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Supply Woes, Weak Demand Cause Deepest Decline in PC Shipments

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The decline seen in personal computer (PC) shipments in first-quarter 2022 after two consecutive years of strong year-over-year growth, accelerated in the second quarter, according to the latest data compiled by two market research firms, namely the International Data Corporation (“IDC”) and Gartner.

Per the preliminary data released by Gartner, PC shipments in the June quarter plunged 12.6% year over year to 72 million units. The independent research firm claims the decline to be the sharpest in nine years for the PC industry.

Per the data compiled by IDC, PC sales were down 15.3% year over year to 71.3 million units during the June quarter. This year-over-year decrease was higher than the previous quarter’s decline rate of 5.1% and also the worst drop in many years.

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What Induced Softness in PC Shipments?

Although the firms reported different figures, both share a similar opinion that the year-over-year decline was mainly due to weakening consumer demand for PCs, lockdowns in China, supply-chain issues, logistics and geopolitical challenges.

In 2020 and 2021, PC manufacturers had benefited from increased demand amid the pandemic-induced remote-working and online-learning wave. The pandemic necessitated the use of PC systems, be it for remote work, web-based learning, video conferencing, video gaming, social media, consumer entertainment and streaming or online shopping.

However, the recent back-to-back two quarters of declining PC shipments depict an end of demand boom for the industry. The two market research firms observed that consumers became cautious about their spending due to inflationary pressures and fears of a possible recession.

IDC also pointed out that supply-chain and logistics disruptions further deteriorated in the second quarter due to lockdowns in China and macroeconomic headwinds. Gartner too has a somewhat similar view and stated that the supply-chain challenges continued but logistics disruption was the major factor behind delivery delays.

The drastic decline in PC shipments was also due to a steep downturn in Chromebook demand as the reopening of schools and colleges across the majority parts of the world weakens the necessity for education on PCs.

Additionally, Gartner pointed out that several PC manufacturers’ decision to halt business operations in Russia due to the war on Ukraine had severely affected PC shipment volumes in the quarter. Per the market research firm, PC deliveries in Russia usually contribute to 5-10% of the total EMEA PC volume.

Vendor-Wise PC Shipments

Both IDC and Gartner revealed almost similar declines in vendors’ shipments, except for discrepancy over Apple’s (AAPL - Free Report) performance. Per the data compiled by IDC, Apple’s PC shipments fell 22.5%, while according to Gartner, its deliveries increased 9.3% in the second quarter.

Moreover, with a market share of 6.7% per IDC, Apple shared the fifth spot among the top vendors with Asustek Computer, which registered a 4.6% year-over-year dip in PC deliveries and has a market share of 6.6%. IDC declares a statistical tie if the shipment market share difference between the companies is 0.1% or less.

According to Gartner, Apple stood third with a market share of 8.8%, while Asustek Computer held the sixth place with a market share of 6.5% and witnessed a 4.3% slip in second-quarter deliveries.

Nonetheless, the two firms agreed on the first three spots, with Lenovo (LNVGY - Free Report) continuing to hold the top spot followed by HP Inc. (HPQ - Free Report) and Dell Technologies (DELL - Free Report) . Per IDC, Lenovo, HP and Dell market shares in the second quarter were 24.6%, 18.9% and 18.5%, respectively, while all three registered a year-over-year decline of 12.1%, 27.6% and 5.3% each in deliveries. Acer Group’s shipment decreased 19.2%, and consequently, it held the fourth position on the top-vendor list with a market share of 6.9%, according to IDC.

Per data compiled by Gartner, Lenovo, HP and Dell shipments declined 12.5%, 27.5% and 5.2%, respectively, in the second quarter. Their respective market share was 24.8%, 18.8% and 18.5%. Acer found the fifth spot with a market share of 7.1%, while the company recorded a shipment decline of 18.7% in the quarter.

Among the leading vendors, Dell currently sports a Zacks Rank #1 (Strong Buy), while Apple, HP and Lenovo carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank stocks here.


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