According to Canalys data, global desktop and notebook computer shipments in the fourth quarter of 2022 fell by 29% to 65.4 million units. The weak macro environment and inventory revisions have been commonly cited in recent earnings calls, especially for key component suppliers such as Samsung, Intel, LGD, and AMD. Different parts of the PC supply chain face different challenges, so their recovery time points vary.
Canalys expects that companies that are first to start inventory adjustments will be the first to emerge from the cycle. Given the lengthy order process, channel and PC suppliers' inventory levels should return to normal levels earlier than upstream component suppliers. According to the recent financial results of the top PC vendors (excluding Apple), days of inventory (DoI) for HP and Asus have started to decline, while Days of Inventory (DoI) for the remaining top three vendors (Dell, Lenovo, and Acer) have increased slightly.
Among PC components, prices for memory products and display panels fluctuated the most due to intense competition and high costs of adjusting capacity. The price dynamics of these two components provide important signals for future recovery.
Display panels are the first key components to reduce prices starting from Q3 in 2021. After several consecutive declines, the price of display panels has reached the cash cost level in Q3 of 2022. Almost all suppliers are at extremely low utilization rates or have experienced a significant decline in production capacity. Prices have fallen modestly in recent months and are expected to drop in the second quarter of 2023, according to Canalys' monthly supply chain check.
In terms of memory products, the prices of DRAM and NAND flash memory products will both drop sharply in the second half of 2022, with a decline of more than 20% in both Q3 and Q4. This led to sharp production cuts by memory suppliers including Kioxia and Micron in the fourth quarter of 2022, which helped memory prices start to stabilize in the first quarter of 2023. We expect memory product prices to bottom out soon after already reaching cash cost, which will help drive demand from OEMs soon.
Recent earnings reports from LGD, Samsung, and SK Hynix have shown very weak Q4 2022 results and even weaker guidance for Q1 2023, a necessary pain in the inventory correction cycle. Canalys expects inventory levels at component suppliers to continue to build, peaking in the second quarter of 2023, as PC and smartphone suppliers make inventory adjustments ahead of any uptick in purchases.
Semiconductor foundries such as TSMC and Samsung have not entered a severe down cycle, thanks to their customers and product exposure, such as automotive and high-performance computing. However, the utilization rate of certain node processes, such as TSMC's 6/7nm node, which is mainly used in smartphones and PCs, began to decline in the fourth quarter of 2022. The underutilization situation is likely to last several quarters longer than other products such as memory and display panels.
Meanwhile, Intel and AMD reported sharp declines in their client CPU businesses, with revenues down 36% and 51%, respectively. A decline of this magnitude is unlikely as PC suppliers have already slashed production. Although PC demand will decline again in the first quarter of 2023, we expect the downward trend to taper off over the next few quarters.
Most suppliers and component suppliers are expecting better demand conditions in the second half of 2023. Canalys expects module prices to rebound sharply in the second half of the year if purchase orders are squeezed in at the same time. With limited visibility into future demand, procurement teams struggled to increase component orders during revision cycles. Companies willing to take more risks to order ahead in the second quarter of 2023 will be able to respond to market demand more quickly and reduce the impact of the next component price increase trend.
Canalys: Global PC shipments to drop 16% in 2022
The global PC market ended 2022 on a low note, with combined desktop and notebook shipments falling 29% to 65.4 million units in the fourth quarter. It was the fourth straight quarterly decline, driven by lower spending during the holiday season amid a worsening economic environment. This suggests a total of 285.1 million units shipped in 2022, down 16% from the peak demand peak in 2021 across all end-user segments.
Still, shipments remain favorable compared to pre-pandemic, with total shipments in 2022 7% higher than in 2019. Laptops will see even steeper declines, down 30% to 51.4 million units in Q4 2022 and 19% to 223.8 million units a year. Desktops fared slightly better, falling 24% to 14.1 million units in Q4 and 7% to 61.3 million units in 2022.
"As expected, the global PC market faced further headwinds in the fourth quarter to wrap up a difficult 2022," said Ishan Dutt, senior analyst at Canalys.
The decline is particularly pronounced as shipments of laptops and desktops hit record highs during the same period in 2021. Suppliers and retailers have aimed to stimulate consumer spending with deep discounts, but while there has been some success, it has not been enough to drive a flood of new sales. With the cost of energy and basic goods rising in major markets such as the U.S. and Europe, spending on big-ticket items such as personal computers has taken a backseat as consumers prepare to hold off on refreshes. Meanwhile, on the business front, budgets in both the public and private sectors face tightening amid rising interest rates, slowing hiring and expectations of a recession early this year.
"Despite short-term difficulties, the long-term outlook for PCs remains positive," Dutt added. "Shipments in 2022 are down 16%, and we expect further contraction in 2023, but combined shipments for both years will still be higher than in the pre-pandemic era in 2019. Once businesses and consumers weather the storm, we Delayed purchases are expected to start boosting the market in late 2023, with momentum picking up in 2024. As devices deployed during the peak of the pandemic reach the end of their lifecycles, this trend will be driven by a surge in demand for education in key markets. Even in an economic downturn , there are still areas that could bring success to the industry, such as gaming, connected PCs, and hybrid work, all of which were highlighted in announcements made at CES 2023."
Lenovo ranked first in the PC market in the fourth quarter of 2022, with shipments of 15.5 million units, a year-on-year decrease of 29%. It is also the largest vendor by shipments for all of 2022, with shipments of 68.1 million units, a 17% decline compared to 2021.
HP, which ranked second, also saw shipments fall 29 percent to 13.2 million units in the fourth quarter. Full-year shipments in 2022 are down 25% to 55.2 million units.
Third-ranked Dell's fourth-quarter shipments fell 37 percent to 10.8 million units, the biggest drop among the top vendors. However, its commercial strength in early 2022 meant its total shipments fell 16% to 49.7 million units.
Apple ranked fourth in both the fourth quarter and the full-year rankings, with 27.2 million Macs shipped through 2022, a decline of 6%.
