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Global PC Shipments Fall 15% YoY in Q2 2023, Record First QoQ Growth After Q1 2022

  • Global PC shipments fell 15% YoY in Q2 2023 but rose 8% QoQ.
  • PC OEMs’ rankings remained unchanged.
  • HP and Apple reported relatively resilient performance.
  • We maintain a double-digit YoY shipment decline outlook for 2023.
  • Global PC shipments will return to pre-COVID-19 levels in H2 2023.

London, Hong Kong, Boston, Toronto, New Delhi, Beijing, Taipei, Seoul – July 14, 2023

Global PC shipments fell 15% YoY in Q2 2023 but rose 8% QoQ, according to Counterpoint’s PC tracker service. Although the inventory levels continued to normalize in Q2, another double-digit YoY decline was recorded after the 28% YoY decline in Q1. Therefore, the YoY decline in Q2 can be seen as relatively stabilizing the shipment downturn since Q1 2022. Also, the QoQ growth in Q2 was the first since Q1 2022. The shipment numbers of Q2 can be considered an early sign of stabilization in the PC market. We can expect a mild recovery in H2 2023 due to the absence of solid growth drivers.

Global PC shipment
Source: Counterpoint Research

Vendors except HP and Apple suffered double-digit shipment declines

Lenovo’s solid #1 place in shipments remained unchanged in Q2, though the company still experienced an 18% YoY decline due to persistent soft demand in some markets. The double-digit sequential growth is a sign of normalizing demand and healthier inventory levels.

HP’s 22% market share was the highest since Q2 2021, while its resilient shipment numbers were a mix of early inventory correction and incremental Chromebook orders.

Dell reported sequential shipment growth in the quarter but a double-digit YoY decline due to overall demand weakness.

Apple saw a high single-digit shipment growth when compared to last year. The growth was largely due to the relatively low Q2 2022 and partially due to new product launches.

Negative factors are weakening in H2 2023

Though the global PC market shipments saw their first QoQ rise after Q1 2022 in Q2, according to Counterpoint’s Macro Index Tracker, the market may have to experience some turbulence in the second half of this year before seeing the first sunrise. Based on our checks, the end demand has picked up to become stronger than OEM shipments (sell-in), which would likely translate into accelerating re-order demand. In H2 2023, we are expecting back-to-school momentum to strengthen sales numbers coupled with potential AI-enabled and Arm laptop launches. Overall, the market is stepping away from the lull and moving toward a new post-COVID-19 normal.

Global PC shipment
Source: Counterpoint Research

Global PC shipments to return to pre-COVID-19 levels in H2 2023

We expect the QoQ rebound seen in Q2 2023 to sustain throughout the rest of the year. However, we reiterate our cautiously optimistic view on shipment performance in H2, as we still expect the shipments to decline YoY in the coming quarters before ultimately regaining their growth momentum. Therefore, we maintain our outlook of a double-digit YoY shipment decline in the 2023 full year. But the shipments will return to pre-COVID-19 levels in H2 2023.

We believe the PC inventory will enter 2024 at a healthy level after two more quarters of adjustments. Replacement demand, AI-enabled models and Chromebook renewal could be potential growth drivers even as we keep a close eye on enterprise expenditure plans.

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Entry Into Flagship Segment, 5G AP/SOCs Lead to Strong Growth for MediaTek in Q1 2022

  • MediaTek recorded an impressive set of numbers for Q1 2022 with revenues growing 32% YoY and 10.2% QoQ to reach $4.8 billion. The company’s mobile phone segment achieved a revenue of $2.7 billion, growing 29% YoY. According to Counterpoint Research’s Smartphone, AP/SOC Shipment Tracker, the addition of the Dimensity 9000 to the premium segment has added meaningfully to the overall revenues that have also been driven by 5G AP/SOCs in the mid-tier segment. LTE AP/SOCs are still attracting high demand and will be in tight supply throughout 2022. Based on our data, LTE AP/SOCs contributed to one-third of the total AP shipments in Q1 2022.
Counterpoint Research MediaTek revenue by segment
MediaTek Revenue by segment
  • The smart edge segment contributed 39% to MediaTek’s Q1 2022 revenues. This segment is mainly driven by the Wi-Fi 6/6E migration and higher-end solutions for smart TVs and tablets. Technology migration trends in smart edge platforms have led to a higher blended ASP in this segment.
  • The power IC segment accounted for 8% of the total revenues, growing 52% YoY and 21% QoQ. A large part of the PMIC segment’s revenue is coming from displays and smartphones. Automotive and industrial applications contribute to 10% of the PMIC revenue and will drive growth for this segment in 2022.
  • MediaTek guided revenues to be in the range of $5-$5.3 billion in Q2 2022, up 3~10% QoQ and 17~25% YoY. The mobile phone segment will show the strongest growth due to the shifting of demand from LTE to 5G AP/SOCs. As the China market is slowing, the revenue growth will come from other regions like India and Europe. Also, the Dimensity 9000 and 8000 series will continue to add to the revenues in Q2 2022. However, due to the slowdown in China and deteriorating macroeconomic conditions, we have reduced our H2 2022 forecast for the Dimensity 9000.
  • Revenues from Wi-Fi 6, 5G SIM modem, 5G tablet, 10G-PON and 4K smart TV are also expected to grow strongly in H2 2022. Also, MediaTek’s mmWave SOC is on schedule to ship in the second half of 2022. It will pave the way for MediaTek’s further expansion in the global market.
  • According to Counterpoint Research’s Smartphone AP/SOC Shipment Tracker, MediaTek will continue to lead the smartphone AP SOC market with a volume share of 41% in Q2 2022, followed by Qualcomm with 27%. The company’s strategy of 5G, Wi-Fi 6, focused product migration, geographic expansion with global customers, and penetration into high-end and flagship segments will allow MediaTek to retain and even improve its strong market position.
  • China slowdown, COVID-19 lockdowns and macroeconomic conditions will affect the global smartphone market. MediaTek guides flat growth for the smartphone market in 2022 and 5G penetration (660-680 million units) reaching 50%. Further, 5G penetration is expected to reach 70% in the next two years.
  • Smartphone OEMs like OPPO, vivo and Xiaomi currently have inventories with distributors and also for components like AP/SOCs, PMICs and DDICs. This has led to a drop in AP/SOC orders for MediaTek for H2 2022. But MediaTek is keeping a high inventory reserve this quarter to sustain its OEM and ODM partners during the worsening COVID-19 situation. MediaTek normally runs with around 90 days of inventory. But it has now raised this to around 100 days to manage potential supply constraints.
  • MediaTek sought to reassure investors that it would not follow a low pricing strategy to counter slowing demand. Instead, it will invest in future growth. Its pricing strategy will also leverage its high capacity and will manage profitability by maintaining similar pricing as the previous quarter. We expect overall 5G AP/SOC ASPs to be flat compared to last year. If the competition reduces the prices, it will be challenging for MediaTek to maintain growth in H2 2022. Due to the strong demand for LTE AP/SOCs, the ASPs will not decline this year. Overall, 5G AP/SOCs will have a premium pricing over LTE. The company is now focusing on developing 5G AP/SOCs for low-end phones priced less than $150. We believe this will happen two years down the line. However, based on our estimates, LTE is going to dominate the less than $100 smartphones, driven by regions like LATAM, Africa and APAC.
  • Presently, MediaTek is not a big player in the PC business, having only a few Chromebook-type devices in the market. The company played down its expectations for substantial growth in the PC sector while confirming that it was interested in the potential of the Arm-based PC market.
  • Smartphones still contribute 53% of the revenues for MediaTek. For longer-term growth, MediaTek has to reduce dependence on smartphones and expand into areas like the smart edge, automotive, connected PCs and AR/VR.

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AMD in 2021: A Year of Great Profits, Market Gains

AMD, one of the world’s leading chip companies, has reported a 49% YoY growth in its Q4 2021 revenue to $4.8 billion while increasing its gross margin by 560 basis points from the same period in 2020. For 2021, its revenue grew 68% YoY to $16.4 billion and the gross margin increased by 370 basis points due to strong data center revenues and high-end processor sales. Data center business contributed to ~25% of AMD’s overall revenues for 2021.

Company Strategy for 2021
The revenues reflect the company’s strategy to focus on high-margin data center products and high-end Ryzen processors for 2021 as semiconductor shortages persisted throughout the year along with supply chain hiccups.

Counterpoint Research AMD Earnings
Source: Company Earnings, Counterpoint Estimates

Annual Segment Updates:

Computing and graphics

The segment’s revenues grew 45% YoY to $9.3 billion in 2021. A 57% increase in the average selling price (ASP) and a higher mix of the latest Ryzen processors along with high-end GPU cards drove the segment’s revenues and profitability to record levels since 2011.

Client launches in 2021

AMD launched the Ryzen 5000 series and Ryzen PRO 5000 series mobile processors powered by the Zen 3 core architecture for business laptops built on 7 nm.

AMD expanded its graphic cards portfolio by launching the Radeon RX 6700 XT built on 7 nm process technology and AMD RDNA 2 gaming architecture, as well as the Radeon RX 6600 XT graphics card that delivers a high frame rate, high fidelity and highly responsive 1080p gaming experience. In mobile graphics, Radeon RX 6000M series was launched for high-performance gaming laptops.

Enterprise, Embedded and Semi-Custom

The revenue grew 113% YoY to $7.1 billion due to EPYC processor and MI200 accelerator sales in HPC (high performance computing), and Cloud and Supercomputer wins. Besides, demand from gaming consoles, automotive and IoT contributed to the segment’s growth.

Data center launches in 2021

AMD launched the Instinct MI200 series accelerators based on the 2nd Gen AMD CDNA architecture, optimized for HPC and AI/ML (artificial intelligence/machine learning) workloads. Next-generation AMD EPYC processors – AMD EPYC 7003 series CPUs boasting 64 Zen 3 cores per processor for HPC, cloud and enterprise customers, were also launched.

Analyst takeaways and company outlook for 2022

  • AMD estimates a 31% YoY annual revenue growth for 2022 to ~$21.5 billion.
  • Data center revenues to be ~30% of overall revenues.
  • Xilinx acquisition creates synergies for its embedded portfolio for other industry segments including IoT, automotive and networking.

AMD will gain market share in the server segment due to the launch of Genoa, its next-generation EPYC processors that feature 96 Zen 4 cores and next-generation memory and I/O technologies. Besides, the ‘Infinity Fabric’, which provides greater efficiencies by connecting CPU and GPU, will play a pivotal role in AMD’s market share considering the accelerator portfolio has established itself as a catalyst in AMD’s data center segment.

The diversification through the successful acquisition of Xilinx has unlocked opportunities for AMD to capture the demand from the networking industry and create an end-to-end solution portfolio for specialized workloads.

For the client side, we see demand correction as the COVID-19 pandemic-led demand subsides in the PC market. However, the compute refresh cycles in enterprise and increased demand from premium ultrathin/thin laptops will offset some of the demand correction, as indicated by the launch of its processors and SKUs at CES 2022.

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Global PC Shipments up 15% YoY in Q2 2021; Macs See Record Sales on M1 Push

London, Hong Kong, Boston, Toronto, New Delhi, Beijing, Taipei, Seoul – July 30, 2021

Global PC demand continued to grow in Q2 2021 amid component shortages, with shipments increasing 15% YoY to 80.1 million during the quarter, according to Counterpoint Research’s latest data. This growth was largely driven by work-from-home and distance learning requirements triggered by the COVID-19 outbreak. In terms of shipment mix, both commercial and consumer demand remained strong, with models from the former category outpacing the latter one.

The global PC supply chain has been experiencing component shortages for the past several months, resulting in an imbalance between orders and actual shipments. This situation will not improve in the second half of the year. Therefore, we may not see normal seasonal trends in the PC market in 2021, as accumulated orders cannot be fulfilled anytime soon.

With the pandemic continuing to drive demand, global PC shipments are likely to reach another peak this year since the early 2010s. Research Analyst William Li said, “We expect double-digit shipment growth in 2021 but have reduced the number slightly to factor in component shortages and Chromebook sales slowdown. In 2022, demand triggered by the new Windows 11 and post-pandemic work patterns will not be sufficient to further boost the gigantic expansion of 2021. Therefore, we may see a relatively soft market next year.”

Global PC Shipments by Vendor, Q2 2021

Counterpoint Research - Q2 2021 Global PC shipments

Lenovo stayed ahead in the market in Q2 2021 with a 25% share. The company is likely to extend its dominance and outperform the global PC market. HP’s 23% share marked its stability in the enterprise market, though its growth momentum was partly offset by decelerating Chromebook shipments. Dell also leveraged the elevated commercial demand to gain 20% YoY and push forward its market share to 17%. Apple’s 22% YoY growth in the quarter supported its 7.5% market share despite severe component shortages.

Counterpoint Research - Q2 2021 Global PC brand share

Thanks to the introduction of Apple Silicon M1, Macs had their greatest Q2 sales ever and reached 6 million shipments in the quarter and 90% Macs are powered by M1 chips. Associate Director Brady Wang said, “The M1 can meet most of the general demands. However, it is not only a replacement for the Intel CPU but also allows Apple to develop new apps and create fully controlled ecosystems. Furthermore, M1-powered Macs can help Apple improve its profit margin by increasing Mac store sales and lowering production expenses.”

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

William Li

Brady Wang

Counterpoint Research
press(at)counterpointresearch.com

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Global PC Shipments up 45% YoY in Q1 2021; Chip Shortage Impact to Continue in H2 2021

  • Global PC shipments grew 45% YoY in Q1 2021 on solid demand and a low base in the same period in 2020 due to COVID-19.
  • Shortages of key IC components will continue to affect the shipment schedules of PC brands and ODMs.

The recovery reported by the PC market in H2 2020 gained momentum in H1 2021. Global PC shipments grew 45% YoY to 75.6 million in Q1 2021 thanks to robust demand across different categories and a low base in the same period last year due to the COVID-19 outbreak. However, PC shipment volumes were down 14% sequentially from Q4 2020 due to seasonality.

With a 24% market share, Lenovo took the first place again in Q1 2021, followed by HP at 23% and Dell at 17%. The overall momentum of the PC market was mainly driven by the growth in gaming notebooks and surging demand from the work-from-home and study-from-home segments, which stimulated Chromebook sales.

Global PC Shipments by Vendor, Q1 2021 (units in million)

Counterpoint Research - Q1 2021 Global PC shipments of top brands

Counterpoint Research - Q1 2021 global PC shipments market share

 

In Q2 2021, PC shipments will remain resilient with the pent-up demand from Q1 2021 extending to this quarter. We believe the top six vendors will continue to dominate the market with over 85% share.

Stepping into H2 2021, the momentum from the previous half will continue and reach a peak with back-to-school (some will be virtual classes) demand as well as the pent-up demand from H1 2021. Premium models with higher ASPs could take the lead via big promotions, which may squeeze out Chromebook’s market share in H2 to some extent. In all, we predict a 16.3% YoY growth in 2021, with global shipments reaching 333 million.

Lead time will ease only in late H1 2022

On the other hand, our checks suggest ODMs’ component inventory levels are relatively higher. But they are still facing shortages of key components like power management IC, display driver IC (with display panel) and CPUs. We have found a 20%-30% gap between orders (end-demand) and actual shipments (supply), largely owing to the component shortage beginning H2 2020.

Lead Time (weeks) for Key Components in PC/Notebook Segments

Counterpoint Research - Lead time of key PC components

PMIC and DDIC have faced the biggest gaps in the PC segment, with the lead time almost two times more than the normal before the COVID-19 outbreak. For PC CPUs, it was gently improving in late H1 in several sub-segment products. Some vendors also said the demand for audio codec IC and LAN chip remained unsatisfied and would continue to remain so in the second half of this year. WiFi SoC has also faced relatively low inventory levels, which will prove to be a drag on 2021 global PC shipments.

Since we do not see any meaningful foundry capacity expansion in H2 2021, it is unlikely that the lead time for key IC components would recover from the current status. Therefore, PC brands and ODMs cannot fully solve the shortage issue and clear the orders backlog. We expect the demand-supply gap to gradually normalize in late H1 2022.

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