PC Archives - Counterpoint

Q1 2023 Global PC Shipments Mark Another Quarterly Decline, Gradual Recovery Expected in H2

Q1 2023 global PC shipments fell 28% YoY.
Inventory digestion likely to end in Q2 2023.
Although PC demand is expected to gradually recover in H2 2023, full-year shipments are set to decline by double-digit percentages.
Windows 11, commercial/flagship models and replacement cycles are key 2024 growth drivers.

Taipei, London, Hong Kong, Boston, Toronto, New Delhi, Beijing, Seoul – April 17, 2023

Global PC shipments fell 28% YoY in Q1 2023

Global PC shipments dropped 28% YoY in Q1 2023 to hit 56.7 million units, the lowest quarterly numbers in the past 10 years, excluding Q1 2020 when the COVID-19 pandemic outbreak interrupted manufacturing and production. The Q1 2023 decline was due to the continued delay in demand pickup amid an inventory correction during the quarter. However, we are cautiously optimistic and believe the overall PC market will start gradually recovering in the latter half of Q2 2023 which will pave the way for comparably stronger momentum in H2 2023.

Global PC Shipments by Vendor, Q1 2023

The last mile of inventory digestion since mid-2022

The PC and PC components’ inventory issue has remained for more than half a year due to frozen demand and aggressive double booking. As we have already entered the post-pandemic era and are settling in with the new work environment and lifestyle, the PC industry has also adapted a lot with incremental demand from each consumer. However, increased devices per person do not imply continuous high-level demand for PCs, especially during economic downturns. Fortunately, based on feedback from OEM/ODMs, we are close to the end of PC inventory digestion which is expected by H1 2023. PC OEMs could begin executing their next step of PC strategies as consumer demand is gradually increasing.

Major OEMs, especially Apple, had a tough time in Q1 2023

Lenovo remained the world’s largest PC vendor in Q1 2023, despite a huge decline in shipments during the quarter. The company registered shipments of 12.8 million units in Q1 2023 and a market share of 23%. HP reported a relatively narrow adjustment in the quarter off a lower base in the year-ago period, maintained its second rank and retained its 21% market share. Dell’s better-than-expected performance in the US helped the company rank third in terms of global PC shipments during the quarter with a 17% market share. Apple suffered the most, marking a 38% YoY decline in shipments due to a higher base in the year-ago period and a longer replacement cycle.

We foresee slow-paced demand recovery

It is widely expected that PC demand will recover in H2 2023. PC OEMs are also looking forward to a pickup in demand following the inventory digestion. Although we did say that demand will recover post-inventory normalization, we are afraid demand recovery will take slightly longer to start accelerating. On the other hand, we believe the rate of demand recovery will vary across different categories. Based on our checks, demand for commercial segments and premium/flagship consumer product lines will likely recover faster than others and are expected to sell better in H2 2023. Arm laptops continue to be relatively vulnerable due to a lower shipment base a year ago and are more eye-catching to customers.

Inventory Correction Continues while YoY decline improves

Another YoY double-digit percentage shipment contraction is expected in 2023

Although OEM vendors reported another quarterly shipment decline in Q1 2023, they maintain a cautiously-optimistic tone for PC demand in H2 2023. We further adjust our 2023 global PC shipments forecasts and expect to see a double-digit percentage shipment decline throughout 2023 from the original high single-digit percentage shipment decline at the end of 2022. Additionally, we expect a bright 2024 due to renewal demand from Chromebook and Windows 11, coupled with a replacement cycle since the outbreak of the COVID-19 pandemic.

Global PC Shipments See Record YoY Decline in Q4 2022

Global PC shipments fell 27.8% YoY in Q4 2022 to reach 65.2 million units.
For the full year of 2022, the shipments declined 15% YoY.
Macroeconomic headwinds, increasing inflation pressure and frozen PC demand affected the global PC market in 2022.
Soft demand in H1 2023 will cause heavy pressure on shipments. Therefore, we do not see annual shipment growth in 2023.

Taipei, London, Hong Kong, Boston, Toronto, New Delhi, Beijing, Seoul – January 19, 2023

Global PC shipments left Q4 2022 with a record-high YoY decline of 27.8% to reach 65.2 million units, according to Counterpoint Research’s data. Although inventory levels of several OEMs and ODMs likely peaked in Q3 2022, the year-end season failed to accelerate the PC shipment momentum in Q4. At 286 million units, the total PC shipments for 2022 also reflect a muted global PC demand with four consecutive quarters of YoY shipment declines. Therefore, we are not expecting a decent rebound in H1 2023.

Macroeconomic headwinds, increasing inflation pressure and frozen PC demand affected the global PC market in 2022, with shipments declining 15% YoY. Besides, consumers who bought new PCs were still enjoying the latest models, whereas enterprises were working more carefully on their budgets. Also, the lack of appealing functions and financial support could not bring in incremental demand in 2022, not to mention the aggressive inventory digestion target of OEMs since H1 2022.

Record YoY Shipment Decline in Q4 2022

Source: Counterpoint Research

Lenovo continued to lead the market in Q4 2022 but with a flattish 23.7% share. Mild inventory correction dragged the company’s performance amid a lackluster holiday season. Its shipments declined 17% YoY in 2022 to take a 23.7% market share. We expect Lenovo’s shipment decline to normalize along with demand revival in the Chinese market in 2023.

HP secured its second place in Q4 2022 with a 20.3% share. Its shipments declined 29% YoY during the quarter but it was the only major PC OEM to report positive sequential shipment growth in Q4, thanks to improving shipment performance in North America and a lower base in Q3. HP had the largest shipment pullback in 2022 due to weak consumer demand across the globe. The company ultimately recorded a below 20% market share in 2022. But we expect a meaningful share rebound in 2023.

Dell’s 16.7% market share was the lowest in the past seven quarters largely due to an enterprise demand slowdown. As the economic situation remains weak, the company is not expected to see rapid pick-up for commercial models in 2023, which is crucial for Dell to narrow the market share gap with HP. Therefore, we may see pressures on Dell’s share (17.4% in 2022) and shipment performance in 2023.

Apple’s comparatively tiny 3% YoY shipment decline in Q4 2022 helped the company close the book with a flattish shipment volume performance for 2022. Apple kept gaining market share at the expense of x86-based vendors and recorded a double-digit share in the second half of 2022 and 9.4% in the full year. Arm-based M-series models helped the company weather the slump cycle in both consumer and commercial devices in 2022.

Global PC Shipments by Vendor, Q4 2022

Source: Counterpoint Research

Windows on Arm a key focus in 2023

Despite near-term headwinds, we could still see global PC shipment volumes higher than pre-COVID levels in the coming years, thanks to the continuous work environment and lifestyle changes and delayed procurement from both consumer and commercial sectors after H1 2023. Consumer demand will likely see gradual rebound in H2 2023 followed by a slower warm-up in enterprise procurement. Soft demand in the first half will cause heavy pressure on global PC shipments. Therefore, we do not see annual shipment growth in 2023.

Eying Apple’s M-series success, Qualcomm’s Arm-based Oryon CPU will likely enter the market and heat up Windows-on-Arm momentum in 2023. We see mid-single-digit YoY shipment growth for Arm-based laptops compared to the global laptop market’s high-single-digit shipment decline in 2023.

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.

Despite China’s Failure to Recover in Q3 2022, Global Cellular IoT Module Market Experiences Growth

China led the global cellular IoT module market in Q3 2022 despite losing volume share. China was followed by North America and Western Europe.
Smart meter, POS, automotive, industrial and router/CPE were the top five applications in terms of volume this quarter.
Automotive, router/CPE, PC, industrial and POS were the top five applications in terms of value this quarter.
The top three technologies in terms of volume were NB-IoT, 4G Cat 1 and 4G Cat 4. They captured more than 60% of the total volume in Q3 2022.
The top three technologies in terms of value were 5G, 4G Cat 4 and 4G Other. They captured nearly two-thirds of the total value in Q3 2022.

San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – December 27, 2022

Global cellular IoT module shipments grew by only 2% YoY in Q3 2022, according to the latest research from Counterpoint’s Global Cellular IoT Module and Chipset Tracker by Application. China led the market followed by North America and Europe. China’s shipments decreased 8% YoY in this quarter due to a resurgence of COVID-19 cases. However, some of this demand decline was offset by an increase in the residential, smart door lock, patient monitoring, registrar device, smoke detector, drone, smart meter and automotive applications. Other markets such as North America, Western Europe, India, Japan, Latin America, and Middle East and Africa witnessed healthy growth.

Commenting on the competitive landscape, Associate Director Ethan Qi said, “Quectel is leading the cellular IoT module market, followed by Fibocom, Sunsea AIoT, China Mobile and MeiG. China is dominating this market with all the top five IoT module vendors being from the country. In the past few months, we have seen some consolidation among international players, like Telit taking over Thales’ IoT business and Semtech acquiring Sierra Wireless in the IoT module space to remain resilient against Chinese module vendors. With the increasing adoption of IoT technologies in various sectors, many players will consolidate to get bigger value from this fragmented value chain.”

Commenting on the important underlying technology dynamics shaping the entire IoT ecosystem, Senior Research Analyst Soumen Mandal said, “The IoT module market is undergoing changes as demand for low-end technologies like 2G and 3G declines and shifts towards 4G Cat 1 and 4G Cat 1 bis, where higher-end applications are upgrading from 4G to 5G. In this quarter, the top three technologies in terms of shipments – NB-IoT, 4G Cat 1 and 4G Cat 4 – accounted for over 60% of the total shipments. However, in terms of revenue share, 5G, 4G Cat 4 and 4G Other were the top three technologies and held nearly two-thirds of the total revenue. The lower-end technologies such as NB-IoT, 4G Cat 1 and 4G Cat 1 bis are helping connect a greater number of IoT devices, while higher-end technologies like 4G Cat 4, 4G Other and 5G are adding more value to the IoT ecosystem. This is why the automotive, router/CPE, PC and industrial segments, which rely mostly on higher-end technologies, are generating more revenue.

During this quarter, we saw some 4G Cat 1 and 4G Cat 1 bis-based applications being replaced with NB-IoT. Chinese NB-IoT chipset companies Eignecomm and Xinyi have improved their partnerships with module players, particularly in the domestic market. Besides, there were few options available for 4G Cat 1 bis chipsets in international markets, with Sequans being the exception. Last week, Qualcomm entered the 4G Cat 1 bis market by launching the QCX216 chipset in partnership with Quectel, Cavli Wireless and MoMAGIC. We believe that 4G Cat 1 bis technology will start to gain traction as leading IoT module and chipset players focus on it for use in massive IoT applications.”

Mandal further added, “Despite slower growth in IoT module shipments, IoT module revenue increased by 12% YoY in Q3 2022 due to a higher mix of 5G and 4G Cat 4 modules. The average selling price (ASP) of all types of 4G technologies and LTE-M continued to rise, while the ASP for 2G, 3G, 5G and NB-IoT technologies decreased. It is believed that 2023 will be a breakthrough year for 5G, and the ASP may decrease to below $100, which will help facilitate wider adoption.”

Commenting on the key application trends in the IoT space, Associate Director Mohit Agrawal said, “The top 10 applications in the market captured more than 80% of shipments this quarter, with the top five being smart meters, POS, automotive, industrial and router/CPE. Smoke detectors saw the fastest growth, followed by residential applications and drones. China was a driving force in the growth of all three of these fast-growing segments, fuelled by a resurgence of COVID-19 cases in the country. Among the top five applications, industrial and router/CPE applications saw a decrease in shipments both on a sequential and yearly basis. However, the industrial segment still presents a large opportunity due to the number of companies embarking on digital transformation projects.”

For detailed research, refer to the following reports available for subscribing clients and individuals:

Counterpoint tracks and forecasts on a quarterly basis 1,500+ IoT module SKUs’ shipments, revenues and ASP performance across 80+ IoT module vendors, 12+ chipset players, 18+ IoT applications and 10 major geographies.

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.

Analyst Contacts

Soumen Mandal

Mohit Agrawal

Counterpoint Research

press@counterpointresearch.com

Related Reports

Global PC Shipments’ Double-digit Crash in Q3

Taipei, London, Hong Kong, Boston, Toronto, New Delhi, Beijing, Seoul – October 25, 2022

Global PC shipments fell 15.5% YoY in Q3 2022 to reach 71.1 million units recording another wave of huge YoY declines after the severe annual and sequential falls in Q2, according to Counterpoint Research data. The Q3 2022 decline was largely due to demand weakness across both consumer and commercial markets, which was mainly driven by global inflation. Despite components shortage issues being largely resolved, OEMs and ODMs are holding a relatively conservative view on Q4 2022 and first half of 2023.

The lull in PC demand continued in the quarter despite broad promotional activities from major OEMs, especially for consumer product lines. In addition, inventory digestion processes have been activated to deal with abnormally high levels as we enter the second half of the year. Although it is the season of peak consumer device sales, PC OEMs believe the destocking process will continue into 2023. Based on our conversations with supply chain members, especially with components suppliers, the largest inventory numbers were in Q3 2022 and will likely begin to decline in coming quarters but there is uncertainty within the supply chain on when shipment growth will restart.

Global PC Inventory Accumulation Since 2022

Source: Counterpoint Research

Lack of consumer demand in the back-to-school season, shrinking enterprise purchasing due to economic uncertainty and increasing promotional events all created a drag on Average Selling Price (ASP) growth momentum and also impacted PC market revenue.

Apple reported a counter-market 7% YoY shipment growth amid muted market momentum, thanks to its new product launch in late Q2 with shipments refilled after the China lockdowns in Q2 that interrupted ODM manufacturing schedules. Meanwhile, Asus reported a 9% YoY shipment decline in the quarter, reflecting a relatively resilient performance due to its enterprise focused strategy, in line with management’s target of outperforming shipment in 2022.

Lenovo booked a 16% YoY decline, largely in-line with the global PC market, consumer demand weakness was partly offset by enterprise spending. Its 23.7% market share remains flattish compared to last year, reflecting Lenovo’s strong position efforts to cope with a shaky market.

HP took an 18% share in Q3 with 12.7 million unit shipments. This is the second quarter of lower than 20% market share by HP since 2016, largely due to its higher consumer mix, which meant it exited Q3 with a 26.5% YoY decline.

Dell also reported more than a 20% YoY shipment decline with and 17% market share. Its 12 million units were a bit higher than Q3 2020, right before Dell began to benefit from working style changes post the initial waves of COVID.

Global PC Shipment by Vendor, Q3 2022

PC market unlikely to grow until H2 2023

Overall, global PC shipments in the second half of 2022 will still be comparatively higher than the level before Covid broke out. However, Chip maker AMD claimed that PC market weakness already caused negative impacts to its results and outlook; while the management of Taiwan OEMs Acer and Asus, both shared their views that the PC industry will not recover until H2 2023.

Looking into 2023, the sky is still covered by dark clouds. We are also adjusting our 2022 shipment forecast to a 13% YoY decline on soft PC demand. Among all PC product segments, we believe Arm-based PCs and gaming PCs are poised to weather the market downturn best, with the help from Apple’s M-series offerings as well as incremental R&D efforts from chip makers and the wider ecosystem.

Execution Woes and Economy Sink Intel Earnings

Intel, under immense pressure from internal execution delays in key segments – DCAI, AXG and product design, and economic headwinds from falling consumer demand and fiscal tightening, reported its eighth consecutive YoY revenue decline and its first net loss in 30 years, amounting to $454 Mn.

The GAAP revenue dropped to $15.3 Bn, a 22% YoY decline and missed its estimate by $2.7 Bn for the Q2 outlook due to weaker demand in CCG and lose of market share to AMD.
Gross margins declined 15% YoY and stood at 44.8% compared to 59.8% in the previous year quarter due to component pricing not passed onto consumers

This was well below the guidance issued at its Investor Day and Q1 quarterly earnings where it projected to be above 50%.

Source: Counterpoint Estimates, Company Earnings

Segment Reports

Client Computing: OEM inventory reductions and soft demand contribute to 25% revenue decline; Lowest since 2014

Client Computing Revenues were at $7.7 Bn a 25% decline in YoY revenues and 29% decline in the ‘Notebook’ segment. The biggest decline factors were:

OEM inventory reduction followed by softening demand from consumer, education and SMB (Small and Medium Sized Business) customers.

The company expects the revenue to decline in Q3 and then rise again in Q4 due to inventory balancing and price increases. The company expects a 10% decline in the PC TAM for this financial year.

The company expects its roadmap of Raptor Lake processors to be on schedule for this Q3 and Q4 for desktop and notebook chip releases respectively.

Source: Counterpoint Estimates, Company Earnings

Datacenter and AI (DCAI) underperforms due to execution issues, match-set issues and ethernet & power supply component shortages

The DCAI revenue was $4.6 Bn a 16% YoY decline.

The revenue slump was primarily due to execution issues of stepping out ‘Sapphire Rapids’ which has been delayed three times due to security and quality performance not being in line with expectations and competitor products.

The company had launched its last generation of processors – Ice Lake in 2019 and Cooper Lake in 2020 with some upgrades in 2021.

The revenue for DCAI will remain downcast for the whole year due to the financial impact of Sapphire Rapids ramp only being realized next year and competitive pressures for its existing product line. The company expects a high-volume SKU ramp later this year.

The company launched its next gen AI accelerator Gaudi2 and its software platform security capability – Amber for AI driven continuous optimizations.
On an optimistic note, the company emphasizes the deals it has with Meta, Nvidia and AWS for its multi-year and multi-generational compute expansion.

Source: Counterpoint Estimates, Company Earnings

Network and Edge (NEX) segment provides some green amidst the deep red CCG and DCAI revenues

Revenue grew 11% YoY at $2.3 Bn with Xeon D (processor for Network & Edge) and Mount Evans helping to drive the revenue as leading network companies adopt the product into their network infrastructure.

Accelerated Computing Systems and Graphics (AXG) revenue grew 5% with software issues delaying some launches

The AXG revenue stood at $186 Mn representing a 5% increase in revenue YoY.

The company is poised to miss its target of 4-million-unit shipments in 2022 but to achieve a target of $1 bn in revenues. The Intel Art GPU series remained the revenue driver.
Intel Arc A5 and A7 Desktop GPU Cards were delayed due to software issues and will start shipping in Q3.
Data Center GPU – Arctic Sound has shipped to customers and the financial impact will be seen in the next two quarters.

Mobileye has its best ever quarter revenue at $460 Mn representing 46% YoY growth

Mobileye continued to outperform the market and increased its backlog by over 21 million units for the upcoming quarters. 16 million units were shipped in the first half of 2022. The company expects to add more customers and is extensively deploying capital for next generation ADAS products.

Intel Foundry Services (IFS) gains support and forms IFS Cloud Alliance to improve foundry design efficiency, time-to-market

The revenue of IFS was $126 Mn representing a 54% decline YoY due to lower mass tool sales as well as a revenue decrease in the automotive segment due to customer shortages in the automotive market.

The company has added $1 Bn in revenue pipeline for this quarter, including a new client – MediaTek – on Intel 16 node, making the revenue pipeline about $6 Bn in total.
The advanced node revenue pipeline remains undecided as the company is still working on test chips and design libraries to secure orders. The company is also expected to benefit from the recently passed CHIPS act from 2023 onwards and the industry wide transition to System and Package chipsets vis-à-vis a board chipsets.

Additionally, the IFS Cloud alliance was launched with leading cloud providers – Azure and AWS, and EDA tool providers – Ansys, Cadence, Siemens and Synopsys, to enable secure design environments in the cloud, improving design efficiency and accelerating the time-to-market for chips.

Outlook for Q3 2022 and FY 2022

Q3 revenue to decline 12-17% YoY to $15-$16 Bn and gross margin to be at 46.5%.
FY 2022 revenue to be in range of $65-$68 Bn down $8-$11 Bn from earlier guidance.
Capex reduced by $4 Bn from earlier forecasts to $23 Bn.

The capex reduction will directly impact the wafer fab equipment delivery and possible delays in fab expansion and capacity.

The primary reasons for the forecast revenue declines include – product roadmap delays in DCAI and software issues in AXG product segments. Dampened demand from desktop and notebook industry amid worsening consumer sentiment is also dragging on the revenue outlook.

The company has already indicated a not-too-good Q3 with some breathing room available from Q4.

Though, the company has reiterated its position is on track for its future nodes and product releases we believe the latter half-year launches will crystallize the current status of its advanced nodes and likely delivery of its future product roadmaps.

Global PC Shipments in Q2 2022 See Largest YoY Decline Since Q2 2013

Taipei, London, Hong Kong, Boston, Toronto, New Delhi, Beijing, Seoul – July 27, 2022

Global PC shipments fell 11.1% YoY in Q2 2022 to reach 71.2 million units and record the largest YoY decline since Q2 2013, according to Counterpoint data. The Q2 2022 decline was largely due to lockdowns in China’s Shanghai and Kunshan, which hit the PC supply chain. However, as the OEMs’ inventory continues to accumulate amid lackluster consumer demand globally, we believe supply issues will likely get resolved in the second half of this year.

Diminishing YoY PC Shipment Growth Since Q1 2021

Source: Counterpoint Research

The macroeconomic turbulence continues to impact worldwide consumption momentum. Regional conflicts as well as global inflation have resulted in a downward sloping demand and consumer spending. Enterprises too are putting off their new purchases and device upgrades, though the orders from the commercial segment have remained more solid compared to the consumer segment. By region, the US and EU experienced relatively huge double-digit YoY declines in their Q2 2022 shipments, mainly dragged by Chromebook demand correction and soft consumer demand, as these regions had started seeing shipment growth ahead of other regions last year.

On the other hand, lockdowns in China during the quarter hit hard the laptop supply chain, as major laptop ODMs, including Quanta, Compal and Wistron, suffered manufacturing disruptions. The most harmful impacts were in April and May when we saw approximately 40% and 20% YoY declines respectively for key ODMs. Production lines resumed normal operations in the second half of May and were trying to clear order backlogs.

Major Laptop ODMs’ Inventory Levels (in $ mn)

Source: Counterpoint Research

Even though the top three brands showed a YoY decline in Q2 shipments, they all managed to keep their rankings unchanged. Lenovo maintained its leadership in the global PC market with a 24.4% share in Q2 2022. The brand’s total shipments fell 12.7% YoY to 17.4 million units mainly due to weak consumer demand, partly offset by moderate commercial orders.

HP suffered the most among the top brands in Q2 2022, reporting a 27% YoY decline in shipments from a high base last year. The sharp decline was mainly due to soft momentum for consumer products and Chromebooks. On the other hand, Dell had the smallest adjustment to its YoY shipment performance, thanks to a commercial/premium-focused product strategy.

Acer saw a 14.8% YoY shipment decline off a relatively high base in Q2 2021. Despite Chromebook weakness continuing to cap Acer’s growth momentum, its market exposure in entry- to mainstream-level laptops helped the brand take fourth place in global PC shipments in Q2 2022.

Apple reported a sharp decline of 20% YoY in its Q2 shipments largely due to supply chain disruption at Quanta’s manufacturing lines in China. The consumers too were waiting for a new MacBook series equipped with M2 chips. As a result, the company lost its fourth place in the global PC rankings for Q2 2022.

Asus’ Q2 shipments were down 7.7% YoY thanks to its commercial segment focus in recent quarters combined with consumer spending weakness entering 2022. The brand’s total shipments of 4.7 million made it share the fifth position with Apple in Q2 2022.

Global PC Shipments by Vendor, Q2 2022

More shipment adjustments seen

We had cut our 2022 shipment forecast in Q1 2022 to reflect the beginning of a weakening PC demand. But with persistent inflation pressure and enterprise spending saturating, we expect order adjustments to continue even as the average selling price plateaus on easing supply constraints. Therefore, we are revising our forecast for the 2022 PC shipments to a 9% YoY decline, with potential bright spots of new M2 MacBooks and desktop demand rebounding after the post-COVID-19 reopening of offices.

Quectel, Fibocom & Sunsea Capture Half the Cellular IoT Module Market in Q1 2022

Quectel, Foxconn, China Mobile, WNC, Telit, MeiG, Sequans, Gosuncn were the fastest growing vendors in Q1 2022.
Smart Meters, POS, industrial, automotive and telematics were the top five applications in the quarter.
China, North America, and Western Europe accounted for over 75% of the volume.

San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – June 23, 2022

Global cellular IoT module shipments grew 35% YoY in Q1 2022, according to the latest research from Counterpoint’s Global Cellular IoT Module and Chipset Tracker by Application. India was the fastest growing market (59% YoY) followed by Middle East Africa, Japan, North America, China, Western Europe and Korea, all registering healthy double-digit growth. However, the largest IoT module market, China, saw demand dip by 11% QoQ due to the new wave of COVID-19 and resulting lockdowns.

Commenting on the market dynamics, Senior Research Analyst Soumen Mandal said, “The cellular IoT module market remains competitive, but there is growing consolidation. For example, Quectel, Fibocom and Sunsea accounted for more than half of the global IoT cellular module shipment volumes for the first time ever. This highlights the growing influence, expertise, and scale of these Chinese vendors in the fast-growing global market.

Quectel’s cellular IoT module shipments grew 77% YoY in Q1 2022 to a healthy 38% of global volume. Quectel now ships more modules than the next ten vendors combined. Quectel continues to dominate geographically with leadership in seven out of ten key markets globally. Quectel commands a strong position in 4G and NB-IoT modules. Quectel is expanding its 5G portfolio and aims to gain scale as the technology ramps.

Fibocom’s shipments grew by 24% YoY benefitting from the surging demand for 4G Cat 1 bis modules, which is one of the fastest growing segments and led by Fibocom globally. 4G Cat 1 bis is becoming a key technology targeting the 2G and 3G IoT installed base and similar applications such as POS and telematics. Fibocom is also heavily focusing on 5G AIoT based smart modules to maintain a lead in high value applications.

Sunsea AIoT which includes the brands SIMcom and Longsung, has cemented its place in the top three brands. It focuses on 4G Cat-1 and NB-IoT modules. China continues to be the key market for Sunsea; it will need to diversify if it wants to scale and grow at the same pace as its peers.

Telit captured 4.6% share and is the only non-Chinese brand in the top five players. Demand for its modules remains healthy in North and Latin America. The module mix shifted slightly with increasing demand for legacy 2G and 3G modules offsetting some volume decline in 4G modules due to supply chain constraints. Telit leads the Latin America market and is among the top three vendors in North America.

China Mobile, Sierra Wireless and u-blox improved their market share in Q1. The world’s largest EMS, Foxconn, also entered our top ten module players list with growing demand in the CPE and connected PC segments. The relationship with top device makers, potential EV business growth and a focus on 5G technology, should help Foxconn to grow in this sector in the mid- to long-term.”

Commenting on cellular IoT technology evolution, Associate Director Ethan Qi, said, “There is a significant shift happening in the adoption and proliferation of different cellular IoT access technologies, from LPWA (NB-IoT, LTE-M) to 4G (Cat 1, Cat 1 bis) to 4G Cat 3+, 5G and upcoming 5G Redcap. This is driven not only by the wide range of different applications, but also regional and operator adoption dynamics. NB-IoT is considered a key and fast-growing technology for low power IoT applications and has been widely adopted in China and some other parts of the world. Whereas LTE-M is preferred in markets such as Japan, Australia, North America, and parts of Europe. However, we are also witnessing many regions and operators favouring 4G Cat 1 and Cat 1 bis for some mature and some new IoT applications. While most of these technologies are complimentary, operators still have to selectively invest in one over others, depending on the IoT verticals of most importance to them.

As we see 5G rolling out, many of the advanced IoT applications such as automotive, router CPEs, PCs will move to 5G from advanced 4G technologies. Furthermore, the advent of 5G Redcap will also supplant some legacy technologies such as 3G/4G in some IoT applications. So, the entire IoT ecosystem has a wide array of cellular access technology solutions to choose from depending on the applications, data requirements, cost constraints and operator dynamics in a particular market.

The technology mix also shapes the overall cellular IoT module Average Selling Price (ASP), which declined by 3% annually in Q1 due to an increasing mix of lower cost 4G Cat 1 and 4G Cat 1 bis modules. Furthermore, the 4G Cat 4+ modules are still facing supply chain constraints and the % share of 5G modules remains small contributing to the overall ASP decline. We believe the 4G module supply chain issues will moderate later this year, but the falling ASP for 5G modules will provide an option for device OEMs to either select 4G or 5G modules moving forward.”

Commenting on which IoT applications are hottest, Research Vice President Neil Shah said, “Cellular IoT powers a diverse set of applications and the number of things that can be connected to the internet continues to rise.

Smart meters, POS and industrial were the top three applications in the global cellular IoT module market in Q1 2022. These segments are contributing to nearly 40% of total cellular IoT module shipments.

Smart meter projects have restarted in many markets post-COVID and the segment is seeing strong growth with shipments doubling compared to a year ago. Meanwhile, demand in the router/CPE segment is steadily growing as the supply constraints lessen and demand increases for FWA CPEs for the work-from-home segment, and 4G/5G upgrade projects increase for enterprise-grade routers across retail, factories, offices, etc.”

For detailed research, refer to the following reports available for subscribing clients and also for individual subscription:

Counterpoint tracks and forecasts on a quarterly basis 1500+ IoT module SKUs’ shipments, revenues, and ASP performance across 80+ IoT module vendors, 12+ chipset players, 18+ IoT applications and 10 major geographies.

Background

Analyst Contacts:

Soumen Mandal

Ethan Qi

Neil Shah

Counterpoint Research

press(at)counterpointresearch.com

Related Reports:

AMD Records Stellar Q1 2022 Numbers, Completes Xilinx Acquisition

AMD reported its best-ever quarterly revenue at $5.9 billion in Q1 2022, a 71% YoY increase driven by the cloud computing, automotive, gaming and data center segments. This revenue includes six weeks of performance of Xilinx, whose acquisition was successfully completed by the company during the quarter. Xilinx is an FPGA and networking compute solution provider. Excluding Xilinx, AMD’s Q1 2022 revenue was $5.3 billion, a 54.7% YoY increase. We give below some of the key takeaways from AMD’s Q1 2022 earnings statement:

The gross margin was at 48%, up 190 bps YoY.
Revenue for the Computing and Graphics segment was $2.8 billion, up 33% YoY.
Revenue for the Enterprise, Embedded and Semi-custom segment was $2.5 billion, up 88% YoY.
The company intends to acquire Pensando, a distributed services platform provider.
Wafer shortage for 16nm and below will remain constrained till H2 2022.

All values in USD Million

Client Compute revenues
The company launched seven new CPUs for desktop processors and first desktop processors with 3D chiplet architecture. In the notebook segment, the company extended the mobile processors to cater to customers across the spectrum, including gaming and creators, with features like better battery life and compute synergies.

Desktop GPUs grew significantly owing to mobile GPU launches, but data center GPUs, including the new launch of Instinct MI210 accelerators, remained flat.

The revenues across the client compute PC market will see a correction in the next quarter, driven by inflationary pressures and dampened demand.
The company will focus more on premium, high-margin segments as the PC market softens in the next quarter.
GPU demand will also remain muted due to lowered prices and improved supply in the market. Weakening crypto markets will also contribute to the growth pace of the product portfolio.

Enterprise, Embedded and Semi-custom segment

Gaming console, automotive and data center units were the growth drivers for this segment, including a new launch by Valve in the gaming console space. The company also launched its first processors for the cloud and HPC markets, featuring 3D-stacked chiplets architecture.

The Data Center Compute segment will continue to drive growth as hyperscalars continue to expand cloud infrastructure and enterprises upgrade their IT infrastructure.
In networking and communication, due to enhanced synergies with the Xilinx portfolio, the company’s FPGA-as-a-Service and Smart NICs will help in penetration and diversification of the market to mainly telecom and fintech players.
The company will focus more on AI workload-based GPUs and expanding its software stack.

The uphill battle for Intel commences with its first earnings of 2022

Intel enters a year where Moore’s law has considerably slowed, supply chains are constantly under pressure from various macro and micro factors, PC demand corrects from the pandemic induced highs and growth rally momentum comes from mostly Cloud, Automotive and 5G.

Intel reported revenue of $18.4B, a decrease of 7% YoY, gross margin was down 4.8% YoY to 50.4%
Client Computing Group (Notebooks and Desktop) was down 13% with Notebook Revenue declining significantly by 14%
Datacenter & AI Group remained the key growth segment for revenues for company with 22% YoY growth in revenues supported by Network and Edge Group with 23% YoY growth, Accelerated Computing & Systems with 21% YoY increase and Intel Foundry Services up by 175%
Foundry capacity and Equipment to remain tightened till 2024

Segment Reports:

Client Computing: Consumer and Apple headwinds chip away $1.4B from the Client Group

The desktop revenues stood at $2.6B and notebook revenues were at $6.0B indicating a decline of 5% and 14% YoY respectively. The decline was majorly attributed to inventory digestion cycle and demand waning due to Covid-driven situations. Ramp down on Apple CPU and modem business in addition to muted demand from education market segment contributed to the significant decline in revenues.

The only offset came from increased ASP pricing across segments with 32% increase in Notebooks and 7% increase in Desktop segment.

The Client computing group will see muted demand for the year because of the inflationary environment, supply chain constraints and inventory realignment by OEMs to reflect the intrinsic demand minus the Covid induced spike.
Gaming and Enterprise Tech Refresh are the two trends that will help the group revenues to surf and stabilise.
The product roadmap in later half of year will see intensive competition due to Raptor Lake and AMD Ryzen 7 hitting the markets.

Datacenter and AI (DCAI) proves to be The Revenue Guard for year 2022

DCAI revenue was up $1.1B or 22% at $6.0B due to continued demand from Hyperscalars and Enterprises. Hyperscalars are continuing to invest in DC infrastructures to enable their Metaverse ambitions whilst Enterprises are expanding and upgrading their infrastructure to sustain the data generation and providing analytics that is fast becoming a necessity from consumers.

Intel FPGA based IPUs also contributed to the growth where volume adoption is present at the major cloud players and the demand continues from peripheries including Networking and Automotive DCs.

A 3% ASP decrease was observed in segment and 26% volume increase due to product and customer mix indicating majority of sales from Intel Xeon Silver/Bronze.

We think that majority of sales went to enable the ‘Edge’ infrastructure.

This is the year of Datacenters and Cloud as reinforced by every chip and cloud company in their revenue forecasts. The demand will be coming from Hyperscalars, and Enterprises expansion accelerated by the supercomputing efforts from the companies, SaaS adoption and cloudification of consumer services.
Company’s Edge to Cloud chip portfolio offerings will help capturing the demand coming from the Edge and Networking market as 5G network deployments and MEC becomes more widespread
With the acquisition of Granulate (SaaS service that improves performance in cloud costs with its autonomous dynamic optimization service to unmodified customer workloads) – the company’s SW stack combined with HW would provide additional revenue streams

Network and Edge (NEX) segment rolls due to the ’Edge’ Expansion

NEX revenue was $2.2B up 22% YoY. Demand drivers for the segment came from cloud networking hardware and software tools.

The networking segment will strengthen as company has focused on launching silicon for software defined infrastructure – vRAN and ORAN for Network and Edge capturing the upcoming high-volume deployments from operators
Upcoming Sapphire Rapids can prove to be a breakthrough for Intel to establish its leadership as it claims to deliver up to two times capacity gains for vRAN and support advanced capabilities like high-cell density for 64T64R Massive MIMO

Accelerated Computing Systems and Graphics (AXG) revenue is at $219M

Intel marked its foray into Discrete Graphics with its Intel A series of mobile GPU which was launched in Spring this year. The Desktop GPU are expected to be launched in Market this summer. Company is expecting to do $1B+ business this year as it scales the range at Data Centre level with Ponte Vecchio.

Intel is entering highly competitive market where Nvidia reigns supreme. The company has launched only one Variant – Intel ARC for Mobile so far with 50+ design wins. The variant has performed well but it will take more time for Intel to get the mind share and the wallet share it is expecting! The other variants would be launching this summer and we sincerely hope that Intel promises on the momentum it has indicated for its AXG business.
The launch of Blockchain accelerator would help in capturing the peripheral accelerator business which is dominated by mostly DIYs or Nvidia
The resonance of synergies from having its own CPU+GPU+I/O and in-house foundry coupled with its proprietary SW technologies – Evo & XeSS would help Intel to produce inspiring performances from devices because of component efficiencies in the long run.

Mobileye logs record revenues at $394M

Mobileye grew 17% YoY to have its best quarter in earnings. The company has successfully demoed L4 robotaxi in Jerusalem and grew its number of testing sites to 10 cities across 3 continents with addition of Miami and Stuttgart. The commercial robotaxi services will commence at the end of 2022 in Munich and Tel Aviv.

The much-awaited IPO might debut later this year but Intel has so far kept to its delivery and promise schedule regarding Mobileye products
The revenue would probably see a considerable spike later this and early next year as the consumer and commercial L4 vehicles enter mass production

Intel Foundry Services (IFS) is on a promising start with $5B in deal value across nodes

The revenue of IFS was $283M. The team has 10 opportunities for its process and package offerings representing over $5B in deal value. The team has over 30 test chips for Intel 16 and is expecting Intel 3 and Intel 18a customer test chips to tape out later in 2022.

From foundry perspective the progress looks very optimistic considering on Intel 4, Meteor Lake has successfully booted and pre-production wafers have commenced on Intel 3.

The company also commented that it has enough substrate and Fab supply to meet customer’s demand.

The behemoth task of delivering 5 nodes in 4 years remains the crucial aspect to Intel for its every business. So far it looks like everything is going good for them but as the tape-outs occur for Intel 7 we would have better visibility on the yields.
Considering the past, we are cautiously optimistic on the outcome on the node delivery as the Wafer Equipment manufacturers have started flagging the delivery timelines.

ESG Commitment Updates: Intel announced initiatives to reduce its greenhouse gas emissions and develop more sustainable technology solutions by identifying greener chemicals, new abatement equipments, including using 100% renewable energy across their global operations by 2030 by investing $300M to achieve 4B KWh of energy savings and achieving net-zero greenhouse gas emissions in their global operations by 2040.

Outlook for Q2 2022

Company is expecting $18B for Q2 2022, a 3% decrease YoY as the inventory burns happen and the company readies itself for inventory reversals due to launch of Raptor Lake and Sapphire lake. But for Q2 the client computing will remain muted due to the macro factors heavily influencing consumer sentiments.

Global Cellular IoT Module Revenue Grows 58% YoY in Q4 2021; 5G, 4G Cat 1 Modules Fastest Growing

Quectel and Qualcomm led the global cellular IoT module and IoT chipset markets respectively in Q4 2021.
5G contributed to nearly a quarter of the cellular IoT module market revenue.
Automotive, router/CPE, industrial, PC and POS were the top five applications in the quarter.

San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – March 31, 2022

Global cellular IoT module revenue grew 58% YoY in Q4 2021, according to the latest research from Counterpoint’s Global Cellular IoT Module and Chipset Tracker by Application. China, the leading region in the cellular IoT module market, accounted for more than 40% of the revenue. However, India was the fastest growing (154% YoY) cellular IoT module market. 5G was the fastest growing (324% YoY) technology followed by 4G Cat 1 (105% YoY). Router/CPE, PC and industrial were the top applications for 5G.

Commenting on the market dynamics, Senior Research Analyst Soumen Mandal said, “Quectel, Telit and MeiG held the top three positions in the global cellular IoT module market, accounting for 40% of the total revenue in Q4 2021. For 2021, global cellular IoT module shipments and revenue grew by 59% and 57% YoY respectively.”

Quectel’s cellular IoT module revenue grew more than 100% YoY in Q4 2021. Strong partnerships, superior service and a wide range of product offerings are supporting its growth. Quectel launched a new ODM brand, Ikotek, targeting the US market. We expect it to help Quectel increase its footprint in North America and Latin America. Moreover, the products can be customized and designed according to the regulatory requirements of a project.

Telit made a strong comeback after a relatively weaker performance in recent history. Telit has been expanding its offerings, which is helping its revival. Telit NExT is providing flexible connectivity plans across 190 countries to take advantage of emerging business models and removing major bottlenecks for many IoT device vendors. In Q4 2021, Telit’s focus on Latin America to help customers migrate legacy 2G and 3G modules to 4G Cat 1 modules helped it become the leading module supplier in the region to complement its strong position in North America.

MeiG is another Chinese player which is making continuous progress and made it to the top three in cellular IoT modules, both in shipments and revenue. It is focusing more on AIoT and smart module-based higher-end applications such as router/CPE, intelligent cockpit, video recordings, industrial PDAs, drones and AR/VR. MeiG entered lower-end applications in 2021. This product mix of higher-end and lower-end modules helped MeiG increase revenue by more than 100% in Q4 2021.

Thales, Rolling Wireless, Sunsea, Fibocom and Sierra Wireless are other key players. Out of the top 10 players, Rolling Wireless and LG are focussing on the automotive segment only.

Thales is performing well in Europe, North America and Japan targeting smart meter, healthcare and industrial applications. Sunsea improved its performance in the global IoT module market, but it wasn’t enough to prevent its share from going down. The industry is growing at a faster rate compared to Sunsea’s growth. Fibocom is showing a stronger presence in 4G Cat 1 bis technology. However, Fibocom slipped out of the top five module vendors rankings due to weaker performance of NB-IoT modules.

Rolling Wireless’s and Sierra Wireless’s revenues increased 105% and 87% respectively. After spinning off from Sierra Wireless’s automotive division last year, Rolling Wireless quickly made it to the top 10 module vendors list. Rolling Wireless and Sierra Wireless have been successful in targeting specific applications, such as automotive and router/CPE respectively.

Global Cellular IoT Module Revenue Share by Module Vendor, Q4 2021

Source: Counterpoint Global Cellular IoT Module and Chipset Tracker by Application, Q4 2021

Automotive, router/CPE, industrial, PC and POS are the top five cellular IoT applications in terms of revenue. However, drones, PC and router/CPE are the top three fastest growing segments. Smart meters is another key segment but the lower ASPs of NB-IoT and 4G Cat 1 modules mean it is not among the top five IoT applications in terms of revenue.

Global Cellular IoT Module Vendor Shipment Share Rankings by Key Geographies, Q4 2021

Commenting on the regional performance of module vendors and pricing dynamics, Vice President Research Neil Shah said, “International players made a strong comeback in Q4 2021 after weaker performance in the previous quarter. Quectel, MeiG and Sunsea were the top three cellular IoT module players in China in terms of revenue. For the rest of the world, Quectel, Telit and Thales were the top three cellular IoT module players.”

Quectel is leading in most regions except Latin America, India and Japan. However, as these regions currently represent a small share of the global cellular IoT module market, it doesn’t have much impact overall. Japan’s preference for LTE-M works against Quectel.

In China, MeiG overtook Fibocom to become the second largest cellular IoT module vendor.

Neoway, another Chinese module vendor, maintained its leading position in the Indian market. Strong partnerships with smart meter manufacturers and telematics providers are helping Neoway to maintain its position.

The overall cellular IoT module ASP increased 7% sequentially due to supply chain constraints, especially in 4G modules. Chinese chipset players are trying to reduce the 5G module ASP for mass commercialization. However, 5G adoption hasn’t picked up as expected. We see 5G peaking in the global cellular IoT module market after 2025.

For detailed research, refer to the following reports available for subscribing clients and also for individual subscription:

Counterpoint tracks and forecasts on a quarterly basis 1450+ IoT module SKUs’ shipments, revenues and ASP performance across 80+ IoT module vendors, 12+ chipset players, 18+ IoT applications and 10 major geographies

*Note: We have updated regional ranking data as per industry feedback (as of Oct 2022) which indicates Quectel led in India shipment share during Q4 2021.

Background

Analyst Contacts:

Soumen Mandal

Neil Shah

Counterpoint Research

press(at)counterpointresearch.com

Related Reports:

Top

Global PC shipments fell 28% YoY in Q1 2023

Global PC Shipments by Vendor, Q1 2023

The last mile of inventory digestion since mid-2022

Major OEMs, especially Apple, had a tough time in Q1 2023

We foresee slow-paced demand recovery

Inventory Correction Continues while YoY decline improves

Another YoY double-digit percentage shipment contraction is expected in 2023

Related Posts

Record YoY Shipment Decline in Q4 2022

Global PC Shipments by Vendor, Q4 2022

Windows on Arm a key focus in 2023

Global PC Inventory Accumulation Since 2022

Global PC Shipment by Vendor, Q3 2022

PC market unlikely to grow until H2 2023

More shipment adjustments seen

Related Posts

Related Posts

Segment Reports:

Client Computing: Consumer and Apple headwinds chip away $1.4B from the Client Group

Datacenter and AI (DCAI) proves to be The Revenue Guard for year 2022

Network and Edge (NEX) segment rolls due to the ’Edge’ Expansion

Accelerated Computing Systems and Graphics (AXG) revenue is at $219M

Mobileye logs record revenues at $394M

Intel Foundry Services (IFS) is on a promising start with $5B in deal value across nodes

Outlook for Q2 2022

Related Posts

Coverage

Insights

Social media

Contact us

Term of Use and Privacy Policy