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Global PC sales, which had been growing at the peak of the pandemic, have started to decline again. Sales of computers, which include laptops and tablets, saw an unexpected jump during the peak of the pandemic as millions worked remotely. However, demand seems to be easing again as things return to normal and people return to their jobs and schools.
However, there are several other factors that pose challenges for the computer market, the supply chain crisis being one of the biggest. It has to overcome a number of obstacles, including a supply chain problem. The industry therefore needs to overcome these challenges to bounce back from the current situation.
Global PC Shipments Hit New Low
Several industries have been left battered by the COVID-19 outbreak, but some have also managed to be big beneficiaries of the pandemic. One of them that benefited the most was the computer sector. However, things have changed again, and this year’s sales are in free fall.
According to a Gartner report, global PC shipments totaled 68 million units in the third quarter of 2022, a 19.5% year-over-year decline. This is the sharpest drop in nine years and the second straight quarter of double-digit decline. PC shipments totaled 72 million in the second quarter, registering a 12.6% year-over-year decline.
PC sales began to slow last year after the economy began to reopen. This year was particularly worse as sales were down dramatically in all of the first three quarters of the year.
The main reason behind the decline in the third quarter was the lack of demand for computers during the back-to-school season and shrinking business purchasing.
Challenges galore
Industry leaders have suffered the most from the decline in demand for computers. The top three computer manufacturers also had the biggest loss during this time, despite the fact that their ranking did not change.
Lenovo Group Limited (LNVGY – Free Report), which is still the market leader, saw its market share increase in the third quarter of 2022 to 23.7%. However, on a year-over-year basis, LNGVY recorded a 16% decline in sales. This is also the fourth straight quarter of sales decline for Lenovo Group Limited.
HP Inc. (HPQ – Free Report) held its position as the second largest in terms of market share. HP now holds 18% of the market share but it managed to sell only 12.7 million units. This is also the second consecutive quarter that HP had less than 20% market share. Additionally, HP recorded a 26.5% year-over-year decline in sales in the third quarter.
Dell Technologies Inc. (Dell – Free Report), the third largest player, saw its shipments fall more than 20% in the third quarter of 2022, after a 5.2% decline in the previous quarter.
Apple Inc. (AAPL – Free Report) is the only company among the top five to post a jump in shipments. AAPL’s shipments grew 7% year over year in the third quarter after recording a 9.3% jump in the previous quarter. AAPL currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The US, one of the largest markets, saw a sharp decline in PC sales in 2022. The US PC market fell 17.3% in the third quarter, recording five straight quarters of declines. A slowdown in laptop sales is affecting the overall PC market in the US, although demand for desktops has shown modest improvement.
The computer industry faces several challenges. Inflation was a major concern in the United States, which saw people cut back on expensive goods. The third quarter saw the supply chain crisis finally subside, but high inventory is now a fresh concern as demand continues to decline in both the consumer and business markets.
Lower PC demand is also affecting semiconductor sales now. Several chip makers like Advanced Micro Devices, Inc. (AMD – Free Report) said weaker demand for PCs is affecting its earnings. AMD also said that poor PC demand is having a negative impact on its outlook.
Overall, 2022 was quite difficult for the PC market and experts believe that the market will not improve before 2023. Given the ongoing challenges and weak demand, 2022 is likely to see a 13% annual drop in global PC shipments, according to Gartner. The company had previously predicted a 9.5% year-over-year decline in sales
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