Tighter IT Budgets Hit Global Laptop, PC Shipments | Biden News

Ishan Dutt, senior analyst at Canalys, said corporate spending supported weak sales of personal computers during the first half of the year as higher prices and rising interest rates cooled consumer demand.

Now, with businesses curbing IT budgets as they grapple with persistent inflation and higher borrowing costs, the decline in PC spending is likely to extend to 2023, Mr. Dutt said in a research note.

Instead of making new purchases, he said, many companies are looking to keep their workers’ current desktops and laptops longer through maintenance and upkeep. “Businesses are exercising greater caution by extending hardware refresh cycles as they weather the current uncertainty,” Mr. Dutt said.

International Data Corp., a technology industry research firm, reported similar declines in third-quarter consumer PC sales. It said average selling prices for desktops and laptops climbed steadily throughout 2021 and increased earlier this year, as a result of higher component costs and ongoing supply chain disruptions. More recently, IDC said, average prices have started to come back down. The company is expected to report business PC sales next week, IDC research director Jitesh Ubrani said.

So far, Mr. Ubrani said, big businesses haven’t started cutting hardware budgets, “although we’ve heard cases where they’ve been delayed,” he said. “This unfortunately weakens the short-term outlook,” Mr. Ubrani said.

IDC estimates that many of the market’s largest PC companies saw double-digit declines in sales during the third quarter, citing key enterprise technology vendors such as Lenovo Group. Ltd.

HP Inc.

and Dell Technologies Inc.,

among others.

Gartner Inc.,

An IT research and consulting firm, estimates that global IT spending will grow by just 3% this year, compared to more than 10% in 2021, dragged down by weaker spending on computers.

On Monday, demand for laptops among large businesses fell sharply in the third quarter, while overall global PC sales saw their steepest decline in more than two decades, Gartner said.

In the third quarter, global shipments of personal computers fell 19.5% from a year ago, Gartner reported.

John-David Lovelock, Gartner’s chief forecaster, said it estimates that worldwide business spending on PCs will fall 3.7% by the end of the year, compared to 2021.

Mr Lovelock said the declines come after an “extended sales cycle for businesses”, which have raced to supply workers with laptops and other devices during the Covid-19 lockdown and extended remote and hybrid workplace models. He expects business spending on PCs to grow again in 2023.

“With the mandatory technology refresh that took place in 2020 to enable work from home and remote education, consumers are stuck with the technology they already have,” including many of the devices they use to work from home, said Mr. Lovelock.

Weaker demand for PCs is already rippling through the tech industry.

Advanced Micro Devices Inc., a maker of computer chips, last week cut its revenue forecast for the latest quarter, citing weaker-than-expected demand for personal computers. The company on Thursday said it expected about $5.6 billion in sales in the quarter that just ended, about $1.1 billion less than it had previously forecast.

Intel corp.

AMD’s main competitor, in the second quarter reported its biggest revenue decline in more than a decade, also blaming a slowdown in computer sales.

Last week, enterprise technology trade group CompTIA said the number of IT jobs from US employers last month fell 12% from August, to about 300,000, marking the first decline since the start of the year.

Write to Angus Loten at angus.loten@wsj.com