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CPU Shortage To Bring New Challenges to PC Market

PC Market

Worldwide PC shipments totaled 67.2 million units in the third quarter of 2018, a 0.1 percent increase from the third quarter of 2017, according to preliminary results by Gartner, Inc. Despite the global market has shown modest stability for two consecutive quarters, the ongoing concerns about a shortage of Intel processors as the industry slides into the high-demand holiday buying season could have an impact by the end of this year and beyond, the research firm said.

EMEA, Asia/Pacific and Japan experienced growth in the third quarter of 2018, while the U.S. and Latin America declined. Latin America showed the steepest decline of 8.5 percent after showing some stabilization earlier in 2018. However, these results are in line with Gartner’s expectations in view of CPU supply constraints for the rest of the year.

“The PC market continued to be driven by steady corporate PC demand, which was driven by Windows 10 PC hardware upgrades. We expect the Windows 10 upgrade cycle to continue through 2020 at which point the upgrade demand will diminish,” said Mikako Kitagawa, principal analyst at Gartner. “Despite the third quarter typically showing strong consumer PC sales due to the back-to-school season, weakness in consumer PC demand continued, offsetting the strong sales in the business market.”

“Although the third-quarter results did not show any material impact, the Intel CPU shortage could influence the PC market moving forward with price increases and changes to the vendor landscape. While this shortage will have some short-term impacts, Gartner does not see any lasting impact on overall PC demand. Current expectation is that the shortage will continue into 2019, but Intel will prioritize the high-end CPU as well as the CPUs for business PCs. In the meantime, AMD will pick up the part of the market where Intel cannot supply CPUs.”

Lenovo secured the top spot in the worldwide PC market with growth of 10.7 percent, driven by regained traction in the commercial market and its joint venture with Fujitsu (see Table 1). HP Inc. dropped to the second position, but recorded its fourth consecutive quarter of year-over-year shipment growth. HP showed strong desktop shipment growth, which indicated strong demand among corporate buyers. 

Table 1) Preliminary Worldwide PC Vendor Unit Shipment Estimates for 3Q18 (Thousands of Units)

Company 3Q18 Shipments 3Q18 Market Share (%) 3Q17 Shipments 3Q17 Market Share (%) 3Q18-3Q17 Growth (%)
Lenovo* 15,889 23.6 14,357 21.4 10.7
HP Inc. 14,629 21.8 13,773 20.5 6.2
Dell 10,737 16.0 10,200 15.2 5.3
Apple 4,928 7.3 5,385 8.0 -8.5
Acer Group 4,074 6.1 4,322 6.4 -5.7
Asus 4,013 6.0 4,774 7.1 -15.9
Others 12,934 19.2 14,345 21.4 -9.8
Total 67,206 100.0 67,156 100.0 0.1

Source: Gartner (October 2018)

Dell experienced its 10th consecutive quarter of shipment growth, with growth of 5.3 percent in the third quarter of 2018. Dell did well in EMEA, Asia/Pacific and Japan, showing growth in both desktop and mobile PCs in these regions. However, Dell’s shipments declined in Latin America and the U.S. due to the weakness in the mobile PC market.

In the U.S. PC market, shipments declined 0.4 percent compared with the third quarter of 2017 (see Table 2). While desktop shipments were flat, mobile PC shipments slightly declined compared with a year ago. The major driver of the market continued to be business PC demand. “The third-quarter results confirmed the continuous shift to Chromebooks among U.S. K-12 educational institutions. While PCs are still the main device for higher education students, most students already have PCs before they head off to college, so there is limited demand for new PCs from back-to-school sales. Overall, Chromebooks experienced double-digit growth in the U.S., but Chromebooks are not included in the PC market statistics,” said Ms. Kitagawa.

HP Inc. continued to be the market leader in the U.S. with 30.7 percent of the market. Despite experiencing a decline of 0.8 percent, Dell remained in the No. 2 position. Dell may have been impacted by the weakness in mobile PC demand in the U.S. due to its specific target of the high-end consumer market, including gaming.

Table 2) Preliminary U.S. PC Vendor Unit Shipment Estimates for 3Q18 (Thousands of Units)

Company 3Q18 Shipments 3Q18 Market Share (%) 3Q17 Shipments 3Q17 Market Share (%) 3Q18-3Q17 Growth (%)
HP Inc. 4,531 30.7 4,377 29.5 3.5
Dell 3,831 25.9 3,860 26.0 -0.8
Lenovo* 2,276 15.4 1,863 12.6 22.2
Apple 2,022 13.7 2,189 14.8 -7.6
Microsoft 602 4.1 591 4.0 1.9
Others 1,510 10.2 1,949 13.1 -22.5
Total 14,771 100.0 14,828 100.0 -0.4

Source: Gartner (October 2018)

PC shipments in EMEA reached 18.9 million units in the third quarter of 2018, a 1.1 percent increase year over year. Consumer PC demand overall continued to decline, while sales of business PCs remained the one thing sustaining the market. However, demand driven by Windows 10 upgrades in Western Europe is expected to slow going forward.

PC shipments in Asia/Pacific totaled 24.3 million units, a 0.3 percent increase from the third quarter of 2017. PC demand from the commercial segment buoyed the market. Though the consumer segment continued to be challenging in terms of unit sales, demand remained at the midrange to premium price points, signaling purchases from consumers who look for features, functions and quality built for specific needs. Shipments in China grew 0.8 percent in the third quarter of 2018, showing a continued gradual recovery from a steady decline over the past few quarters, said Gartner.

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