The pandemic-era PC boom is over

Article by Gadjo Sevilla | Apr 11, 2023

The news: Apple’s PC shipments declined 40.5% from Q4 2022 to Q1 2023, reflecting that the mounting malaise in the PC sector has finally caught up with Cupertino, per Bloomberg.

Apple stock was down by as much as 3.12% to $161.65 Monday on the news of decreased shipments.

PC industry sales plummet: Shipments by all PC makers slumped 29% to 56.9 million units in the same time period—falling below the level of early 2019.

The drop in PC demand is attributed to economic uncertainty and diminished consumer demand.
Lenovo and Dell registered drops of more than 30%, while HP was down 24.2%, and Asus dealt with a 30.3% reduction.
Samsung, which provides memory for desktop and laptop PCs, said it’s cutting memory production after reporting its slimmest profit since the 2009 financial crisis.
Foxconn, the world's largest contract manufacturer of electronics, reported a 21% YoY fall in revenue in March.
Similarly, TSMC, the world’s largest foundry, posted its first revenue drop in nearly four years, per The Wall Street Journal.

Apple losing its shine: Apple’s drop in shipments is the most dramatic among PC manufacturers, especially considering it was the outlier in the segment in Q3 2022.

The MacBook maker had a 13.5% market share of the PC market as of Q3, per IDC, and enjoyed staggering 40.2% growth YoY when its competitors were falling behind.
Transitioning to the second-generation M2 Apple Silicon chips, Apple seemed to be coasting on the demand for new MacBooks and desktops.

Our take: We’ve seen the end of the pandemic’s PC boom, when the transition to remote work and learning fueled unparalleled demand and led to notebooks, desktops, and peripherals like cameras being in short supply.

There is a potential for a rebound in the PC sector. Apple is preparing to launch the new M3-powered MacBook Air in the summer, which could drive adoption.
IDC is expecting growth in PC sales to be fueled by an aging PC install base updating to Microsoft Windows 11 devices.
Pushing new devices doesn’t solve the growing glut of PC inventory. Discounting might be able to move inventory, especially leading into the summer and back-to-school sales.