Despite skyrocketing demand for laptops as people increasingly work from home, the PC industry suffered its largest drop in shipments in four years during Q1. Early on in the COVID-19 pandemic, experts predicted that the sector would take a hit. However, no one really knew how bad it would be.
A new report from Canalys shows how extensive the damage is. In the first quarter of 2020, PC shipments plummeted by 8 percent year-over-year. The drop is due to complications of the COVID-19 pandemic such as component shortages and factory shutdowns. It’s extremely disappointing after the industry came off its first year of growth in eight years in 2019.
Big Five Facing Hardship
The supply chain disruptions currently facing the PC industry haven’t spared anyone. The electronics industry as a whole has been severely affected. That’s largely due to the fact that many suppliers are located in China—the original epicenter of the coronavirus crisis.
While the virus has now spread globally, the world’s economy is still feeling the effects of shutdowns in Asia.
The five biggest PC manufacturers saw varying degrees of disruption. Of them, Apple suffered the worst drop. Its shipments fell by a staggering 21 percent compared to the start of 2019. Likewise, HP and Acer both saw declines of more than 10 percent year-over-year. Even the PC world’s frontrunner, Lenovo, saw a dip of 4.4 percent. There was one bright spot in the quarter—Dell. The firm actually had a 1.1 percent year-on-year growth.
The industry-wide decline of 8 percent is the largest to plague the PC world since the beginning of 2016. At that time, Canalys reported a 12 percent drop.
Along with factory shutdowns, a big reason for the decline is a shortage of Intel components. Although the chipmaker is maintaining an on-time delivery rate upwards of 90 percent, COVID-19 struck just as it began transitioning to 10-nanometer manufacturing. That poor timing has led to the chip shortage.
Temporary Life Support
If there is one good thing to take away from the first quarter, it’s that PC sales are actually up. Increased demand from consumers going into quarantine has helped support the PC industry. However, that won’t last forever.
Rushabh Doshi, research director at Canalys, says, “The slowdown in supply met with accelerated demand, as businesses were suddenly forced to equip a newly remote workforce, placing urgent orders for tens of thousands of PCs.”
Unfortunately, the future doesn’t look bright for the industry at the moment. The level of demand currently supporting the market will quickly dissipate in the wake of the coronavirus pandemic. On top of that, consumers and businesses alike will be looking for ways to cut back on spending to better address the economic fallout of COVID-19.
Ishan Dutt, another analyst at Canalys, says, “We expect to see a significant downturn in demand in Q2 2020. With factories now reopened and virtually up to full speed in China, PC vendors will face a challenge to manage supply chain and production correctly over the next three to six months.”