A new report from Digitimes paints a dire picture of the PC industry in 2022. It was able to achieve record sales for the past two years in the pandemic. However, there are now several signs that the PC market is heading into a slow decline in sales. Due to this downturn, Intel is alleged to be cutting prices for customers who sell Intel-based PCs. Although the cut isn’t huge — just five percent — what’s notable is sources say it will be the second cut this year. That’s unprecedented for Intel. In addition, another first is it’s cutting prices on its high-end Alder Lake CPUs. Typically it only slashes prices on its previous era CPUs like Tiger Lake, or specific CPUs that serve a niche market.
The report is based on sources in the supply chain who talked to Digitimes per Tom’s Hardware. Sources said Intel previously cut prices on CPUs it sells to PC makers 10 percent in Q2. Now, it’s looking to follow that up with another reduction in Q3. This will be applied to both Core i5 and i7 CPUs, which is a novel situation. Despite Intel’s drastic price cut, PC shipments in the latest quarter were “far weaker than expected,” according to Digitimes. In addition, the report states one of the Big 5 PC companies will reduce its pull-in orders for July by 70 to 80 percent. In addition, China just held its 618 shopping festival, which is like Black Friday in the US but it lasts 18 days. Digitimes says sales this year were 20 to 30 percent less than last year. This was also confirmed by Reuters for Chinese e-commerce giant JD.com. The festival’s slower sales are attributed to the lingering effects of COVID-19 lockdowns on China’s economy.
IDC’s prediction for the future of the PC market from Q3, 2021.
Digitimes mostly directed its inquiry at the Big 5 PC makers which make consumer PCs. However, it noted the mood is also dour in the enterprise PC world. Along those lines, it spoke with the president of a big ODM. This is similar to an OEM in that it creates PCs and products for other companies. He said he hoped the downturn remained in the mainstream part of the market, and didn’t expand to gaming PCs. If that happens, he said, “the PC market will be in big trouble.”
News of an unprecedented price cut comes just two weeks ago after Intel announced a hiring freeze for its client PC division. This division makes up the lion’s share of Intel’s sales, and the hiring pause was confirmed by Reuters. Also, in the first quarter of 2022 it was reported that PC and GPU shipments suffered deep declines. That is typical for the first quarter though, as it comes after the holiday period when more people are inclined to go shopping. Still, research firm IDC predicted 2022 was going to be a tough year for the PC market. At the end of 2021 it estimated PC shipments would decline almost five percent. We noted at the time, “IDC predicts the PC market will slow considerably in 2022.”
The big question now is whether or not AMD will follow in Intel’s footsteps. Both companies are currently gearing up to launch their next-gen platforms in the coming months. The same goes for Nvidia as well. Given the timing, they are likely eager to clear out any remaining inventory.