At the end of January 2023, two statistical reports on global PC shipments dropped heavy “bombs” in the entire technology circle.
The international data research organization Counterpoint Research released a report stating that in the fourth quarter of 2022, global PC shipments fell by 27.8% year-on-year to 65.2 million units, a record low. Almost at the same time, the international data company IDC recently released a report. In the fourth quarter of 2022, global PC shipments will decline sharply. Data show that in the fourth quarter, global PC shipments were 67.2 million units, a year-on-year decrease of 28.1%.
In response, Jitesh Ubrani, research manager at IDC, said in a statement: “Due to excess channel inventory over the past few months, average selling prices in many channels have also declined in an effort to stimulate demand. Despite these efforts, finished PCs and zero Inventory management of components will still be a key issue in the next few quarters, and may further affect the average selling price.”
Before that, many people’s impression of the PC industry was still in 2020~2021 Affected by the epidemic, global PC shipments hit a new high in nearly 10 years in 2021, stimulated by the rigid demand for telecommuting and education. However, such a reversal in less than a year not only surprised consumers, but also surprised technology giants. They are frustrated.
tech giants with heavy losses
Global PC shipments have fallen, and technology giants have become the targets of the impact.
On January 27, the last day of the Spring Festival holiday, Intel handed over its worst financial report in the past seven years, with revenue of 14 billion US dollars, far below market expectations, and a year-on-year decrease of 32%. In the case of a year-on-year decline in revenue for a year, Intel turned from profit to loss for the first time this quarter, and recorded the worst single-quarter loss in history. The day after the financial report was released, Intel’s stock price fell nearly 9%. By January 29, the stock price hadn’t improved much, hovering around $28 a share. While the stock price continued to fluctuate, Intel’s market value once fell by US$8 billion (54.2 billion yuan). In fact, before the release of the financial report, Intel’s stock price has set a record of continuous decline for 4 consecutive months since June 2022. The stock prices of Intel’s three equipment suppliers KLA, Applied Materials, and Lam Group also fell by 2%-7%. wait.
Intel is obviously aware of the chills passed by the secondary market, and its forecast for the next quarter’s earnings is shockingly conservative. According to Intel, Q1 revenue in 2023 is expected to be US$10.5 billion to US$11.5 billion, which is significantly lower than market expectations.
In fact, it’s not just Intel. In the past year or so, the stock prices of AMD and NVIDIA have also been consolidating at low levels for a long time. Take Nvidia as an example. The third-quarter financial report continued the decline, with revenue down 17% year-on-year and 12% quarter-on-quarter. As a company with a certain right to speak in the field of PC memory chips, Micron warned that the demand for PCs is weak and the market is full of challenges. Even for AMD, whose revenue and profits look good, its CEO Lisa Su said that AMD’s outlook on the PC business in the coming quarters tends to be conservative.
In addition to the above-mentioned major PC giants, Microsoft said that the slowdown in production and the deterioration of the PC market have resulted in a loss of $300 million in its Windows OEM business. This business provides OEM versions of Windows systems to PC manufacturers. In addition, South Korean memory chip maker SK Hynix is considering whether to cut its capital spending in 2023 by a third.
Chip glut behind PC weakness
The entire semiconductor industry is like a pair of precise dominoes. When the PC domino is crumbling due to weakness, it is enough to trigger a series of reactions in the entire semiconductor industry. The most direct impact is the increase in chip inventory.
The time between chip orders and deliveries has been shorter than usual in recent months, according to Susquehanna International Group LLP. According to an analysis by UBS, by measuring the inventory level by the number of days, it can be found that chip inventory is at the highest level in more than a decade, and even domestic chip companies have not been able to escape the cold wave.
Not long ago, the domestic IC design sector leader and A-share image sensor leader Weil’s performance forecast revealed a corner of the industry’s “destocking”: the performance forecast was released on the evening of January 13, and the net profit in 2022 will decrease by 73.19% year-on-year~ 82.13%. At the same time, it is estimated that the provision for inventory depreciation last year will reach 1.34 billion to 1.49 billion yuan, and the provision has been increased month-on-month. At the same time, Chipfriend Micro, a power management chip company, expects to achieve a net profit of 80 million to 100 million yuan last year, a year-on-year decrease of 50.32% to 60.25%. Some local semiconductor distributors in Shenzhen revealed that the current chip design manufacturers generally actively control inventory, and there is often the embarrassment of “refund upon arrival”. Distributors will often discuss with upstream and downstream customers about solutions such as “half the order and extend the delivery time”.
Chip companies that have bucked the trend and expanded production
Under the risk of global economic recession, many companies are becoming more and more cautious about IT spending, and personal computer updates have also slowed down. However, for a capital- and technology-intensive industry such as semiconductors, industry weakness has become Opportunities for enterprises to expand production against the trend.
Intel, which has poor financial reports, announced plans to build two new cutting-edge chip factories in Liking County, Ohio, USA, with an initial investment of more than 20 billion US dollars, which will be part of Intel’s IDM 2.0 strategy. In addition to Intel, TSMC, the global foundry leader, also announced in December last year that it would increase its planned investment of US$12 billion to US$40 billion and build two factories in Phoenix, which are scheduled to be put into production in 2024 and 2026 respectively. 4nm and 3nm chips.
In view of the fact that semiconductor resources have gradually become strategic materials, the medium and long-term supply and demand status of wafer foundries will gradually lean towards the multi-regional production capacity layout. 5 plants in the United States, 6 plants in mainland China, 4 plants in Europe, 4 plants in Japan, South Korea, and Singapore. Although the problem of insufficient production capacity in each region has been solved through the layout of multiple production capacities, such expansion has intensified people’s expectations for the terminal market with reduced demand. Worries for the semiconductor chip industry.
In general, in the past two years, major chip manufacturers have expanded production frantically. But now the global economic growth is slowing down and demand is weakening, so there is a structural oversupply phenomenon, which means that the global semiconductor chip industry may take a long time to absorb production capacity.