With smartphones and the hoteling of offices on the upswing, PC sales were once thought to be on the downswing. It would be a world of tablets and mobile phones in the future. But the pandemic changed all that. PC sales have been soaring while chip shortages are pushing up prices and causing concern throughout the industry.
In Europe, where rolling lockdowns afflicted country after country, in 2020, there was a 43 percent sales increase year over year of notebook PCs, according to new data from GfK. And while enterprise IT departments all but shut down spending during the early months of the COVID-19 pandemic, working-from-home consumers created a surge in demand, spurring the charge for new computers.
“There was an overwhelming demand for electronics in general,” acknowledged Josh Wanderman, GfK´s vice president of global market insights, “but in particular for laptops and notebooks.” And that helped create a shortage of processors.
“For the electronics world, COVID was a one-two punch, first due to manufacturing shutdowns, and second was the ‘work-from-home’ surge of demand for laptops, tablets, etc.,” said Steve Oliver, vice president of corporate marketing and investor relations at Navitas Semiconductor. That, in turn, drove resulting 26- to 52-week lead times for silicon chips, he said.
Retailers can expect the trend to continue well into this year, said Wanderman, with a 12 percent rise in unit sales of laptops in the first 10 weeks of 2021 in the five largest European countries (the U.K., Germany, France, Italy, and Spain).
Meanwhile, chip and, in particular, CPU shortages have helped drive up prices. Dollar sales for the same period increased by 28 percent, a reflection of the shortages and consumer shift to faster and more premium-priced laptops. It also revealed consumer sentiment that home-based work and study would become more of a long-term situation, justifying greater investment in the technology.
Similar trends were seen in the U.S. last year, with overall PC sales, including desktops, up 13.1 percent in 2020 over 2019, according to IDC.
As a result, worldwide semiconductor revenue totaled $466.2 billion in 2020, an increase of 10.4 percent compared to 2019, according to Gartner, Inc. It was led by demand for graphics processors, 5G chipsets, and PC demand, according to Gartner. Simultaneously, the chip shortage has sparked concerns over the supply of not only laptops but also everything from communications equipment to cars.
It’s why Michael Dell attended a virtual semiconductor summit initiated by the White House on April 12. In a statement to Dealerscope, the company underscored the fact that semiconductors are critical to everything from vaccine deployment to remote learning, and that a long-term solution to the semiconductor problem is needed.
But advanced chip fabrication plants cannot be built overnight. “There is very little slack in manufacturing capacity, plus a minimum 12-week throughput time, so it could be two to three quarters before supply chains recover,” said Navitas’ Oliver.
On the other hand, “every government around the world sees this as a national security issue and as a result is throwing a lot of money at this,” said GfK’s Wanderman, predicting that while chip shortages won’t ease up in the next couple of months, things might look better by the end of the year.
In the meantime, how high will prices for laptops and notebooks go?
While it’s difficult for anyone to predict, there have been threatening signs of inflation. U.S. consumer prices rose sharply in March, for example. The Labor Department reported that its consumer-price index — which measures what consumers pay for everyday items including groceries, clothes, recreational activities, and vehicles — jumped 2.6 percent, the biggest 12-month increase since August 2018. While nearly half of that increase was due to a 9.1 percent increase in gasoline prices, it has caused the Federal Reserve, among others, to focus on inflation concerns.
Meanwhile, “COVID-19 has had an unprecedented impact on IT sales, changing consumer behavior for the long term,” says GfK’s Wanderman. He said some of the continued demand for laptops is the result of pent-up demand among consumers who were unable to get the products they wanted earlier. They’ll have even more models to choose from: In April alone, Acer, Dell, Microsoft, and Razer either released or announced new laptop models for the spring. So the price increases won’t continue forever, he said: “At some point, that growth is going to go down.”
- In Europe in 2020, there was a 43-percent sales increase year over year of notebook PCs, per GfK.
- The five largest EU countries experienced a 12-percent rise in unit sales of laptops in the first 10 weeks of 2021.
- Analysts expect continued high demand and global chip shortages through the rest of the year, even as people head back to offices.