PC Market Holds Steady, but CPU Shortages a Concern, Analysts Say

Gartner and IDC said shipments of PCs stayed relatively flat in the third quarter, but that the impact of Intel chip shortages remains to be seen.

PC sales

The global PC market is continuing to hold steady after several years of contraction, but ongoing concerns about a shortage of Intel processors as the industry slides into the high-demand holiday buying season could have an impact as the year comes to a close.

According to analysts with IDC and Gartner, PC shipments worldwide stayed relatively flat in the third quarter after showing the strongest numbers in six years in the second quarter. Gartner analysts this week said shipments increased 0.1 percent in Q3 while IDC found a 0.9 percent decline, which analysts there said was better than expected. Gartner said 67.2 million systems shipped in the third quarter; IDC put the number at almost 67.4 million.

Overall, the PC market was helped again by ongoing demand for new systems by corporations continuing to upgrade to Windows 10, according to Gartner analysts. Mikako Kitagawa, principal analyst at Gartner, said in a statement that the “Windows 10 upgrade cycle [will] continue through 2020 at which point the upgrade demand will diminish. Despite the third quarter typically showing strong consumer PC sales due to the back-to-school season, weakness in consumer PC demand continued, offsetting the strong sales in the business market.”

Both market research firms showed Lenovo holding a slim lead over rival HP with 23.6 percent to 24 percent market share, with HP holding 21.8 percent to 22.8 percent share. Dell came in third in both the IDC and Gartner lists. Gartner had Apple in fourth and Acer and Asus tied for fifth, while IDC had Acer listed fourth with 7.2 percent of the market and Apple right behind with 7.1 percent. Both firms had the top five continuing to dominate the industry, with more than two-thirds of the market.

Intel Struggles to Keep Up With Demand

However, even as the numbers in the industry continue to remain steady, the upcoming holiday season could prove problematic. Demand for low-end consumer systems will increase as the shopping season heats up, and Intel, which holds more than 98 percent of the global PC chip market, has for months reportedly struggled to keep up with demand.

In an open letter late last month, Intel CFO and interim CEO Bob Swan admitted that the unexpected upswing in PC demand combined with growth in the company’s data-centric businesses has put pressure on the company’s manufacturing capabilities and a squeeze on available 14-nanometer processors. Swan said Intel was taking steps to meet demand this year while it continues to transition from a 14nm to 10nm manufacturing process. Intel expects 10nm chips to be in volume production next year after several delays.

He said one of the steps the company is taking is to prioritize Xeon data center chips and high-end PC Core processors, adding that “supply is undoubtedly tight, particularly at the entry level of the PC market.”

Gartner’s Kitagawa said that any CPU shortages did not seem to impact the third-quarter PC numbers, but said they could “influence the PC market moving forward with price increases and changes to the vendor landscape. While this shortage will have some short-term impacts, Gartner does not see any lasting impact on overall PC demand.”

The chip shortage will continue into next year, Kitagawa said, and while Intel is prioritizing high-end PC CPUs and those for business systems, rival Advanced Micro Devices—which has seen a resurgence due in part to the popularity of its Ryzen PC chips based on its “Zen” microarchitecture—could help pick up the slack in the other parts of the PC market that Intel is not focusing on.

OEMs like Lenovo, HP and Dell already offer PCs powered by Ryzen chips.

Jay Chou, research manager with IDC’s Personal Computing Device Tracker, echoed Kitagawa’s remarks, saying in a statement that “AMD supply could help with processor demand somewhat, but it will also take time for OEMs to spec in more models."

After decades of dominance in the PC chip space, Intel is seeing growing competition not only from AMD but also from Arm-based chip makers, which see an opportunity in the market for small and highly power-efficient systems-on-a-chip (SoCs) in laptops. Vendors like Lenovo are rolling out Always Connected PCs, a device class from Microsoft hardware partners that use Arm-based chips similar to those found in most smartphones and tablets to drive thin-and-light form factors and longer battery life.