Notebook Computers


2022-04-11

Demand for Consumer Electronics Weak, Supply Chain Shortages Ease in 1H22, Says TrendForce

According to TrendForce, the consumer electronics market will feel the brunt of the weakening stay-at-home economy, the pandemic in China, international tensions, and rising inflation in 1H22. Coupled with the traditional off-season, demand for relevant applications such as PCs, laptops, TVs, and smartphones has cooled significantly and downstream customers have successively downgraded their shipment targets for the year, while demand for automotive, Internet of Things, communications, and servers products remain good. At the same time, the supply chain will build higher inventories in general to mitigate the risk of material shortages due to transportation impediments induced by the spread of the pandemic and the ongoing war between Russia and Ukraine.

1. Foundries

Due to the prolonged lead-time of semiconductor equipment and limited new capacity in 1Q22, the overall foundry capacity utilization rate remains fully loaded, in particular, component mismatch issues continue for parts produced at mature nodes (1Xnm~180nm). Looking forward to the second quarter, although growth in global wafer production capacity remains limited, due to weak demand for end products, continuing international tension, and China’s forced lockdowns and supervision due to the recent spread of the pandemic, there is an opportunity for the supply chain to obtain a more adequate supply of wafers that were previously squeezed by production capacity.

2. Servers

The overall supply of key server materials improved slightly in 1Q22. In addition, due to increasing orders from ultra-large data centers, the general supply cycle of NetCom chips such as LAN IC/chip remains as long as approximately 40 weeks but the demand gap can be bridged by instituting urgent order fees, mitigating actual impact. As the aforementioned situation eases, additional orders for ODM motherboard production are moving briskly, prompting continued stocking of FPGAs and PMICs materials. NetCom chips are also overstocked and the overall market has a reached a “rich get richer” mindset. Material shortages at second-tier ODMs still stifle the production of motherboards for a small number of customers but does not affect the overall server market supply. With improvements in material supply, server shipments will increase significantly in 2Q22, growing an estimated 15.8% QoQ to 3.6 million units.

3. Smartphones

Affected by sluggish seasonal demand, the Russian-Ukrainian war, and rising inflation, market demand has cooled. Thus, material delivery issues in the supply chain have eased compared to 2H21. Although there is still a shortage of certain components, most of these shortages are concentrated in mid/low-end smartphone products. The lead time for 4G and low-end 5G SoCs is approximately 30 to 40 weeks, which is limited by production capacity planning. Since last year, the demand of the mid/low-end mobile phone market has not been met. This is followed by A+G sensors with a lead time of approximately 32~36 weeks and OLED DDIC and Touch IC with a lead time of 20~22 weeks. The production volume of smartphones in 2Q22 will be affected by the interaction of the aforementioned factors with a forecast production volume of 323 million units, or only 6% QoQ, which is lower than the performance of previous years.

4. Notebooks

Also affected by weakening end market demand, discounting client SSDs that are no longer oversupplied, Type C IC, WiFi, and PMIC all currently boast long lead times, with Type C IC the lengthiest at 20~25 weeks. However, compared with TrendForce’s assessment at the beginning of this year, the delivery cycle has not grown longer, so the lead time of these three types of products is expected to improve by the end of 2Q22. As supply chain backlog continues to improve, shipments of notebook computers (including Chromebooks) is expected to reach approximately 55.1 million units in 2Q22, down 0.7% QoQ.

5. MLCC Passive Components

From the perspective of other key components, taking MLCC as an example, demand for major consumer electronic products such as mobile phones, laptops, tablets, and TVs declined significantly in 1Q22, resulting in high consumer product specification MLCC inventory levels held by original suppliers and channel agents and this situation may continue into 2Q22. At present, the stocking momentum for automotive and industrial MLCCs has steadily increased, while consumer specification products have yet to escape the pattern of oversupply. In 2Q22, the MLCC market has the opportunity to alleviate its component mismatch issues through gradually increased production capacity and automotive and server ICs supplied by semiconductor IDM companies, driving stocking momentum at automotive power, server, fast charging, and charging/energy storage equipment OEMs. Vehicle and industrial MLCCs have the opportunity to become primary growth drivers in 2Q22 with Murata, TDK, Taiyu and Yageo as the primary beneficiaries. Consumer specification products, which account for the bulk of MLCC production from suppliers in Taiwan, South Korea, and China, may face continued market demand weakness in 2Q22 due to a slowdown in demand for mobile phones and laptops and continuing inventory adjustment by branded companies and ODMs.

Looking forward to 2Q22, not including servers, demand for end products related to the consumer category remains weak. Components that were originally oversupplied will face more severe price tests due to the imbalance between supply and demand. In terms of materials in serious short supply, more output will be transferred to products with strong demand through the deployment of internal production capacity. TrendForce believes that from the changes in PC market conditions, it can be seen in rapid changes in demand, purchasing behavior has quickly switched from the former over-ordering strategy to actively cutting orders, inducing supply chains to buck the seasonal trends of previous years. Due to the accelerated recent spread of Omicron in China and under the country’s dynamic zero-COVID policy, mandatory and sudden lockdown and control measures may cause local manufacturers to face multiple and complex supply chain problems, which will be detrimental to market performance.

2022-03-31

[Russia-Ukraine] Intensifying Consequences of Russian-Ukrainian War and Rising Inflation, TV, LCD Monitor, Notebook Shipments Face Correction Pressure, Says TrendForce

As the Russian-Ukrainian war directly affects Eastern Europe and, indeed, the entire European market, the supply of raw materials has destabilized and prices continued to soar, exacerbating inflation and pummeling the global economy. In addition, lockdowns and work suspensions caused by the recent pandemic outbreak in China and the government’s insistence on a dynamic zero-COVID policy may lead to complex problems such as reductions in factory production efficiency and logistical delays. TrendForce indicates, the uncertainty of current global political and economic circumstances have upset demand for three major display applications including TVs, LCD monitors, and notebooks, overshadowing 1H22 with pressure to correct expectations.

TV panel prices nearly bottomed out, driving demand in TV market remains challenging

In terms of the TV market, due to the deleterious effect of the Russian-Ukrainian war on inflation and assuming consumer budgets remain unchanged, expenditures on non-essential items will fall, deferred demand for TV products. In addition, due to issues in 2021 such as the shortage of cargo containers and port congestion, shipping costs spiked, indirectly inflating the production cost of TV sets. Before the pandemic, shipping costs on a 65-inch TV was US$9. Last year, this jumped to US$50-US$100, scaling with TV size. Even though current TV panel pricing has plunged by 30% to 40% compared to last year’s peak, the fact that freight costs are not expected to improve in 2022 will inevitably affect TV brand promotions and scale of stocking during the peak season of overseas markets in 2H22. Therefore, TrendForce revises downward its TV shipment forecast for 2022, from the original 217 million units to 215 million units, reducing annual growth rate to 2.4%.

Stay-at-home economy effect vanishes, war worries dampen demand, dragging on demand for LCD monitors

In terms of the LCD monitor market, the scale of the 2022 market will be smaller than that in 2021 as the overall market is no longer supported by strong demand from last year’s stay-at-home economy. In addition, relatively stable past demand originating from the European market ran headlong into the Russian-Ukrainian war at the end of February. This, coupled with a subsequent butterfly effect that may lead to a downward revision in demand, as well as problems such as inflation and sustained high freight rates, make it difficult for brands to realize aggressive shipping goals. Therefore, TrendForce preliminarily revises downward its LCD monitor shipment forecast for this year, from 144 million units to 142 million units, expanding annual negative growth rate to 2.3%, without ruling out a possibility of further downward revision.

Notebook demand under downward pressure from inflation and soaring component inventories

In terms of the notebook computer market, TrendForce revises downward its original 238 million unit shipment forecast to 225 million units, a decrease of 8.5% YoY. There are three primary factors to this downgrade. First, Chromebooks benefited from the pandemic driving demand for distance education in 2021, accounting for 15% of total notebook shipments. Chromebook shipments are forecast to decline by more than 50% in 2022 as a whole, disrupting total notebook shipments by approximately 7~10%. Second, the conflict between Russia and Ukraine has caused most notebook brands to suspend shipments to Russia. Russia accounted for approximately 2% of global notebook shipments in 2021 and a suspension will also curb the demand for notebook shipments. Third, every notebook brand has revised 2022 shipment forecasts downward by approximately 10-15% on average compared to the beginning of the year, indicating that inflation has clouded these brand’s future demand outlook. The inventory of the entire supply chain including certain in-transit ODM/OEM components, continues to climb while the prices of some components continue to face downward pressure, resulting in intertwined problems and forcing notebook brands to prudently control purchasing momentum, which may further impact the upstream supply chain.

2022-03-08

TrendForce Provides Data for Apple Conference

On the eve of Apple’s upcoming new product launch conference, the global market research organization, TrendForce, provides the following reference data for your articles and reporting.

Reference data as follows:

2022-02-24

Notebook Panel Shipments Hit Record High 282 million in 2021, Potential Risk of Correction in 1H22, Says TrendForce

In 2021, notebook panel shipments reached a record high of 282 million units, with an annual growth rate of 25.1%, according to TrendForce’s research. In the first half of the year, demand was driven by the pandemic and primarily focused on consumer notebooks and Chromebooks while, in the second half of the year, as Europe and the United States gradually lifted lockdowns and work returned to normal, demand largely shifted to commercial models, which continued to support the demand for notebook panels throughout the year.

It is worth noting that TrendForce believes shipment totals of notebook panels from 1Q22 to 2Q22 may be corrected. Notebook panel shipments in 1Q22 are estimated at approximately 67.9 million units, a QoQ decline of 9.7% while 2Q22 shipments are expected to drop to 61.4 million units, down 9.5% QoQ. In addition to the impact of the traditional off-season, there are two reasons for this correction. One is that inventory on the brand-side has increased. Due to the shortage of panels in the past two years, the brand-side continued to purchase panels in 2021 to avoid supply chain disruption. Normally, notebook brands hold 4 to 8 weeks of inventory but some brands have already stocked up to 8 weeks. Two, since a whole notebook requires numerous components, it cannot be assembled and shipped if even one is missing. Limitations impose by incomplete materials lists caused the growth rate of notebook computer shipments to fall behind that of panel shipments, shifting notebook computer panels into oversupply.

Despite this, TrendForce has specifically mentioned, since the profit margin of notebook panels still beats LCD monitor panels and TV panels, panel makers will still desire an increase in the supply of notebook panels. However, in the face of a possible correction in notebook panel shipments, panel makers may accumulate more inventory and deepen the downward pressure on notebook panel pricing.

Looking forward to 2022, panel shipment performance and price trends will be adversely affected by adjustments in notebook brand inventories in 1H22. In 2H22, notebook brands will continue to focus on sales plans for whole notebook computers. The sales performance of these brands during the peak season is still worth looking forward to and the restocking momentum of notebook panels is expected to recover. Current estimates put the shipment of notebook panels at 265 million in 2022, a decrease of 6.0% YoY.

2022-01-14

Effects of Stay-at-Home Economy Retreat, Shipments of Notebooks in 2022 Expected to Reach 238 Million Units, Says TrendForce

Due to the pandemic, laptops shipments reached a record high of 240 million units in 2021, according to TrendForce‘s investigations. However, the market has been abuzz recently and, as the global population of the fully vaccinated has exceeded 50%, relevant demand driven by the pandemic is expected to gradually weaken. Shipment volume will decrease by 3.3% year-on-year, revised down slightly to 238 million units. Chromebooks will account for approximately 12.3% of shipment volume, though it accounted for approximately 15.2% in 2021. The momentum of shipments has slowed down significantly which indicates that demand derived from the economic effect of remote working and teaching has subsided.

TrendForce further states that Chromebook shipments declined sharply by nearly 50% in 2H21 due to the end of the Japanese government’s education tender and an increase in U.S. market share. However, thanks to the sequential return to the office of European and American companies driving a wave of commercial equipment replacement, shipments of commercial laptops have grown rapidly to make up for the shortfall. In turn, the shipment of laptops in 4Q21 hit the highest levels of the year, reaching 64.6 million units. In addition, due to the severe shortage of IC materials in mature processes, the backlog of orders extends to 1Q22 and the off-season is expected to be short. Compared with the average quarterly reduction of 15% in previous years, this year’s pullback is expected to be less than 10%.

It is worth noting that due to the shortage of container ships and issues with port congestion, shipping time has been prolonged, increasing by two to three times from manufacturers in mainland China to the United States compared to before the epidemic. Notebook brands have all been shipping in advance and the proportion of air freight shipments has increased. However, shipping time still exceeds expectations, which may flood the supply chain with duplicate orders from downstream customers, resulting in overstocked inventories and the risk of subsequent orders being canceled. In addition, the wave of commercial equipment replacement driven by a return to the office will be a major variable that will affect the demand for notebooks in 2022, resulting in near-term buzz in the market.

TrendForce indicated that in the past, due to factors such as fewer working days during the Lunar New Year Holiday and labor shortages in mainland China, brands would often require large OEMs to produce and ship before the Lunar New Year. This first quarter end-of-season surge will start from this month. Even though changes in end-user demand is unclear, March will see the beginning of a production surge to end the first quarter. If there is a major change in demand at that time, it may lead to an accumulation of distribution channel inventory, leading to a downward revision in demand, and a return to the normal equipment replacement cycle.

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