Apple Inc. experienced a 40.5 percent decline in personal computer shipments in the first quarter, the company’s worst drop since the final quarter of 2000. The slump is attributed to sluggish demand and an industrywide glut that has hit the company particularly hard. Overall, shipments by all PC makers fell 29 percent to 56.9 million units, a level below that of early 2019, as the demand surge triggered by pandemic-era remote work dissipated, according to IDC’s latest report.
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Lenovo Group Ltd. and Dell Technologies Inc. saw declines of more than 30 percent, while HP Inc. was down 24.2 percent. There were no major brand exceptions, with Asustek Computer Inc. rounding out the top 5 with a 30.3% fall. The report is especially troubling for Apple since its shipments had largely remained stable since the onset of the pandemic.
The company, however, had warned investors to expect weaker results in some of its hardware, with a rocky economic backdrop dampening enthusiasm for Apple’s products. PC market declines have been noted for several quarters, and a rebound in the second half of the year is still possible, according to Bloomberg Intelligence analyst, Anurag Rana. Apple was especially affected due to its higher exposure to the consumer market and tougher comparisons to a strong period the year prior.
Apple is preparing new models that could help spur demand, with plans to launch its next slate of laptops and desktops later this year, including a new iMac. During a February earnings call, chief financial officer Luca Maestri stated that the company expects Mac revenue to decline by a percentage in the double digits in the quarter ending in March. CEO Tim Cook said that a successful computer product launch the previous year means that current MacBook sales figures face tough comparisons, and the company continues to face a “challenging” economic environment.
The slowdown in consumer spending over the past year has led to double-digit declines in smartphone shipments and an accumulating glut among the world’s foremost memory chip suppliers. Samsung Electronics Co., which provides memory for portable devices as well as desktop and laptop PCs, said it’s cutting memory production after reporting its slimmest profit since the 2009 financial crisis.
One silver lining is that the cooling demand is giving manufacturers time and room “to make changes as many factories begin to explore production options outside China,” according to the IDC report. Apple is gradually diversifying the geography of its manufacturing base as brewing tensions between Washington and Beijing threaten to disrupt its carefully orchestrated supply chain.
Looking ahead, IDC researchers foresee a potential rebound for PC makers by 2024, driven by a combination of aging hardware that will need to be replaced and an improving global economy. Despite the current slowdown, Apple’s position in the market is still strong, and the company’s forthcoming product launches could boost demand in the second half of the year.
