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Global PC and smartphone sales facing declining demand

Taiwanese contract manufacturers have been increasing inventory amid slowing sales

Apple iPhone. (Pixabay photo)

Apple iPhone. (Pixabay photo)

TAIPEI (Taiwan News) — Surging demand for smartphones and personal computers triggered by the stay-at-home economy in response to the pandemic seems to be cooling off.

Global shipments of smartphones and PCs dropped during the first quarter, according to Nikkei, while large electronics equipment contract manufacturers experienced declines in April. Smartphone shipments worldwide dropped 8% on the year during Q1, Nikkei cited market research firm Counterpoint as saying, with shipments for 2022 expected to drop 3% to 1.35 billion units.

The drop in phone demand has been more pronounced in China, which accounts for around 20% of shipments, per the report. China’s city-wide lockdowns amid its continued zero-COVID policy have also significantly dented consumer confidence, with April sales down 22% on the year, according to research firm CINNO.

Global shipments of PCs and TVs have also dropped, with personal computers falling 5.5% in the first quarter and televisions dropping 20% during the same period, according to research firms cited by Nikkei.

The electronics supply chain is also seeing sluggish demand. Taiwanese contract manufacturers Pegatron and Compal Electronics have been increasing inventories amid slowing sales, with April sales down 19% on the year for Pegatron and 40% for Compal.

Meanwhile, Taiwan’s five biggest companies were keeping inventory equivalent to two months of average monthly sales during Q1, an increase of around 10 days compared to the first quarter in 2021, Nikkei said.

Smartphones and PCs make up around 40% of chip demand, according to Nikkei. So even though semiconductor demand remains strong for vehicles, data centers, and industrial equipment, a slowdown in the consumer electronics segment could also drag down the chip industry.

With inflation and prices going up around the world, buyers are cutting back on nonessential items. And if supply chain constraints continue, it could also eat into the earnings of electronics makers.