A report published in a Taiwanese business journal does not paint a rosy picture of the PC industry.today china times reports that OEMs of PC makers such as Acer, Asus and MSI are seeing their inventories “explode”. His ODMs who make PCs and laptops for HP, Dell, Apple and others face similar problems.
Two of the companies most affected by overstocking are Asus and Quanta. Asus appears to be in particularly bad shape among OEMs with $6.8 billion worth of inventory stranded. This represents a nearly 60% increase from inventory levels at the same time last year. Only Quanta has inventory worth about $8.4 billion, which is up nearly 55% for him since last year.
PC inventory explodes, media reports. .com/z7f1EEj891August 23, 2022
Interestingly, the China Times report highlighted by analysts Dan Neystedthas detailed insider information on the company’s take on Asus’ inventory composition and status. Apparently, about half of Asus’ inventory is finished goods, and the other half is components and ICs.
Some Asus products and components are reportedly expected to go on sale next quarter. Otherwise, they will become obsolete and lose a lot of value. However, Asus estimates that around 80-90% of the ICs and components in their inventory can be used to build next-generation products and PCs. Nonetheless, Asus has set a goal of clearing a quarter of its existing inventory by the end of the year.
Aggressive inventory clearance targets like those set by Asus may be good for bargain-hunting end users. will be actively marketed to the channel.” As a result, PC and component manufacturers will have to sacrifice some profits in order to clear retail and warehouse inventories. How companies achieve this could make a substantial difference to their financials in Q3 and Q4 2022.
Of course, the above inventory issues are happening amid growing fears of a recession. At the height of the pandemic, consumers and businesses couldn’t afford enough PCs for entertainment or working from home, and some components were in dire need. For GPUs, it was made worse by the cryptocurrency boom. However, with the crypto crash, energy shortages and war in Ukraine, the demand curve seems to have rebounded very quickly (although these three effects could be closely related).
