• IT Supply Chain Insights February

Welcome to this months IT Supply Chain Insights. This monthly newsletter keeps you up to date with market trends and IT channel news giving you the knowledge you need to buy IT for less.

Get extra insights by video, from our Supply Chain Director - Ian Nethercot MCIPS.

 

Executive Summary

 

41,677

The largest number of price increases happened on the January 6th, with 41,677.Jump to Monthly Stats

  • Coronavirus impacts ICT supply chain
  • Semiconductor sales dropped 12% in 2019
  • Q4 notebook sales spiked due to tariff worries, Windows 7 upgrades

Distribution revenues grew only 3.4% in the first three quarters of calendar 2019 compared to 6.7% in the same period during the previous year, but resellers across Europe, Russia, and South Africa are still bullish about business prospects in 2020 following higher growth thanks to cloud and IoT investments along with Windows 7 upgrades. The UK and Germany are especially optimistic, said CONTEXT.

Notebook sales spiked in Q4, but we can expect a weak quarter in Q1. The Chinese Coronavirus impacted the ICT supply chain as workers proved unwilling or unable to return to work. Notebook, LCD panel and photovoltaic cell makers were among those affected.

Exchange Rate

 

The euro started at 0.845 against the pound, rising sharply to 0.8525 on Jan 4. It took a dip to 0.8485 by Jan 8 before recovering to a monthly high of 0.8562 on Jan 14. After a drop and a short rally to 0.8533 on Jan 20, it plummetted to 0.8425 on Jan 24 and managed only a half-hearted recovery before ending the month at its lowest point, 0.8408.

There were fewer ups and downs for EUR-USD in January. In fact, the journey was mostly down. The euro never broke its starting value of 1.1209 on Jan 1, suffering an inexorable decine punctuated by short rallies on Jan 6 (1.1182) and Jan 16 (1.1147). It hit a monthly low of 1.1007 on Jan 29 before limping to the finish line at 1.1051.

Price Changes and News Through January 2020

Phones and Tablets

IDC said that worldwide shipments of used smartphones would reach 206.7m in 2019, representing a 17.6% bump from 2018. Shipments of refurbished and used units will see a 13.6% CAGR from 2018 ro 2023 to reach 332.9m units, it predicted.

According to Gartner, the market share for 5G mobile phones will grow rapidly from 12% in 2020 to 43% in 2022.

Traditional PCs

The Coronavirus outbreak in January impacted notebook product with ODMs reporting a 50-70% utilisation rate.

The worldwide market for traditional PCs (including laptops, notebooks, and workstations) enjoyed a 4.8% YoY growth in Q4, according to IDC. Global shipments hit almost 71.8m units, representing the highest single quarter shipment volume in four years. This helped propel overall global shipments 2.7% YoY, which was the first full year of growth in the PC market since 2011's 1.7% bump.

EMEA saw solid single digit growth in spite of Intel's CPU supply woes.

Why the spike in sales? Windows 7 upgrades boosted market fortunes as people rushed to switch to Windows 10 before Windows 7 end of support in January (Windows 10 needs newer generation CPUs).

Another contributing factor could have been a rush to ship laptops to the US in Q4 ahead of expected US tariffs that then failed to materialise in mid-December. This will lead to a weaker Q1, said Trendforce. A compounding factor is the ongoing shortage in Intel chips, which will contribute to a 10-15% drop in Q1 shipments.

The Intel chip shortage is sending notebook vendors fleeing to AMD, according to DigiTimes. That trend, which began in 2019, will continue in 2020, it said.

Lenovo topped worldwide traditional PC shipments with 17,832 units in Q4, representing a 24.8% market share and 6.5% growth. It wasn't the fastest-growing vendor in shipment terms, though; that honour went to Dell, which grew shipments 10.7% YoY for the quarter, reaching 12,463% for a 17.4%% market share.

Premium Ultramobiles & Wearables

Gartner expects global shipments of ultramobiles to grow from 72.53bn to 76.79bn in 2021, reaching 80.04bn in 2022.

IHS charted 57m smart watch display shipments in Q3 2019, and predicted a total of 195m displays for this top-selling wearables category by the year's end, representing a rise of 31% from 149m in 2018. Display makers serving this market must buy legacy Gen 3 and 4 fabs to make the sub-2in screens, it said. BOE topped the Q3 display shipments by far with 15,770 shipments in Q3, giving it 28% of the market, followed by LG Display at 8,400 with a 15% share.

Chinese manufacturers are already gearing up to manufacture augmented reality (AR) glasses. Expect these to contribute 60% of the total AR/VR market.

Processors, MEMs, Semiconductors

Gartner saw an 11.9% decline in worldwide semiconductor revenues in 2019 to $418.3bn, driven in large part by a decline in the memory market, which accounts for 26.7% of sales, it said. Intel regained the number one slot in global semiconductor sales with a 15.7% market share, even though its revenues shrank 0.7%. Incumbent Samsung, now in the number 2 slot, saw sales drop 29.1%.

According to IHS, Samsung and Huawei are both turning to in-house application processors for their smartphones, expanding their use of these components by over 30% YoY in Q3 2019. This freezes out key supplier Qualcomm, which saw its market share fall 16.1% during the same period. Nevertheless, sources expect the company to enjoy double digit growth in mobile chip sales.

5G mobile chips are in short supply thanks to tight 7nm manufacturing processes at foundries.

Intel, still reeling from sustained chip shortages, will cut PC processor prices in 2H 2020 to defend its market dominance, say PC maker sources.

The Semiconductor Industry Association saw sales drop 12.1% in 2019 to $412.1bn. Global sales for December 2019 reached $36.1bn, down 5.5% from the same period a year prior and down 1.7 percent from November 2019.

Memory

Gartner charted a 31.5% decline in memory revenues during 2019. DRAM suffered from a 37.5% drop in sales due to an oversupply situation that lasted for the entire year, driven by a fall in demand from hyperscale data centres. Average selling prices for this technology dropped 47.4% in 2019.

Samsung forecast YOY Q4 profits falling at a milder rate than analysts predicted, indicating a bottoming-out of DRAM prices. Analysts are seeing inventories holding at lower levels, which could signal a rise in Q2 DRAM pricing. TrendForce adjusted its Q1 DRAM contract price forecast from "mostly holding steady" to "slightly trending upward".

NAND flash prices are likely to rise higher than expected in the short term after a fire at a Kioxia fab in early January.

Expect a surge in demand for GDDR6 memory later in 2020, says TrendForce, partly due to NVIDIA's new Ampere GPU architecture in the second half, and partly from the introduction of next-gen consoles from Microsoft and Sony for the holiday season.

Storage

 

Kingston Technologies entered the data centre space with the DC1000B M.2 NVMe boot drive, a device intended to fit in server M.2 NVME slots and offering transfer speeds of up to 3.2Gb/sec.

At its 2020 Storage Field Day, Western Digital predicted that even though SSDs are experiencing the fastest growth in the data centre, HDDs will still dominate in 2023.

Displays

Digitimes said flat panel makers in Korea, Japan, and China have been gearing up large-sized OLEd capacity since 2H 2019. Expect more competition in this area as small- to medium-sized OLEDs see oversupply. Global shipments of OLED TVs will hit 3.5m in 2019, up 2.4m in 2018, it predicted.

TrendForce WitsView has spotted signs of a coming price increase in sub-65 inch TV panels at the end of January due to riding demand and falling supply. Conversely, monitor panel supplies will exceed demand by 20% in 2020 due to rising manufacturing capacity in China, it warned.

LCD panel makers in Wuhan were hit particularly badly by the panic stemming from the Coronavirus outbreak, with BOE Technology, China Star Optoelectronics and Tianma Microelectronics reporting a shortage of upstream materials due to limitations on transport in China.

Printers

Global shipments of industrial polymer 3D printers priced over $100,000 spiked 8% YoY in Q3 2019, according to Context. This sector accounts for more than 70% of all 3D printer revenues, the company said, adding that HP was a particularly strong performer with a 347% growth in shipments in the period. However, this growth came from North America and China. Western European shipments didn't hold up, falling 28% in the period. dragged down by a sluggish economy.

Network Products

Expect Wi-Fi 6 penetration to accelerate thanks to the introduction of laptops supporting Intel's new Comet Lake 10th generation processors, which support the standard natively. It will reach over 10% in 2020, said sources. Sanao Networks' chair Tommy Tsai is already seeing Wi-Fi 5 orders slow, and expects Wi-Fi 6 access point prices to drop from between $290-$290 in 2H 2019 to $100 in June and July 2020.

Monthly Stats

New products were flat until Jan 13 when they spiked to 424. Other than short spikes into triple figures on Jan 15, 20, and 23, they stayed below 60 until a large spike to 1169 on Jan 30. Price increases broke 35,000 twice, on Jan 6 and 22, hitting a low of 3,121 on Jan 24-26. Prices down started at 37,817 before immediately dropping to 8,492. They broke 35,000 again straight afterwards for a three-day stint from Jan 3-5, again on Jan 8, on Jan 23, and one more time on Jan 28. They hit their low during the same period that price increases saw their low, dropping to 7,431 on Jan 24-26. HP topped both price increases and decreases during the month.

Stock increases didn't fluctuate much during January, with the exception of a 328 low on Jan 2. Otherwise, they ranged mostly between the 3,000 and 5,000s, with the occasional outlier in the low 2000s and high 6000s. Stock down began the month with a similar pattern, starting at 4,340 and then dropping to its only three-figure value on Jan 2. Otherwise, it averaged up slightly throughout the month, ending January at 14,027.

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