• IT Supply Chain Insights May

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.

Executive Summary

 

57,070

The largest number of price increases happened on the 14th April, with 57,070.Jump to Monthly Stats

  • COVID-19 continues to ravage the market
  • Smartphones suffer worst quarter ever
  • Notebooks and all-in-one printers are among several bright spots

COVID-19 continued to ravage the markets in April as the full extent of the crisis took hold. Revenue growth faltered among European IT channel players, said CONTEXT. An initial 10% revenue growth driven by specific categories related to home working faltered in late March, falling ultimately to -7.4% in early April. Western Europe took the brunch of the damage with an 8.9% contraction in the week beginning April 6.

Fortunes were down across most of the board, with smartphones suffering their largest quarterly drop ever, tablet shipments plummeting, and PC shipments also falling. Flat panel shipments are down, as are 3D printers. Things are looking up for detachables, notebooks, and all-in-one printers, though. Sales nosed nicely upwards in these remote working-friendly products.

Exchange Rate

 

The Euro began April at a 1.0963 high on the USD, which it didn't achieve again during the month. It saw a quick decline to 1.0801 on April 4, followed by a jagged rise to hit 1.0955 on April 14. From there, it fell to 1.0869 on April 18, where it rested for a few days before dipping to its monthly low of 1.0785. It rallied to 1.0897 on April 30.

Euro followed a similar pattern against the pound, with April 1 representing its 0.8851 monthly high. It dipped to 0.8787 the next day, rallied to 0.8824 on April 7, and then began a long, staircase-like decline to bottom out at 0.8688 on April 18. From there, it picked up to 0.8799 on April 22, but couldn't sustain its rise. It lost momentum and limped in at 0.8703 on April 30.

IHS Markit's 'flash' PMI surveys showed dramatic declines in output, demand and employment in April as countries ramped up their efforts to prevent healthcare systems from being overwhelmed by the pandemic. Expect historically dramatic contractions of GDP in Q2, it warned. In the Euro area, unemployment hit 7.4% in March, down from 7.3% in February, according to Eurostat. It also reported seasonally-adjusted Q1 Euro area GDP down 3.8% YoY (down 3.5% in the EU).

Price Changes and News Through April 2020

Phones and Tablets

IDC noted the largest YoY decline ever in the smartphone market during Q1. Global shipments fell 11.7% to 275.8m units. China led the fall, but Western Europe came a close second with an 18.3% drop, faring worse than the US, which fell 16.1%. Europe should expect a drop in value of a quarter or more this year, it warned.

Tablet shipments were no better. They fell 18.2% YoY to 24.6m in Q1, the company said. Apple, still the market leader, saw a 30.4% drop due to factory closures. Samsung saw a 3.9% rise, while Huawei shipments pulled back 8.3% YoY to 3m units. Lenovo moved up to fourth position and was the only company other than Samsung in the top five with positive shipment growth, bumping 1.9%. Amazon limped in in fifth place with 1.4m shipments - a 24.5% annual decline.

Traditional PCs

Worldwide PC shipments dropped 12.2% YoY during Q1 2020, Gartner said, although the top three vendors, Lenovo, HP, and Dell, boosted their combined market share to 65.6% from just over 60% in Q1 2019.

Narrowing in on the EMEA market, IDC saw a 3.1% YoY drop in traditional PC shipments during Q1 to 16.4m units. The consumer market took the brunt of the damage with an 8.5% drop. Commercial shipments were flat at just 0.7% growth. There was actually high commercial demand for notebooks (CONTEXT saw a 29% spike in notebook sales from the beginning of the lockdown through to the end of April), but vendors found it hard to deliver thanks to reduced air freight slots as the pandemic hit the airline sector. The ongoing supply crunch could mean shortages in May.

According to Digitimes, all-in-one PC shipments reached 2.14m units in Q1, representing a 29% QoQ drop. Growth will bounce back 30% in Q2 though, it said, buoyed by restored capacity and deferred Q1 orders. Server shipments will follow a similar pattern, pulling back 15.8% in Q2 after a 16.9% Q1 drop, it added.

Premium Ultramobiles & Wearables

Detachables were a bright spot in the market, growing shipments 56.8% YoY, said IDC.

Processors, MEMS, Semiconductors

Worldwide semiconductor revenues fell 12% to $419.1bn in 2019, said Gartner, with DRAM oversupply largely to blame, along with the Chinese trade war. Intel (the market leader by revenue) and Apple were the only two companies in the top ten to grow during the year, at 2.2% and 12.1% respectively.

Things are looking up, though. Global spending on fabrication equipment for power and compound devices will ramp up in 2H 2020, blunting an 8% drop in spending this year. It will rise 59% in 2021 to reach a record $6.9 billion said SEMI. Still, that won't get us out of the woods entirely in 2020 - expect a 3% drop in global semiconductor capex in 2020, warned IC Insights.

Memory

DigiTimes expected NOR flash chip supplies to fall short of demand in 2H 2020 based on anecdotal conversations with suppliers.

Storage

Expect competition in the NAND flash market to pick up during 2021, warned TrendForce. Chinese manufacturer YMTC has submitted samples of a 128L 3D NAND system to storage controller suppliers, and wants to begin mass production by the end of the year. SSDs are a primary target. This development heralds falling prices for these and other NAND flash-based products next year.

Displays

The global market for foldable active-matrix organic light-emitting diode (AMOLED) display panels is set for explosive growth in 2020, with shipments soaring by 455% to 3.9m units this year from 700,000 in 2019, says Omdia. Shipments will reach 73.1m in 2025.

Global flat-panel display shipments will also fall 11.1% in 2020 compared to 2019 as the health crisis cripples demand, it warned. Expect 3.2bn units in 2020, down from 3.6bn. TrendForce has already predicted a 7.1% YoY drop for TV panel shipments in Q2.

TrendForce also said that demand for mini-LED backlights is on the rise, driven by Apple's plans to put them into its iPads and desktop displays.

Printers

CONTEXT warned that the pandemic will hit the 3D printer market. Many 3D printer companies have shifted from manufacturing printers to making medical supplies, it said. A weak manufacturing sector, especially in the automotive market, won't help. 2019 was already weak, seeing just a 1% growth in industrial printer shipments and a fall of 6% in the design segment and 11% in personal printer shipments. Only the professional segment grew, enjoying a 16% bump.

The research company also noted an 18% increase in all-in-one inkjet printer sales across Europe during the lockdown.

Consumables

CONTEXT saw a 16% rise in ink cartridge sales in Europe since the lockdown began. People seem to be printing more things while they're at home

Network Products

Omdia warns that uncertainty surrounding the COVID-19 pandemic will cause a 3-4% drop in data centre switch revenue and ports during the first half of 2020 compared to previous expectations. The market will hit $5.4bn in revenues during 1H 2020, down 9.9% from $5.9bn during the same period in 2018.

The analyst firm also saw SD-WAN revenues up 75% YoY to $639.5m in Q4 2019 from $364.5m in Q4 2018, as service providers rolled the network appliances and control and management software into managed services packages.

Monthly Stats

New products sat low for the first half the month, only breaking into three figures once. Then on April 15 they spiked to 1,300 before settling into the same low pattern until the end of the month. They soared to 896 on April 28, and then tailed off to 493 and 378 on April 29 and 30 respectively.

After starting the month at 23,181, Price increases saw two big peaks, reaching 37,470 on April 6 and 37,405 on April 22. Their lowest point came on April 14, when they dipped to 5,710. HP announced the most price increases for the month (63,781). Price reductions saw the same mid-month drop, hitting 2,215 on April 14, followed by a single clear monthly peak of 57,070 the following day. Sonicwall reduced the most prices, at 4,873.

April 14 was the lowest point for all metrics this month, including stock down, which reached 190 that day. It had three modest peaks in a relatively flat month, on April 8 (5,997), April 15 (7,755, its monthly high) and April 21 (7,145). After a slow decline from a 14,254 start, stock down dropped sharply to 2,244 on April 14, before recovering on April 15. It then ranged between 8,600 and 11,200, broken only by a spike to 21,134 on April 20 and a last hurrah of 13,100 on April 30.

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