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PC demand slips worldwide

Posted: 17 Nov 2008 ?? ?Print Version ?Bookmark and Share

Keywords:PC demand? emerging markets? Q4 08 forecast?

PC demand started falling in emerging markets including China in mid-August and has been on the decline globally, according to a market researcher.

"We won't know all the details until companies start reporting their financials, but right now I am considering cutting my Q4 08 forecast in half," said Dean McCarron, principal of Mercury Research.

Pessimistic figure
McCarron had projected slightly more than 8 percent growth in the PC market beginning September, a relatively pessimistic figure. The end of the year is typically a high point of PC consumption worldwide.

"We may see zero to 5 percent growth this quarter, which would be very unseasonable," he said. McCarron bases his estimates on anecdotal reports from industry sources who said for most of September demand has slumped across Asia, Europe and the United States. What's causing the slowdown, and why it started in Chinagenerally seen as one of the faster growing marketsis unclear.

During Micron Technology Inc.'s quarterly earnings call, executives said they anticipate softer Q4 08 PC demand than originally projected. Micron had expected modest year-to-year Q4 PC unit growth but now believes it will be flat to up or down a few percent.

Growth in global PC unit shipments for Q4 08 could be as low as zero to 5 percent.

SMSC, a designer of computer and embedded chips, complained of a slowdown. "The fiscal third quarter is usually our strongest quarter for PC products. But since late August and continuing still, we have seen a significant decline in demand for desktop and notebook PCs for commercial customers in particular," said Steven Bilodeau, CEO of SMSC.

"We attribute this to cutbacks in corporate spending by businesses that are being impacted by the liquidity crisis. The turmoil in the financial markets also seems to have eroded consumer confidence and reduced the normal seasonal increase in demand for our consumer products," he added.

'Not a pretty situation'
Due to the reported decline overseas, the PC demand problem may not be directly linked to the current mortgage debt crisis in the United States. That is raising the specter of multiple economic blows falling in tandem. "It's not a pretty situation," McCarron said.

Wall Streeters have already battered Apple Inc.'s stock, suggesting weak demand for Macintosh computers. Others have predicted the general economic malaise will mute CE sales in the holiday season. Consumer systems have become an increasing share of overall PC sales.

On the other hand, a market watcher in Europe has predicted that overall IT sales will not be affected by the global financial woes.

- Rick Merritt
EE Times

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