We are probably experiencing the backlash from the madness that has rocked the market for nearly two years. According to several sources interviewed by Digitimes, most notebook vendors have dramatically reduced their shipment targets for the first half of 2022 and may reduce orders from some suppliers for the period by as much as 50 percent, according to supply chain sources. Within the major brands, many believe the entire notebook market will enter a period of slowdown.
After the madness, a return to reality that some find difficult
But we should probably take a step back and ask ourselves the right questions. These maudlin forecasts envisage a slowdown in comparison with the years 2020 and 2021. Two totally delirious years artificially boosted by Covid, confinements and the massive switch of companies to telecommuting. A more logical analysis starts by making it clear that most brands have assumed far too optimistic 2022 forecasts. Reducing them to normal levels is much healthier for the entire supply chain. So you have to wonder if the people who came up with all these forecasts did it to smoke out the market (the stock market?) or if they all went crazy thinking that every year Covid would last and create a miracle demand based on constant renewal of equipment. Ray Chen, vice president of Compal Electronics (a huge “maker” of branded notebooks), said the estimates need to be analyzed more accurately. He said that the state of demand needs to be broken down properly. For example, the need for educational notebooks has dropped significantly, but the need for commercial and gaming models is still on the rise.
Inventory levels at distributors is another issue.
The other concern is massive overstocking throughout the distribution network. A situation that is still analyzed by the weakness of the market reading capacity of the main buyers of these entities. Over 2021, the shortage has triggered a sort of Panic Buyeffect among most distributors… But since the end of last year and the very beginning of the first quarter of 2022, these orders are coming in. So the deliveries are massive and concentrated in a short period of time. In a recent discussion with its investors, Asustek said that two-thirds of notebook distributors, including those in heavy markets such as the U.S. and Europe, have seen their inventories return to regular pre-pandemic levels. The average level is back to nearly 12 weeks of inventory, compared to just a few days in the past two years. A situation that seems to panic again the actors of the distribution who were used to live ad vitam the madness of these last months.