Further downturn expected in the PC market

According to forecasts, the weakening PC market is facing a further downturn. Morgan Stanley predicts a significant downturn, which – if it actually occurs – is likely to significantly exacerbate the crisis facing technology manufacturers.

TAM at 249 million units?

Morgan Stanley estimates TAM, the total addressable market, at 249 million units for the PC sector in 2023. This is a significant reduction in the financial firm’s forecast: it was previously 261 million units. The TAM provides information on how large the market is for a particular product or service. The lower the value, the fewer sales can be expected.

The forecast published by Morgan Stanley is in marked contrast to the one recently published by Intel. Intel still estimates the total TAM at 300 million units, but expects a slight downturn to 295 million in 2023. Even in the event of a poor development, Intel says it expects a value of 275 million units, which is still significantly higher than Morgan Stanley’s forecast. The company weakened significantly recently and sent employees on unpaid leave.

Citi Research also published a negative forecast for the PC market shortly after Morgan Stanley. It said the bottom has not yet been reached and that a further downturn in the market can be expected accordingly.

Companies can’t get rid of goods

The PC industry had expected a significant upswing after the pandemic and the associated slump in consumption. However, this did not materialize. Instead, many companies are sitting on goods that have long since been produced and which they cannot get rid of. There are many reasons for this. For example, production geared to a throwaway mentality is currently coming up against a society that is being hit by high inflation on the one hand and is increasingly adopting sustainability targets on the other. In view of the lack of price reductions, it is hardly surprising that inventory levels are rising massively. Micron occupies a top position here with an inventory of 214 days – more than seven months of production scrap have remained unsold.

It remains to be seen how reliable the forecasts are, whose bases are often obscure or simply not transparent. However, in view of the current situation and the foreseeable macroeconomic developments, they appear expectable in their broad thrust.