Has the electronics market bottomed out?

Author: EIS Release Date: Jul 31, 2023

The current slump in the electronics market began in 2021, says Semiconductor Intelligence, smartphone shipments versus a year earlier turned negative in 3Q 2021.

 

The smartphone market declines in 2020 were primarily due to COVID-19 related production cutbacks. The current smartphone decline is due to weak demand.

 

According to IDC, smartphone shipments were 269 million units in 1Q 2023, the lowest level in almost ten years since 262 million units were shipped in 3Q 2013. In its June forecast, IDC projected smartphone unit shipments will drop 3% in 2023.

 

 

However, we could have reached the bottom of the decline. IDC estimated 1Q 2023 smartphones were down 14.5% from a year earlier, following an 18.3% year-on-year decline in 4Q 2023. IDC 2Q 2023 estimates are not yet available, but Canalys puts 2Q 2023 smartphones down 11% from a year ago.

 

 

 

This could signify the bottoming of the downturn and the beginning of a recovery. Smartphones could show positive year-to-year growth by 4Q 2023.

 

 

 

PCs experienced a COVID-19 related boom in 2020 after years of flat to declining shipments. After peaking at 57% in 1Q 2021, PC shipment year-to-year change has steadily declined, hitting a low of minus 29% in 1Q 2023. IDC’s estimate of 56.9 million PCs shipped in 1Q 2023 is the lowest since 54.1 million PCs were shipped in 1Q 2020.

 

IDC’s 2Q 2023 estimates indicate the beginning of a recovery, with PCs down 13% from a year ago versus down 29% in 1Q 2023. 2Q 2023 PC shipments were up 8.3% from 1Q 2023, the strongest quarter-to-quarter growth since 10% in 4Q 2020.

 

IDC’s June PC forecast was a 14% decline in 2023. The second half of 2023 would need to grow 12% from the first half to meet the 14% decline for the year. This scenario seems reasonable since it would only require about 5% to 6% quarter-to-quarter growth. PCs could return to positive year-to-year change by 4Q 2023 or 1Q 2024.

 

China is the world’s largest producer of electronics – including TVs, mobile phones and PCs. China production data shows a turn towards improvement. Three-month-average unit production versus a year ago for May 2023 shows color TVs up 8% after negative change in the first quarter of 2023.

 

Mobile phones were down 3.3%, an improvement from double-digit declines in January and February 2023. PCs were still weak with a 17% decline but improved from 20% plus declines earlier in 2023. Total China electronics production in local currency (yuan) was positive in May with a 1.0% three-month-average change versus a year ago. Electronics change had been negative in the first three months of 2023.