According to TrendForce’s latest research, global NB shipments are forecasted to drop by 5.8% YoY to around 177 million units. However, the downtrend in NB shipments is starting to moderate, and the projected figure for 2023 is expected to represent the lowest point before 2025. Currently, inventory corrections for components and whole devices are taking place in the global supply chain for NBs. Prices are also being cut substantially across sales channels, and PC OEMs have scaled back component procurements. There is a chance that the NB market will return to its usual cyclical pattern and show growth during 2H23, when back-to-school and holiday-related promotions are expected to boost device sales.

However, this scenario will depend on two factors. First, PC OEMs will have been able to effectively get rid of the existing stock of NBs belonging to the older generations during 1H23. Second, global inflation will ease as 2023 progresses. Currently, the IMF forecasts that the rate of global inflation will slide down to 6.5% in 2023, compared with 8.8% in 2023. Such development will help raise the consumer spending related to electronics. All in all, notable inventory corrections and the reduction of inflationary pressure will allow the NB market to leave the gloomy situation of 2022 and get back to upbeat state of quarter-to-quarter shipment growth.

Market Segments for Commercial and Consumer NBs Will Both See Decline in 2023, Chromebooks, Gaming NBs, and Creator NBs Will Become Main Demand Drivers

Looking at the various segments of the NB market, unit shipments and market share are expected to drop for both commercial NBs and consumer NBs. Conversely, Chromebooks will grow in terms of shipments and market share despite various headwinds. In 1H23, mature regional markets such as the US and emerging regional markets such as Indonesia and India will be releasing tenders for Chromebook for educational uses. Turning to gaming NBs, their global shipments are forecasted to increase by 8.3% YoY to 17.45 million units for 2023 thanks to the seasonal demand surge in 2H23. As for creator NBs, the market for them is growing because professional content creators want to purchase a “mobile workstation” in place of a high-end gaming NB for tasks such as building 3D models and processing large amounts of multimedia files. Global shipments of creator NBs are forecasted to rise by 24.9% YoY to around 437,000 units for 2023.

(Note: “NB” stands for notebook or laptop computer.)

Shipments in the global Chromebook product market are expected to return to pre-pandemic levels in 2023. Mature markets such as the United States and emerging markets such as India and Indonesia will play a key role, primarily due to a small number of education tenders to promote shipments, and this rebound can be expected to continue based on future demand in mature and emerging markets. Global shipments of Chromebook products are estimated to reach 15.9 million units in 2023, an annual increase of approximately 8.2%.

In terms of regional markets, apart from Japan and Europe, the United States is the largest market for Chromebook products, accounting for 90% of the world’s demand for Chromebooks. Supported by a bailout bill proposed by the U.S. government and the developmental policy of the U.S. education market, lower-priced distance learning tools such as educational laptops, entry-level laptops, and tablet computers are gradually forming a bastion of Inelastic Demand.

Emerging markets such as India and Indonesia may become new blue oceans for Chromebooks

It is worth noting that the PC industry looks to emerging markets such as India and Indonesia. Relying on a huge demographic dividend, these countries may become another blue ocean market for Chromebooks after the United States, Japan, and Europe. However, TrendForce believes that emerging markets such as India and Indonesia are currently suffering from rising inflation coupled with economic headwinds such as currency depreciation pressure. Chromebooks, which are relatively inexpensive in mature markets, may hold little allure for the Indian and Indonesian education markets, as white-label tablet products will put competitive pressure on Chromebooks at lower prices. In addition, whether procurement policies for distance learning tools in emerging markets such as “Digital India” can be effective depends on the priority of emerging market governments for budgeting projects. At present, such markets have placed more urgency on improving the quality of infrastructure while education tenders may be sidelined.

（Image credit: Pixabay）

Due to the pandemic, laptops shipments reached a record high of 240 million units in 2021, according to TrendForce‘s investigations. However, the market has been abuzz recently and, as the global population of the fully vaccinated has exceeded 50%, relevant demand driven by the pandemic is expected to gradually weaken. Shipment volume will decrease by 3.3% year-on-year, revised down slightly to 238 million units. Chromebooks will account for approximately 12.3% of shipment volume, though it accounted for approximately 15.2% in 2021. The momentum of shipments has slowed down significantly which indicates that demand derived from the economic effect of remote working and teaching has subsided.

TrendForce further states that Chromebook shipments declined sharply by nearly 50% in 2H21 due to the end of the Japanese government’s education tender and an increase in U.S. market share. However, thanks to the sequential return to the office of European and American companies driving a wave of commercial equipment replacement, shipments of commercial laptops have grown rapidly to make up for the shortfall. In turn, the shipment of laptops in 4Q21 hit the highest levels of the year, reaching 64.6 million units. In addition, due to the severe shortage of IC materials in mature processes, the backlog of orders extends to 1Q22 and the off-season is expected to be short. Compared with the average quarterly reduction of 15% in previous years, this year’s pullback is expected to be less than 10%.

It is worth noting that due to the shortage of container ships and issues with port congestion, shipping time has been prolonged, increasing by two to three times from manufacturers in mainland China to the United States compared to before the epidemic. Notebook brands have all been shipping in advance and the proportion of air freight shipments has increased. However, shipping time still exceeds expectations, which may flood the supply chain with duplicate orders from downstream customers, resulting in overstocked inventories and the risk of subsequent orders being canceled. In addition, the wave of commercial equipment replacement driven by a return to the office will be a major variable that will affect the demand for notebooks in 2022, resulting in near-term buzz in the market.

TrendForce indicated that in the past, due to factors such as fewer working days during the Lunar New Year Holiday and labor shortages in mainland China, brands would often require large OEMs to produce and ship before the Lunar New Year. This first quarter end-of-season surge will start from this month. Even though changes in end-user demand is unclear, March will see the beginning of a production surge to end the first quarter. If there is a major change in demand at that time, it may lead to an accumulation of distribution channel inventory, leading to a downward revision in demand, and a return to the normal equipment replacement cycle.

As growing vaccination rates worldwide starting in July lead to a gradual easing of lockdowns, the overall demand for notebook computers has also experienced a corresponding slowdown, with Chromebook demand dropping by as much as 50%, according to TrendForce’s latest investigations. However, factors such as a wave of replacement demand for commercial notebooks in Europe and North America due to the return to physical workplaces, as well as brands’ aggressive efforts to rush out their 4Q21 shipments ahead of time due to global port congestions, became the primary drivers of notebook demand in 3Q21. Hence, annual notebook shipment for 2021 will likely reach 240 million units, a 16.4% YoY increase.

TrendForce further indicates that 4Q21 will welcome both the gradual release of new models equipped with Intel’s next-gen CPUs and a wave of replacement demand for notebooks featuring Windows 11. Even so, overall notebook shipment in 4Q21 will depend on the status of the COVID-19 pandemic and the demand for commercial notebooks. As vaccinations become even more widespread in 2022, pandemic-related spending is expected to decline as a result. TrendForce therefore expects global notebook shipment to decline by 7-8% YoY next year and reach approximately 220 million units, although this still represents a growth of 60 million units over the shipment volume for 2019, prior to the emergence of the pandemic.

Annual Chromebook shipment for 2021 is expected to reach about 36 million units in light of waning demand, while HP and Samsung suffer the brunt of the decline

Chromebook became the primary driver of overall notebook shipment in 1H21. Nevertheless, increased vaccinations in Europe, North America, and Japan in 2H21 have led to a slowdown of Chromebook demand, which mostly arose in response to the needs of distance education. Furthermore, given the relatively high penetration rate of Chromebooks, Chromebook shipment subsequently fell by more than 50% within a single month in 2H21. In particular, as Chromebooks occupy a relatively high share of notebook shipments by HP and Samsung, these companies’ notebook shipment is expected to decline by 10-20% in 2H21 compared to the first half of the year. However, the US FCC released the Emergency Connectivity Fund, which totals US$7.17 billion, in July in order to facilitate the purchase of such equipment as notebooks, tablets, and network connectivity devices by schools and libraries. This fund will likely sustain the demand for Chromebooks for the next year. For 2021, Chromebook shipment is expected to reach 36 million units.

As the workforce in Europe and North America returns to physical workplaces in 2H21, a wave of replacement demand for commercial notebooks is expected to emerge as well, with Dell benefitting the most, since commercial notebooks occupy a higher share of Dell’s notebook portfolio compared to any other brand. Dell’s average monthly shipment of commercial notebooks in 2H21 is expected to surpass 1H21 figures by about 20%. As previously mentioned, it remains to be seen whether the demand for commercial notebooks will persist in 4Q21. Furthermore, the release of new models featuring Windows 11 support and Intel’s next-gen CPUs will also generate yet another wave of replacement demand. Taking these factors into account, TrendForce expects overall notebook shipment for 4Q21 to remain relatively unchanged from 3Q21 figures in the best-case scenario, and momentum driving notebook shipment will likely persist through the end of the year.

It should be noted that the availability of semiconductor components throughout the supply chain remains limited. For instance, the persistent shortage of Wi-Fi module IC, Type C PD IC, and PMIC has created a bottleneck for notebook manufacturing, while mainstream 14-inch and 15.6-inch FHD IPS panels are also in tight supply. Conversely, demand for entry-level and mid-range 14-inch and 15.6-inch HD TN panels is gradually being met, and 11.6-inch notebook panels are starting to experience a price drop due to oversupply. As notebook demand plateaus while panel supply increases, the supply and demand of notebook panels is expected to reach an equilibrium in 4Q21.

For more information on reports and market data from TrendForce’s Department of Display Research, please click here, or email Ms. Vivie Liu from the Sales Department at vivieliu@trendforce.com

The current state of the notebook panel market shows that prices of notebook panels are likely to follow the same trend set by TV panels and monitor panels in 4Q21. In other words, notebook panels may see their prices plummet from the previous uptrend during the quarter.

Notebook brands are confident that a wave of demand for commercial notebooks will take the place of the prior demand for consumer notebooks. Objectively speaking, however, as soon as enterprises return to pre-pandemic business operations, they are unlikely to immediately spend a considerable amount of their budget on refreshing their existing hardware, including notebook computers.

On the other hand, although consumer purchases comprised most WFH demand for notebooks within the past year, these notebooks were purchased with subsidies funded by the buyers’ workplaces. Once consumers return to physical offices for work following the termination of WFH, their purchased notebooks will then be returned to the workplaces as well. Hence, notebook brands which previously anticipated an upcoming wave of replacement demand for business notebooks may be overly optimistic in their expectations. As such, although notebook shipment has remained bullish in 3Q21, notebook sales are likely to gradually slow down going forward, meaning notebook vendors and brands alike may enter into a key period of inventory adjustment in 4Q21. At the same time, notebook manufacturers will also decelerate their procurement activities for panels across their entire range of notebook computers.

The four largest notebook panel suppliers still exert significant influence over the market’s overall supply of notebook panels, although newcomer HKC is not to be underestimated in terms of its potential to do the same, even pertaining to quotes. While HKC did not ship a single notebook panel in 2020, the company has ambitiously targeted an annual shipment of 10 million units this year in light of the expanded production capacity for IPS panels at its Mianyang fab. In 1H21, however, the display industry suffered a severe shortage of driver ICs, whose manufacturers first sought to ensure a steady supply of driver ICs for their more established clients. Being a notebook panel supplier that had had no business foundation, HKC, as was typical of such upstart companies, had its supply of driver ICs accordingly “adjusted” by driver IC suppliers. HKC was hence unable to effectively raise its shipment for 1H21.

As the demand for panels from various end-product segments slows down in 2H21, the shortage situation of driver ICs is also expected to either lessen somewhat or even turn into a supply-demand equilibrium. As such, HKC is likely to procure more driver ICs from its suppliers and subsequently step up its notebook panel shipment to 3.5 million units in 3Q21 and 4 million units in 4Q21. HKC’s increase in panel shipment for 2H21, if proven successful, will place downward pressure on notebook panel prices, thereby weakening said prices going forward.

TrendForce believes that 11.6-inch panels, the market for which has been relatively bearish, will most likely experience a decline in quotes starting in early 4Q21. At this size, even Full HD/IPS products, quotes for which have been relatively high in 3Q21, are likely to see their quotes hold flat in November 2021 and experience a sudden downward pressure on prices at the end of the year. Should the COVID-19 pandemic be brought under control on a global scale, demand for consumer electronics would likely return to its cyclical downturn in 1Q22, and the notebook panel market, despite its relatively robust supply chain, would see a more severe overall price accordingly.

（Cover image source: Unsplash）