PC Graphics Market on Track for Post-pandemic Correction

[TheLostSwede]

Jon Peddie Research (JPR) has responded to the recent dramatic reports by Canalys, Gartner, and IDC showing a precipitous drop in Q3 2022 PC shipments. In addition, JPR is providing guidance on the impact to graphics chip and AIB shipments. Jon Peddie, president and founder of JPR, said, "Our advice to clients has been consistent since 2020: The pandemic boom was not a surge in demand brought about by real growth in the market. The PC market is now correcting itself after a period of extraordinary growth spurred on by spending from an overwhelming surge of users working from home."

Peddie continued, "People were forced to work at home in 2020 and 2021, and many needed equipment. As a result, PC sales surged. Those people have what they need, and some of them are going back to the office. They don't need new PCs, and won't for three to five years. So, we are back to the nominal growth of the PC market, which was, and will be again after two quarters' adjustment, tracking GNP growth."




Supply chain disruptions have now eased, but high inventory is a problem. In addition, TSMC is expected to see its fab capacity utilization trending downward in the next six months as order cuts by fabless clients begin to take a toll on the foundry.

Finally, the AIB market was also buffeted by a surge in late 2021 from crypto miners. This period of readjustment is expected to have a short-term impact on the irrational exuberance of the pandemic buying era. However, it does not indicate anything other than the end of an anomaly in sales, meaning the market is resilient and well-positioned to remain strong going forward.

View at TechPowerUp Main Site | Source

 

[sephiroth117]

Well yes when an AM5 motherboards or a 4090 cost what they cost you bet that the market will correct by itself, that PC market is not really linear:
People with a 3080 will most likely stay with a 3080 for more than two year. Just like most with an iphone 13 are not really going to change for a 14 unless there are really breakthrough innovations.

If the 4080 16GB was 800-900$ that would be another story..

And ethereum merging has nothing to do with pandemic, it's indeed time to adjust to a more down to earth business plan

 

[cvaldes]

And ethereum merging has nothing to do with pandemic, it's indeed time to adjust to a more down to earth business plan

The crypto market crashed before the ETH merge and included crypto tokens (like Bitcoin and others) that aren't minable on GPUs. Miners shut down their now unprofitable operations and started unloading their rigs in March. In many countries miners' costs skyrocketed as electricity rates soared.

However, the ETH merge does have a material effect on GPU demand.

 

[mechtech]

"Our advice to clients has been consistent since 2020: The pandemic boom was not a surge in demand brought about by real growth in the market. The PC market is now correcting itself after a period of extraordinary growth spurred on by spending from an overwhelming surge of users working from home.

?? Not. ??

The PC market is now correcting itself after a period of extraordinary growth spurred on by spending from an overwhelming surge of users working from home."

Surge of crypto they mean.

 

[Chrispy_]

Is "post-pandemic correction" marketing-speak for "production of GPUs and global logistics are back to 2019 levels", or does it mean people aren't going to pay $2000 for a GPU any more?

Ideally, both are true, but I suspect there will still be a small market for $2000 GPUs just as there's a market for $1200 motherboards and $1800 smartphones. Hopefully at least it means an increase in performance/$ for the median buyer, who is interested in something $200-300.

 

[cvaldes]

There will always be a market for $2000 GPUs. They aren't just used for gaming.

There are professional users: scientists, researchers, architects, even developers working on some future gaming title to be released on PS5/XBox/PC/Switch, whatever.

There is more growth potential in Datacenter/HPC anyhow and NVIDIA wisely earmarks their best silicon for those customers.

 

[Bwaze]

Jon Peddie Research (JPR) takes a wild guess what's wrong with the buyers, spends whole five minutes in this detailed analysis...

 

[80-watt Hamster]

"Our advice to clients has been consistent since 2020: The pandemic boom was not a surge in demand brought about by real growth in the market. The PC market is now correcting itself after a period of extraordinary growth spurred on by spending from an overwhelming surge of users working from home.

?? Not. ??

The PC market is now correcting itself after a period of extraordinary growth spurred on by spending from an overwhelming surge of users working from home."

Surge of crypto they mean.

It was a surge, but not one due to "real growth in the market". The highlighted text doesn't make sense without the rest of the sentence for context.

 

[mechtech]

It was a surge, but not one due to "real growth in the market". The highlighted text doesn't make sense without the rest of the sentence for context.

Ya. Just worded that have to read it a few times to let it sink in.

 

[R-T-B]

"Our advice to clients has been consistent since 2020: The pandemic boom was not a surge in demand brought about by real growth in the market. The PC market is now correcting itself after a period of extraordinary growth spurred on by spending from an overwhelming surge of users working from home.

?? Not. ??

The PC market is now correcting itself after a period of extraordinary growth spurred on by spending from an overwhelming surge of users working from home."

Surge of crypto they mean.

Crypto isn't the center of the economic universe, and a lot more surged than just GPUs. Did it have an impact? Sure. But never as much as the pandemic.

 

[cvaldes]

There are several factors at play here.

One was pandemic driven work-from-home demand for PC hardware not just discrete graphics cards but things like monitors, webcams, keyboards, etc.

The second was increased gaming activity due to pandemic shelter-in-place mandates and consumers have less options for their entertainment. The gaming industry reflected this in increased time spent on gaming and revenue increases (titles, subscriptions, etc.). Muddying the waters both Sony and Microsoft launched new console platforms during the first year of the pandemic.

The third was crypto mining. That mostly affected GPU sales. Remember that mining rigs often have multiple GPUs so there's no directly proportional increase in CPUs, monitors, keyboard, mice, etc. It's also important to remember that the entire crypto market crashed, not just Ethereum which was basically the only cryptotoken worth mining on standard PC hardware.

Macroeconomic conditions are far different than three years ago. The market forces have changed, electricity rates skyrocketed.

Whole books could be written about what happened to the computer industry in the past three years, not really realistic to expect that it can be summarized in a handful of sentences.

 

[TheDeeGee]

This only seems to apply to US.

 

[Denver]

Crypto isn't the center of the economic universe, and a lot more surged than just GPUs. Did it have an impact? Sure. But never as much as the pandemic.

I don't think any segment has bought as many GPUs as miners.

 

[bonehead123]

Well, if the market is supposedly "correcting itself" then why the hell are retail component prices still at pandemic/scalper levels ???

ie $1.5-2k for a GPU, $300-1.5k for a mobo etc etc....

Someone please wake me up when the "REAL" correction actually starts

 

[cvaldes]

This only seems to apply to US.

While JPR is an American analysis firm and is comparing PC graphics hardware revenue to the US GNP the same market and macroeconomic forces influence other countries.

The USA doesn’t speak for the entire world but from an economic standpoint what happens here is often reflected in what happens elsewhere, even a nice sovereign nation like the Netherlands.

 

[AusWolf]

It's sad to see AM5 motherboards and Nvidia graphics cards still being priced around that "anomaly in the market".

 

[cvaldes]

It's sad to see AM5 motherboards and Nvidia graphics cards still being priced around that "anomaly in the market".

Manufacturers are likely keeping prices high and just waiting for eventual selloff of existing inventory of older product.

In the past few years consumers have made it crystal clear that they will pay retailers usurious sums for inflated MSRPs or even more outrageous amounts to scalpers.

If no one bought from scalpers prices might actually be reasonable.

Alas…

 

[AusWolf]

Manufacturers are likely keeping prices high and just waiting for eventual selloff of existing inventory of older product.

In the past few years consumers have made it crystal clear that they will pay retailers usurious sums for inflated MSRPs or even more outrageous amounts to scalpers.

If no one bought from scalpers prices might actually be reasonable.

Alas…

Well, there's a glimmer of hope...

AMD Cuts Down Ryzen 7000 "Zen 4" Production As Demand Drops Like a Rock

AMD reportedly scaled down production of its Ryzen 7000 series desktop processors in response to bleak demand across the PC hardware industry. Wccftech claims to have read an internal company document calling for reduced supply to the channel as market response to the Ryzen 7000-series is weak...

www.techpowerup.com

If I saw a similar article on Nvidia, that would mean something.

 

[HTC]

I'll quote myself from two posts that i wrote in another forum:

AMD is in an unique position to cripple nVidia's 30XX and 40XX sales: all they have to do is to have their next generation cards priced "much more consumer friendly", and nVidia will lose millions.

While such a move would mean lower margins for AMD too, it would also have the effect of increasing their sales across the board.

In the current global economic situation, the company that sells cheaper is likely to have the bigger sales, but it's a double edged sword since AMD would lose A LOT OF MONEY too, though nowhere near nVidia's because of their market share.

It would be a gamble, for sure ... but if it works ... AMD would see their market share improve tremendously while forcing nVidia to lose millions at the same time, and not only from the market share loss.

Heads AND jackets might roll ...

Should this work, AMD would:

- lose A LOT of money, specially on current generation cards, since they'd need to lower the prices on these quite drastically in order for the newer cards to be "much more consumer friendly"
- gain A LOT of market share, assuming they can satisfy demand
- inflict nVidia with TERRIBLE LOSSES across the board

I had written part of this in another topic here @ TPU, but i added some bits.

 

[AusWolf]

I'll quote myself from two posts that i wrote in another forum:




I had written part of this in another topic here @ TPU, but i added some bits.

The big question is, will AMD be happy to make that move? We'll see soon enough, I guess.

 

[cvaldes]

Well, there's a glimmer of hope...

AMD Cuts Down Ryzen 7000 "Zen 4" Production As Demand Drops Like a Rock

AMD reportedly scaled down production of its Ryzen 7000 series desktop processors in response to bleak demand across the PC hardware industry. Wccftech claims to have read an internal company document calling for reduced supply to the channel as market response to the Ryzen 7000-series is weak...

www.techpowerup.com

If I saw a similar article on Nvidia, that would mean something.

The CPU market and GPU market are actually considerably different.

Every computer needs a CPU but not all need discrete GPUs (especially high performance models). Notebooks, corporate PCs, etc. often do fine with integrated graphics or low performance graphics cards.

Crypto mining was really a GPU market influencer, not the CPU market.

If corporate compute demand has dropped I expect Intel to issue a similar warning about lower Raptor Lake forecasts. They are debating layoffs.

 

[HTC]

The big question is, will AMD be happy to make that move? We'll see soon enough, I guess.

Imagine this scenario:

- AMD launch just 2 GPUs, for now
- AMD sells their flagship GPU that trades blows @ least in raster with 4090 (if not higher performance) for ... say ... $1000
- AMD lowers the prices of ALL their current line accordingly, so that every tier has their own pricing

How do you think will nVidia respond to that?

It's not like there hasn't been a precedent for this: remember when Zen launched? 8c / 16t @ CPU around half the price of what Intel priced their premium CPU.

 

[AusWolf]

Imagine this scenario:

- AMD launch just 2 GPUs, for now
- AMD sells their flagship GPU that trades blows @ least in raster with 4090 (if not higher performance) for ... say ... $1100
- AMD lowers the prices of ALL their current line accordingly, so that every tier has their own pricing

How do you think will nVidia respond to that?

It's not like there hasn't been a precedent for this: remember when Zen launched? 8c / 16t @ CPU around half the price of what Intel priced their premium CPU.

I'm pretty sure AMD will only release top-end products as long as RDNA 2 inventory lasts. I'm just not sure how well they're gonna be priced.

 

[axiumone]

I'm not an economist, but, duh and or hello? What would make anyone think that the surge that happened when the pandemic hit and work from home took effect would be a sustainable rate of growth? It's not rocket surgery that once the pandemic was mostly over and the supply chain regained some sense of normality, the demand would go to LOWER than pre-pandemic levels.

 

[sepheronx]

I'm not an economist, but, duh and or hello? What would make anyone think that the surge that happened when the pandemic hit and work from home took effect would be a sustainable rate of growth? It's not rocket surgery that once the pandemic was mostly over and the supply chain regained some sense of normality, the demand would go to LOWER than pre-pandemic levels.

there are more than enough nguyen's out there that will be more than happy to buy the price Nvidia sets out there.

Add to that, there are more than enough as well for the AMD inflated prices too.