Apple's steady streak of record Mac sales seems to be taking a hit. While the economic malaise devoured much of PC sales in the first quarter of 2023, the Mac maker bore the brunt, according to preliminary results from IDC.
Apple Mac sales fall 40,5% year-on-year
In its latest PC market share report, IDC confirmed a significant drop in the global PC industry. "Low demand, excess inventory and deteriorating macroeconomic sentiment contributed to the sharp decline in traditional PC shipments during the first quarter of 2023 (1Q23)," the analysts said.
In a miserable quarter for the entire industry, PC shipments hit 56,9 million, down 29% from the same quarter last year. Apple was hardest hit, down 40,5% year-over-year, IDC said. Lenovo posted a 30,3% drop, HP 24,2%, Dell 31% and ASUS 30,3%.
Apple's shipments in the first quarter of 2023 totaled 4,1 million, for a 7,2% market share, IDC said. That's less than the 8,6% market share in the first quarter of 2022. However, it's worth noting that while the PC industry has only grown 6% in recent years, the share of Apple's Mac has grown 60% during this period.
End of feeding frenzy
Apple had warned investors to anticipate a decline in Mac sales. Speaking on the latest financial call in February, CEO Tim Cook noted that the industry is contracting, saying, "I think it's going to be a little tough in the short term." .
The company's CFO, Luca Maestri, explained it like this:
"For Mac and iPad, we expect revenue for both product categories to decline by double digits year-over-year, driven by difficult comparisons and macroeconomic headwinds."
The drop reflects the end of the pandemic-induced shift to remote work, during which employers and employees scrambled to invest in the best computers they could afford. The industry now appears to be reverting to pre-COVID patterns.
In fact, IDC noted that this quarter's total PC shipments of 56,9 million are significantly lower than in pre-pandemic years. The first quarter of 2019 saw 59,2 million PCs shipped, while the first quarter of 2018 reached 60,6 million, according to the firm.
“The sharp decline is affecting all segments (consumer, education, and enterprise),” said Jitesh Ubrani, research manager, global mobile device trackers at IDC. "Businesses have also begun to slow PC spending as they struggle to navigate the difficult macro climate. Forex is also a big problem outside of the US, as businesses that had planned their IT budgets last year now they are realizing that their budgets simply do not go far enough due to rising prices and weakening local currencies.
Morgan Stanley Apple analyst Erik Woodring warned in February that weak consumer demand, slowing corporate markets and weak economic conditions had contributed to the channel's shares rising. He thinks PC sales this year will hit their lowest rate since 2006.
Supply chain challenges, opportunities
The IDC estimates came as Apple's top component suppliers Foxconn and TSMC announced their own dark neighborhoods. Foxconn last week reported a 21% year-on-year revenue decline in March, following an 11,65% decline in February. Foxconn Chairman Young Liu said in February: "We hold a relatively conservative view of smart consumer electronics and believe it may decline slightly."
TSMC revenue fell 15%, according to Bloomberg estimates. This is the second consecutive quarter of decline. It was also recently reported that Apple halted production of TSMC's M2 processors for a month due to weaker-than-expected demand for systems featuring the chip.
If there's a silver lining to these gloomy market forecasts, it's that the drop gives manufacturers some room to adjust their supply chains and explore production outside of China.
Apple's supplier partners are already believed to be accelerating major investments in production facilities in India, Vietnam, Thailand and elsewhere. Foxconn has invested $300 million in production in Vietnam and has placed most of its investment in new iPhone production facilities in India.
zoom in telescope
In the future, much will depend on the economic recovery. "By 2024, an outdated installed base will begin to upgrade," Linn Huang, IDC's vice president of research, devices and displays, said in a statement.
“If the economy is up by then, we expect the market to pick up significantly” as businesses, schools and consumers upgrade their systems, Huang said. "If the recession in key markets lasts into next year, the recovery could be very slow."
As of this writing, there is strong speculation that Apple will show off the first Macs with 3-nanometer M3 processors at its upcoming Worldwide Developers Conference in June. These will be the first consumer PCs in the industry to feature 3nm processors and are expected to offer significant power and performance improvements over existing systems.
Apple saw a strong reaction to the presentations of its MacBook Pro M1 during the last quarter of the year. After a weak Mac quarter in Q2022 2, Apple introduced updated Macs with M2023 chips in January 3, but they arrived with greatly weakened consumer confidence in most economies. Whether the allure of the new MXNUMX Macs will give Apple the boost it needs to shrug off the current malaise any time soon remains to be seen.
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