IT supply chain: Backlog of demand for PCs highest ever; higher IT prices impacted by logistics and transportation

logistics

Spend Matters welcomes this guest post from Ian Nethercot, MCIPS, Supply Chain Director at Probrand, a marketplace for IT products, services and solutions.

The prospect of a no-deal Brexit loomed large over the UK economy in November as the EU and UK struggled to finalise terms. One of the biggest hurdles looks likely to be delays at ports, which will impact product delivery and higher prices due to weaker exchange rates.

Adding to this volatility was a strain on logistics and transportation, largely driven by consumer spending in the run-up to Christmas. I spoke to one courier who reported the delivery of 1.8 million parcels the day after Cyber Monday, representing a 60% increase YoY. This pressure means we may see further delays and price hiking as demand for key lines remains high.

To help navigate the ups and downs, here are the latest developments and major movements that are influencing key IT product categories.

Exchange rate

The euro had a positive month against the US dollar. It began at 1.643 and kicked off with a prompt jump to 1.694 on November 4. From there, it saw its sharpest rise, soaring to 1.1873 on November 8 before falling to 1.1790 three days later. From this point, it rose steadily, hitting 1.1867 on November 24 with just a brief downward blip on November 19, before taking off again in the final week of November to reach a high of 1.1964 at the month’s end.

It was a different story against the pound. The euro saw an uneven rise to 0.9030 on November 5 from an initial 0.8988, but not without a fall from 0.9013 to 0.8998 on November 3. From November 5 it declined gradually to 0.9010 four days later before plummeting to 0.8902 on November 11. It rose sharply to 0.8981 on November 13, initiating a spiky decline to 0.8893 on November 24. The euro finished a volatile month against the pound by rising sharply again, hitting 0.8977 on November 28 before ending the month at 0.8968.

The euro's rise against the dollar was more to do with the dollar's misfortunes than positive news from Europe. The dollar fell to a two-week low against a basket of several currencies as surging stock prices reduced demand for currency.

The euro's drop against the pound mid-month stemmed largely from UK government comments that a Brexit deal was imminent, along with hopes that a coronavirus vaccine was near. The pound's fall at the end of the month came as a leaked UK government memo predicted a difficult winter fraught with a systemic economic crisis thanks to flooding, the pandemic, Brexit, and possible industrial action. A generous support package in the Chancellor's mini-budget was not enough to overcome the market's fears, and money fled elsewhere.

Phones and Tablets

IDC tracked strong performance from Apple, Xiaomi and OPPO in the Western European smartphone market in Q3 2020. Lockdowns continued to impact the market, sending shipments spiralling 6.5% YoY to 28.8 million units, the company said. Huawei suffered the most with a 58.7% decline, while Samsung fell a more moderate 6.9%, slightly under-performing the market average. Apple's gains were modest, rising 1.1%, while Xaomi rocketed 151.6%. OPPO grew by an incredible 566.2% YoY in Western Europe.

Things were better for EMEA overall, according to IDC, with smartphone shipments in that area bouncing back in Q3 before the next phase of lockdowns came into effect. Total smartphone volumes were 93.1 million, up 2.1% YoY to $27.7 billion.

The analyst firm also predicted a return to growth for global smartphone sales during Q4 and beyond, driven by the strong push behind 5G. Expect global smartphone growth of 2.4% YoY in Q4, followed by 4.4% throughout 2021, it said.

Traditional PCs

Demand driven by lockdowns and the move to work from home (WFH) will drive double-digit PC growth through to Q2 2021 in the EMEA region, said IDC. The demand for devices that enable people to work from home will push the Western European commercial market back into growth (7.1% YoY) in Q4 this year, skewing the product mix in favour of notebooks. The consumer market will grow by an impressive 28% in the same period, representing its third consecutive quarter of substantial growth.

Overall, traditional notebooks snapped up 30.9% of the market, while traditional and all-in-one desktops accounted for 23.7% of the market between them.

HP said that the backlog of demand for PCs is at its highest ever, and that the UK is no exception. Company executives added that HP is confident it can meet demand in the UK and Ireland, Brexit and COVID notwithstanding. It has had a global team working on Brexit for the last two years, it said.

Demand for PCs will soften after Q2 2021, said CONTEXT.

Memory

DRAM revenues were flatter than hoped in Q3, growing just 2% QoQ according to TrendForce. Rising bit shipments were not enough to offset falling prices due to excess inventory, the company said. Things will flip over the next six months, however, and we can expect to see DRAM shortages in 2H 2021, experts warned.

Monthly statistics

Price increases hit a big high on November 16 when they hit 46,431 across a variety of product categories. Meanwhile, price decreases hit a high of 38,877 on November 10.

Stock increases saw two significant peaks. The first, on November 4, took numbers to 10,999. The second, on November 10, hit 8,551. Stock decreases hit a high of 17,366 on November 2 and their second-highest number on November 9, when they reached 15,723.

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