Acer and Asus, Taiwan’s two biggest laptop brands, have disclosed their respective revenues for the month of June. Thanks to the “working from home” and “remote learning” trends brought on by the pandemic, laptop sales have never been better. Acer’s consolidated revenue in June surpassed NT$30 billion, a seven-year-high. Asus’s revenue in June was over NT$45 billion, the highest in 55 months.

Neither company revealed how much the Taiwanese market contributed to their stellar performance. However, Andrew Hou, President of Pan-Asia Pacific Operations at Acer, has said that ever since Taiwan announced a nationwide Level 3 epidemic alert in May, there has been a buying frenzy for laptops. The sales numbers every week were three to five times higher than average; at its peak, “We sold in one day what we usually sold in a month.” 

Buyers even lined up outside stores before they opened. “Notebooks went up on the shelves in the morning and were all sold out by the afternoon,” says a senior manager at one of the laptop companies.

But the times are changing. In Europe, the United States, and other regions, pandemic-related restrictions are being lifted. In Taiwan, there is hope of containing the virus. How much longer will the laptop buying frenzy persist? Foreign security firms, a bellwether of the stock market, have already expressed pessimism. 

In mid-June, BofA Securities published a report that urged caution on the personal computer market. In the report, they predicted that consumer spending will shift after the global pandemic has abated. PC shipments (including desktops and laptops) are forecasted to slow starting in the fourth quarter of this year. BofA Securities has downgraded PC brands and manufacturers alike, including Acer and Asus. It was the gloomy pronouncement heard around the world.

Why are security firms pessimistic? How much longer is the buying frenzy expected to last?

In a report published by the market research firm TrendForce on July 12th, analysts pointed out that the “stay-at-home economy” of 2020, brought on by the remote working and learning trend, had caused laptop shipments to rise far above the average annual fluctuation of about 3%--the norm during a slump. Shipments grew by 26% in 2020; increase in demand persisted well into 2021, with an estimated annual growth of 15%. In one example, rising demand in the education market vastly increased the shipment of Chromebooks—a key player in the growing laptop market.

Falling demand will hit in the 4th quarter

However, the report also warned that laptop demand will slow down during the second half of the year. “The impact will be most keenly felt in the fourth quarter.”

Once again, Chromebooks are the key.

TrendForce analyst Chen Jin Shuo (陳勁碩) says two factors will cause PC brands to voluntarily decrease shipment in the second half of the year. The internal factor is the fact that Chromebooks are cheap, and so the profit margin is low. PC brands will naturally try to readjust their product portfolio.

The external factor is more noteworthy. First of all, laptop demand in the educational sector in the U.S. and other markets has already shown signs of slowing down.

“Vaccination rates are rising in the U.S., and restrictions are being lifted in big states like California. Students are going back to school, so there is no longer a drive to purchase laptops for educational purchases,” Chen observes. He thinks Chromebooks will be the most affected by this change.

Another factor is the global shipping container shortage, which has led to shipping delays. This has in turn made it difficult for inventory levels to respond to demand changes in a timely manner, resulting in overbooking. 

“PC brand companies may have been overly optimistic in their forecast of Chromebook shipments earlier this year,” Chen observes.

(Acer Chairman & CEO,Jason,Chen Source: CommonWealth Magazine)

The report states that the combined impact of these factors will be clearly felt in the fourth quarter. It is predicted that laptop shipment will decrease 3% quarter-over-quarter. Global laptop shipments, which saw an annual increase of 15% in 2021, will dip 6% in 2022.  

“Currently, we can already feel that orders are starting to decrease,” reveals a senior manager at a laptop cooler company.

This also shows that, although laptop shipments will reach a historical high of 236 million units in 2021, they may gradually return to normal in the days to come.

Acer is not afraid

However, big PC brands have prepared themselves for this eventuality.

Acer, which has the largest share of the Chromebook market, held a shareholders’ meeting on July 9th. Although Acer Chairman Jason Chen expounded on how well laptops have done in the past year, he also stressed that Acer has diversified its portfolio. “We are concerned with more than just laptops being in short supply.”

In fact, for the last 18 months, four of Acer’s subsidiaries have gone public. At the same time, Acer has acquired two new companies: the Australian company DNA Connect, and the rubber products distributor Protrade. Acer has also invested in the semiconductor company FocalTech.

“We started from our core businesses, which includes monitors, displays, and PC peripherals, and then we entered the services and data security markets; in this way, we are creating multiple business engines,” says Chen. 

He emphasizes: “When you are making money, you need to expand your reach in new sectors.”

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Translated by Jack Chou
Edited by TC Lin
Uploaded by Jane Chen