July 2021

Welcome to this month's IT Market Alert from KnowledgeBus. This alert is designed to deliver some key market knowledge viewed during June 2021 that should help you get more from your IT procurement going forwards.

 

Executive Summary

  • Tablet sales still growing, but slowing
  • Display shortage is easing slowly
  • Semiconductor sales increasing

47,225

The largest number of price increases happened by June 24th, with 47,225.

Jump to Monthly Stats

Signs of recovery from the pandemic continue to pop up, but that isn't a good thing for many sectors. Tablets, for example, are slowing in sales as people anticipate leaving lockdown. The mid-pandemic feeding frenzy in that segment was never sustainable. In other sectors, the component shortage continues to bite. Processors, printers, and displays are good examples although the display shortage is easing slowly.

IT channels in the UK were relatively flat. CONTEXT's UK revenue index, measured as a four-week moving average against an baseline of 100 (representing average 2019 revenues), dropped from 98 to 97 during the first two weeks of June.

 

Exchange Rate

EUR/USD began high at 1.2227 before sinking sporadically for the rest of the month. It dipped to 1.2140 on June 4 before recovering slightly to plateau from a few days, then, on Jun 9 it began sinking from 1.2183, reaching 1.2108 on Jun 12. It rallied slightly to 1.2124 on Jun 15 before sinking quickly to its monthly low of 1.1861 on Jun 19. It rallied slightly to 1.1941 on Jun 25, but couldn't sustain it, and finished the month at 1.1879.

The euro had a volatile month against the pound that ultimately ended down. After starting at 0.8617 it rose briefly before plunging to 0.8587 on Jun 4. After a recovery to 0.8613 on Jun 9 it dipped through a bottom of 0.8577 on Jun 13, recovering to 0.8604 on Jun 15. After another large fall to 0.8559 on Jun 17, it rallied briefly to 0.8585 on Jun 20. This rise lost steam, sending EUR/GBP down to 0.8548 on Jun 22. The currency pair recovered some ground toward the end of the month, rallying to finish at 0.8585.

British Pound (GBP) per 1 Euro (EUR)

The dollar's fortune was based largely on comments by the Federal Reserve, conceding that the economy's recent heat was more than just transitory and that interest hikes in 2023 were likely. This more than offset mid-month positives for the Euro following higher-than-expected Euro PMIs. The pound performed positively overall thanks to factors including hopes for a reintroduction of international travel, but there was still uncertainty as the prime minister extended the lockdown for four weeks due to the delta variant.

US Dollar (USD) per 1 Euro (EUR)

Euro (EUR) per 1 British Pound (GBP)

US Dollar (USD) per 1 British Pound (GBP)

Price Changes and News Through May 2021

 

Phones and Tablets

Online transactions accounted for 26% of global handset sales in 2020, according to Counterpoint Research, up 6% YoY.

IDC expected tablet shipments to grow 1.8% to 166.5m in 2021, representing a significant slowdown from the segment's pandemic-fueled growth last year. Chromebooks will grow at a healthier 33.5% to reach 43.4m shipments this year, it predicted. 2022 will see shrinkage in both categories.

Traditional PCs

Gaming PC shipments continue to soar in the EMEA region, growing 50.2% YoY to 2.4 million units, according to IDC. This will slow as the pandemic effect wears off, though, hitting 17.6% YoY in Q2 and 11.1% in Q3.

Notebook gaming is the biggest driver for gaming PC sales in Western Europe, growing an estimated 33.3% YoY in 2021. Gaming desktops will grow by just 3.9%.

Premium Ultramobiles & Wearables

The European smart home market sold nearly 23 million units in Q1 2021, growing 25.6% YoY, said IDC.

Video entertainment topped 10.7 million units to capture 46.6% share of the home market, representing a 24.9% growth. Most of those shipments (79.4%) was in smart TVs, while digital media adapters had a 20.4% category share.

Smart speakers grew the most, at 19.1%, with Amazon retaining the number one slot ahead of Google.

Home monitoring and security, lighting, and thermostats accounted for 6.1 million units and 26.7% YoY growth.

Processors, MEMs, Semiconductors

The Semiconductor Industry Association (SIA) reported global semiconductor industry sales up 26.6% YoY to $43.6bn in May from $34.6bn last year. It outpaced April's sales of $41.9bn by 4.1%. This demonstrates rising chip production capacity, said officials. Semiconductor sales were up 31.2% in Europe. Nevertheless, CONTEXT's figures showed a marked decrease in European processor revenues in the first two weeks of June, dipping well below the 2019 baseline.

Memory

Counterpoint Research tracked a 30% rise in DRAM revenues to $19bn in Q1, driven by demand for mobile devices. TrendForce noted continuing high prices for graphics DRAM in the contract market as supply shortages persist. Supply fulfillment rates are at around 30%, and this will continue through 3Q21, driving graphics DRAM contract prices up by 8-13% QoQ.

Spot market prices have outpaced contract rates thanks to a rise in cryptocurrency prices. At the height of the graphics card boom, spot prices of graphics DRAM products were up to 200% higher than contract prices, the company said.

Expect the delta between contract and spot prices to narrow as the cryptocurrency market dampens (the difference had already dropped to around 100% in June). Nevertheless, things will still remain overheated in the contract market thanks to high demand for gaming PCs and continued demand from GPU giant NVIDIA.

Storage

External storage grew 4.5% YoY in dollars but shrunk 4.3% in euros during Q1, said IDC, highlighting the difference that exchange rates can make. Western Europe did especially well with a 6.6% rise (but still dropped 2.4% in euros). Dell led the market with $654.82m in sales representing a 33.4% market share, followed by NetApp, with a 14.6% share, HPE (12.8%) and Hitachi (6%). Dell saw the only significant growth at 12.4%.

All-flash-arrays were flat, growing just 0.4% year on year, showing that the market still prefers hybrid arrays, which grew 8.2%. HDD-only storage grew a respectable 7.8%.

Displays

The shortage in the panel storage is easing, according to TrendForce. It expected a 2% glut ratio for the large-sized TFT-LCD panel market for 2021, which is still verging on a shortage but significantly healthier than the 1.2% glut ratio in 1H 2021, which represents a drought. A healthy glut ratio for panels is 2.5-3%.

Manufacturers are installing more capacity to mitigate the shortage further, which TrendForce said will lead to a glut ratio of 2.6% in Q3 and 2.9% in Q4. In short, TrendForce believes that peak demand in the panel market has already passed.

Nevertheless, the supply/demand imbalance has had an effect. The shortage, which ushered in high prices, prompted a switch in focus to large mid- to high-end TVs will boost QLED TV shipments by 22.4% to a record-breaking 11.02 million units in 2021, according to TrendForce. OLED TV shipments will also break new ground, reaching 7.1m units this year, up 80% YoY. The move away from lower-end TVs will stifle overall shipments, which will grow 1.4% to 220m units this year.

The traditional busy period for monitors in Q3 will keep demand for IT panels high.

Printers

Printer shipments through European distributors fell 11.3% YoY according to CONTEXT, following a 29% growth in February and a 10.5% growth in March as companies fulfilled backlogs. A new printer shortage in the EU has affected sales.

Consumer sales dragged overall shipments down, falling 15.1% YoY in April. Inkjet multifunction printers (MFP) shipments, which account for 81% of consumer sales, dropped 12.2%. This category was hit hardest by the shortage, which has telescoped manufacturing times from one month to four. This will have a significant effect on overall market performance in the coming months, the company said.

Things were not all bad. Revenues rose 8.2% YoY as consumers turned to more expensive printers. Ink tank printers also continued to perform well, growing at a more muted 5% YoY in April.

The UK bucked the trend with a 13.2% rise in inkjet MFP sales.

Network Products

Global Ethernet switch revenues grew 7.6% to $6.7bn in Q1, noted IDC, while enterprise and service provider router revenues grew 14.4% YoY to $3.4bn.

Cisco led the switch market with a 49.3% share on revenues up 3.4% in Q1. Its share of the service provider and enterprise market stood at 37.6% on revenues up 18.5% YoY.

Western Europe switch revenues rose 16.7%, fueled by strong demand in Germany. The higher-speed switch segment is a key driver. Router revenues in the region grew 19.9% YoY.

Global Q1 enterprise WLAN revenues grew 24.6% YoY, driven by Wi-Fi 6, while consumer device revenues rose 11.7%, with the new W-Fi standard accouting for roughly one in five dollars spent in that segment. Enterprises are opening up WLAN investments again as they recover from the pandemic and budgets open up.

 

Monthly Stats

Price increases began low at 7,143, only dipping lower on Jun 23 when they reached 6,558. They saw highs of 45,350 on Jun 10 and 46,327 on 16, along with more moderate peaks of 38,418 on June 21 and 34,125 on Jun 29. Price drops peaked on Jun 14 at 47,225, along with other highs of 45,506 on Jun 8 and 36,522 on Jun 23.

Stock increases rose from 620 on Jun 1 to 6609 on Jun 2, and also saw a bump at the month's end from 3,146 on Jun 28 to 5,722 on Jun 29. Stock increases also saw a mid-month rise from the high 2000s to 5,967 before falling back. Stock decreases also saw a mid-month bump to 13,294 on Jun 16 after ranging between the mid-10,000s and low 12,000s for the first half of the month. They fell back to this range subsequently, only dipping briefly to 8,776 on Jun 24. New products spiked dramatically to 1,209 on Jun 16, punctuating an otherwise quiet month where new products never rose above the mid-100s.

New Products June 2021

Prices and Stock Movements June 2021