Semicondcutor supply chain problems are set to continue for at least another six months, according to Dell UK senior vice president and GM, Dayne Turbitt, who pointed to a surprising culprit amid surging demand.
“The silicon,” he said, “has been consumed by all the vials for the vaccine,” as he responded to a question from The Register concerning hardware supply constraints.
He also mentioned IC manufacturing challenges caused by water shortages in Taiwan, but the demand for vaccine vials was a reason we’d not heard echoed by other hardware vendors or analysts.
Back in November 2020, the first sign that countries were ordering COVID-19 vaccine supplies on a large scale also came from Dell – via vice chairman and chief operating officer Jeff Clarke. Clarke warned financial analysts at the time that there were “going to be challenges in the freight network towards the very end of the year as airplanes get filled up with vaccines and are all competing for a limited amount of space.”
Steve Brazier, president and CEO of analyst firm Canalys, told The Register today: “The processor supply issue has eased, but the global shortages of semiconductors has not. So even if you have the processor, you may not have the displays, memory, ICs to build your product.
The shortages have rattled up the supply chain and left all PC makers facing surging demand from consumers – and now enterprises – amidst challenging inventory levels.
In May this year, analysts said global PC shipments would swell 18 per cent to 357 million units in 2021.
That demand doesn’t appear to be slackening off any time soon. “Most people,” said Turbitt, “are still completing their Windows 10 rollout.”
The pandemic also triggered “this massive surge of ‘get me a laptop or get me anything that’s mobile, so I can work from home’,” which played well for vendors like Dell.
The shift in revenue balance toward laptops from desktops is well documented – 75 per cent of PCs sold were portables last year. Turbitt said the shift to hybrid working, requiring both improved peripherals (such as webcams and monitors) at home and an update to computers in the office, would keep the tills ringing for some time.
Ah, the refreshing taste of a refresh
It is also nearly 18 months since many workers last used kit in the pre-pandemic workplace, meaning another potential upgrade wave as older hardware gets swapped out.
“You’ll be coming back into a collection of kit that’s now two years old,” said Turbitt, “And most corporations run their assets between a three and a five year lifespan so some of those assets will now be seven years old.
“So there will probably be a wave of refresh that we’re expecting that will take place based on how we work, but also the age of the equipment.”
According to Dell, there are about 700 million PCs out there that are older than four years.
And then there is Windows 11, with some hardware compatibility requirements that will have put smiles on the faces of many vendors. As El Reg explained at the end of June, when Windows 11 was announced, Microsoft detailed stringent requirements for the OS. It stated TPM 2.0 support is required, meaning a minimum eighth generation Intel chipset, for example. The new operating system Windows won’t land until nearer to the end of this year.
“I think the Windows 11 rhetoric will pick up,” said Turbitt, “Microsoft just announced it; most people look at it, fiddle with it, break it, find the bugs and then plan their upgrades, which I see being something more of a 2022 answer.”
Canalys’ Brazier told us: “The Win 11 announcement came as a surprise to most enterprise customers, and not in a good way. Customers have to revaluate their client device plans now.
“Do they delay purchases until Win 11 is released and tested (i.e. one year from launch), do they stay with Win 10, or is now the time to consider Chrome or iOS (both of which are doing well)?”
Other hardware vendors were more bullish. Marco Andresen, Global COO of Lenovo, told El Reg that he hoped it would drive demand, “especially in the consumer space initially.”
The hardware restrictions announced by Microsoft could also stimulate demand from enterprises that thought they could take a breather after the Windows 10 refresh cycle.
Thank heavens for Microsoft, eh? ®