CPU shipments suffer biggest decline in 30 years, for the second time in the last year

[Daniel Sims]

The big picture: Reports continue to roll in, signaling that 2022 was a historically rough year for hardware sales across the tech industry. Throughout the year, PC processor sales saw not one but two record-breaking quarterly slumps. And yet, AMD managed to gain market share in both cases.

Mercury Research writes (via Tom's Hardware) that the fourth quarter of 2022 saw the biggest fall in PC processor shipments in three decades. If reading that gives you a sense of déjà vu, it's because the same thing happened earlier in the same year.

The same market research group reported that Q2 2022 desktop CPU sales suffered their biggest year-on-year decline since they started recording that data in 1994. Now, it seems Q4 2022's quarter-over-quarter and year-over-year drop broke that record. Moreover, third-party data leads Mercury to conclude that 2022 represents the biggest slump in PC CPU history.

Excluding Arm processors, around 374 million CPUs were shipped in 2022, 21 percent less than in 2021. 2022 CPU revenues saw a 19 percent drop to $65 billion. The primary cause is inventory adjustments, which had a bigger impact than declining sales. This means that although shipments sharply fell, it didn't necessarily indicate an equally stark slide in sales to end users.

Data: Mercury Research

Another important detail is that the decline affected x86 processors more than others. Recent reports indicate that Arm processors are gaining market share in the laptop market, suggesting they haven't suffered the same blow x86 units did last year.

Tech manufacturers struggled to increase inventory after the supply chain shocks starting in 2020 coincided with swelling demand. This led to oversupply which, combined with falling demand in 2022, spelled bad financials for almost everybody.

Revenues from DRAM saw their greatest global drop since the 2008 financial crisis last year. Desktop GPUs experienced their lowest sales since 2005. Companies like Nvidia and AMD slashed their orders from TSMC. Falling demand for smartphones resulted in 8-year quarterly lows from Samsung and Apple's largest quarterly revenue slump since 2016.

Like some analyses have reported for other sectors, Mercury expects the choppy waters for CPU shipments to continue through the first half of 2023 before turning around in H2.

When Mercury reported the Q2 2022 numbers, they showed a market share gain for AMD, which has been replicated in Q4. From 2021 to 2022, Team Red's share of the x86 CPU market grew from 23 percent to 30 percent. Most of those gains were in the server CPU market, although Intel gained some market share in mobile processors.

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https://www.techspot.com/news/97574-cpu-shipments-suffer-biggest-decline-30-years-second.html

 

[nnguy2]

These market analysts keep calling this a downturn but it's a return to baseline after the pandemic record demands. Same reason all these companies overforecast thinking the pandemic demand would be the new normal only to have to lay off workers after demand normalize back to pre pandemic level.

 

[takaozo]

CPU's are in recent years something you don't change that often. Hell I kept my i7 4790 longer than usual.
Just upgraded to Zen 3 so no upgrade for me for a while.
Market conditions are worse then before pandemic because of the inflation and panic for another economic crisis like the one in 2008. Also the situation in East Europe and China trade war. It will take some time for the market to come back to pre 2019 status.

 

[Gaara]

Lower the price simple.

 

[psycros]

A high-end CPU from three years ago can still handle anything you can throw at it. DDR4 is still the standard and plenty fast. If you have an Nvidia 2070 or better you have no problems with demanding graphics unless you're dead-set on 4K with max everything. For most people there's simply no compelling reason to upgrade anything other than perhaps storage as games balloon in size.

 

[Enaks]

CPU's are in recent years something you don't change that often. Hell I kept my i7 4790 longer than usual.
Just upgraded to Zen 3 so no upgrade for me for a while.
Market conditions are worse then before pandemic because of the inflation and panic for another economic crisis like the one in 2008. Also the situation in East Europe and China trade war. It will take some time for the market to come back to pre 2019 status.

The ‘main’ PC in the kitchen is still a 2600K/OG Titan. It spends 99.999% of its life running a web browser & Office, I just don’t see the point in replacing it at present.

If I were to built something for gaming today I’d go AMD, but with component prices what they are I’m half tempted to get a reasonably spec’s M2 Mac Mini. Hilariously, the Apple solution is the cheaper option.

 

[Superconductor]

Law of diminishing returns. Just like storage ... for the consumer that is.

 

[Lounds]

AMD seriously needs to up their capacity they're seriously missing out on OEM capacity for desktop computers for offices, schools etc. Any dip in shipments and sales is down to the fact we're in a recession and cost of living crisis pushed up by Russia and Ukraine being excluded from the global trade throughout the majority of the world.

 

[toooooot]

There is inflation, no easy ways to make up for income eaten by inflation.
The same can be said about many things beside CPUs. People are trying to save
on many things. CPUs and all of the tech is on the list.
I am personally interested in how it will change for cellphone sales.
Can we expect to see people slow down on upgrades beside 2-3 years?

 

[sreams]

The ‘main’ PC in the kitchen is still a 2600K/OG Titan. It spends 99.999% of its life running a web browser & Office, I just don’t see the point in replacing it at present.

If I were to built something for gaming today I’d go AMD, but with component prices what they are I’m half tempted to get a reasonably spec’s M2 Mac Mini. Hilariously, the Apple solution is the cheaper option.

The M2 would certainly give you a capable system, but you'd be committed to Apple's OS and nothing else (unless you run VMs). Not even Linux can run on the M1/M2.

 

[lripplinger]

I think the demand of the last couple years has peaked. I also haven't bought a new CPU in many, many years. My current system has an i5-4670k, which I bought off of eBay, used. I do need to look at building a new rig, sometime this year, hopefully.

 

[Mr Majestyk]

Tough choice, pay the rent/mortgage and put food on the table or pay thousands for a new PC to get extra fps. What to do what to do?

 

[Enaks]

The M2 would certainly give you a capable system, but you'd be committed to Apple's OS and nothing else (unless you run VMs). Not even Linux can run on the M1/M2.

Which is fine tbh, the kitchen PC spends its life browsing the web and running office which is hardly a problem on a Mac, plus it’ll vertically integrate nicely with all the iPads/iPhones in the house

 

[rmcrys]

The ‘main’ PC in the kitchen is still a 2600K/OG Titan. It spends 99.999% of its life running a web browser & Office, I just don’t see the point in replacing it at present.

If I were to built something for gaming today I’d go AMD, but with component prices what they are I’m half tempted to get a reasonably spec’s M2 Mac Mini.

- M1 or M2 Apple systems are fenomenal for "home" use and multimedia editing. Everything else look elsewhere.

- most 6 to 8 core midrange chips are more than enough to power whatever GPU you want, but of course, if you go rtx 4080 or higher (or AMD equivalent) of course you have money to buy something stronger

- most older 4 to 6 core chips are still fabulous for 1080p or even 1440p if you don't want (or can) max the settings

I think since some gens ago, there is an artificial "need" to always buy the latest and best. Why?! This year there is less money and people will enjoy finally what they already have. I have a Surface Pro 8 with an RTX 3060ti on a eGPU box and it rules, I'm happy. And yes, I'm no hard core gamer, I have a personal life...

 

[BrwPCnrd87]

I just upgraded my primary rig, and I stayed on AM4 after seeing all the new launches play out. I have also been frequenting ebay for used parts just to save e-waste and money. My daughters both have Zen+ based systems with a mix of my old and used parts and both run perfectly for their needs. My 5800X3D is slotted into a used X570 board I only bought after deciding to use my b450 board in my wife's new office PC, which is a Ryzen 5 5600 / Nitro+ 5700 XT w/ 32GG DDR4 and used almost exclusively my old parts. Most people don't "Need" the latest and greatest and recent older hardware is more than capable in most scenarios. I also did some testing with my 5600 vs 5800X3D and in my case, only a handful of the games I actually play showed any tangible benefit when paired with my 6950 XT at 1440p.

 

[Jerry in WA]

People went nuts buying home entertainment options during the pandemic. Investors also got bored and bought crypto; so even more PC parts got sold for that racket. Everything PC related sold; 10 year old GPUs were selling for top dollar; It all set new records. Supply lines got messed up; there were shortages in raw materials, slowdowns in freight, scalping; all making PC parts more expensive.

Now, we're getting back to normal but we still aren't there. Prices are still not that exciting on the GPU front unless you are willing to roll the dice on Intel.