Are concerns about PC demand and inventory builds overblown? A report from Bear Stearns makes the case that PC demand is tracking normal seasonal patterns.
According to a research report by Bear Stearns, the PC supply chain indicates a roughly balanced state of affairs. The big takeaways:
- Notebook and desktop builds are expected to decline 9 percent to 7 percent, respectively from the fourth quarter. Normal declines range anywhere from 5 percent to 10 percent.
- Bear Stearns notes: "We are not seeing any net order cuts for 1Q08. While there has been some incremental softness at specific PC assemblers in Asia (such as Elitegroup and Compal), this is being offset by stronger builds at others (including Gigabyte and Quanta). Though 1Q is a back-end loaded quarter, the fact that PC vendors have been conservative in their order forecasts to the PC assemblers does reduce the risk of significant incremental downside to build forecasts."
- Semiconductor inventory levels are healthy in the channel. There are some inventory issues with other PC components due to slower than expected PC builds in the fourth quarter.
Overall, Bear Stearns argues that there isn't a PC demand train wreck around the corner. Problems could emerge later in 2008 though.