PC Market Update: Focus on China. Global Insight World Economic Outlook Conference, Milan, Italy May 9-10, 2006

Transcription

1 PC Market Update: Focus on China Global Insight World Economic Outlook Conference, Milan, Italy May 9-10, 2006 Paul Thomas Chief Economist, Intel Corporation

2 Strong Growth in PC Industry 2003 to Q Worldwide unit growth rates of 11% in 2003, 14% in 2004, and about 14% in 2005 IDC and Gartner estimate 13% year over year growth in worldwide PC sales 2006Q1 Mercury Research estimates 13% year over year growth in worldwide CPU sales 2006Q1 Evidence that CPU inventories increased in 2005H2 and 2006Q1 indicating lower PC sales growth 2

3 China s Place in the PC Industry PRC Demand for PCs and Servers Growing Rapidly CAGR or 49% , 23% Versus CAGR of 29% , 20% for Emerging Markets Versus CAGR of 19% , 8% Worldwide Level of PRC demand already very high, #1 in desktop purchases, soon #2 in notebooks Major source of PC parts and system assembly Likely source of open market chips Steep import tariff on semiconductors (17%) with high rebate on reexport (14%), some evasion 3

4 Third party survey of Semis, OEMs, Comms, SW Firms, and IT Service Companies ISI TECH SURVEY 0=Weak 100=Strong 4 Wk. Avg. April 28,

5 GEO Share of TAM - Desktop % of Units 100% 90% GEO SOT - DT % of Units 100% 90% Japan 80% 70% 60% GEO SOT - DT EMEA Japan 80% 70% EMEA 50% 40% 30% 20% ASMO Rest of APAC 60% 50% 10% 0% PRC % ASMO 30% 20% Rest of APAC 10% 0% PRC MS&F TAM PIVOT 5

6 GEO Share of TAM - Notebook % of Units 100% 90% 80% GEO SOT - NB Japan % of Units 100% 90% 80% 70% 60% 50% 40% GEO SOT - NB Japan EMEA 70% 60% 50% EMEA 30% 20% 10% 0% ASMO PRC 2003 Rest of APAC % 30% ASMO 20% 10% Rest of APAC 0% PRC MS&F TAM PIVOT 6

7 OEM Sales PRC Monthly OEM Sales 17.0% Sales Growth YOY SA 2006 Q1 Source: APMSC 7

8 OEM Sales APAC Monthly OEM Sales 20.0% Sales Growth YOY SA 2006 Q1 Source: APMSC 8

9 OEM PC Sales Middle East, Turkey, Africa Monthly OEM Desktop Sales 24.7% Desktop Sales Growth YOY SA 2006 Q1 Source: EMS EMS_META_TOTAL EMS_META_TOTAL_12_SA 9

10 OEM PC Sales Middle East, Turkey, Africa Monthly OEM Notebook Sales 115.4% Notebook Sales Growth YOY SA 2006 Q1 Source: EMS EMS_META_NB EMS_META_NB_12_SA 10

11 OEM PC Sales Eastern Europe Monthly OEM Desktop Sales 20.4% Desktop Sales Growth YOY SA 2006 Q1 Source: EMS EMS_EE_DT EMS_EE_DT_12_SA 11

12 OEM PC Sales Eastern Europe Monthly OEM Notebook Sales 72.3% Notebook Sales Growth YOY SA 2006 Q1 Source: EMS EMS_EE_NB EMS_EE_NB_12_SA 12

13 OEM PC Sales North America Monthly OEM Desktop Sales -2.9% Desktop Sales Growth YOY SA 2006 Q1 Source: USMSC (-5.9% retail per NPD Group) USMSC_DT_UNITS USMSC_DT_UNITS_12_SA 13

14 OEM PC Sales North America Monthly OEM Notebook Sales 29.0% Notebook Sales Growth YOY SA 2006 Q1 Source: NPD Group (+48.4% retail per NPD Group) USMSC_NB_UNITS USMSC_NB_UNITS_12_SA 14

15 OEM PC Sales Western Europe Monthly OEM Desktop Sales 7.6% Desktop Sales Growth YOY SA 2006 Q1 Source: EMS EMS_WE_DT EMS_WE_DT_12_SA 15

16 OEM PC Sales Western Europe Monthly OEM Notebook Sales 22.4% Notebook Sales Growth YOY SA 2006 Q1 Source: EMS EMS_WE_NB EMS_WE_NB_12_SA 16

17 2004Q3 2005Q1 2005Q3 Notebook Share of Client NB SOC NB SOC 40% 2000Q1 2000Q3 2001Q1 2001Q3 2002Q1 2002Q3 35% 30% 25% 20% 15% 10% 5% 0% 2003Q1 2003Q3 2004Q1 40% 35% 30% 25% 20% USA PRC WW 15% 10% 5% 0% 17 IDC 2000Q1 2000Q3 2001Q1 2001Q3 2002Q1 2002Q3 2003Q1 2003Q3 2004Q1 2004Q3 2005Q1 2005Q3 USA PRC WW

18 18 Exchange Rates Drive Relative NB Share USD/EUR Relative NB Share of Client % 145% 1.25 USD/EUR 140% % 130% % 120% % WE/USA NB SOC % 105% % 2000Q1 2000Q2 2000Q3 2000Q4 2001Q1 2001Q2 2001Q3 2001Q4 2002Q1 2002Q2 2002Q3 2002Q4 2003Q1 2003Q2 2003Q3 2003Q4 2004Q1 2004Q2 2004Q3 2004Q4 2005Q1 2005Q2 2005Q3 2005Q4 USD/EUR WE/USA NB SOC IDC

19 19 Exchange Rates Drive Relative NB Premium USD/EUR Relative NB Premium % % % 1.05 WE/USA 90% USD/EUR 85% % 2000Q1 2000Q2 2000Q3 2000Q4 2001Q1 2001Q2 2001Q3 2001Q4 2002Q1 2002Q2 2002Q3 2002Q4 2003Q1 2003Q2 2003Q3 2003Q4 2004Q1 2004Q2 2004Q3 2004Q4 2005Q1 2005Q2 2005Q3 2005Q4 USD/EUR WE/USA NB Premium IDC

20 Despite lower income, emerging markets are buying PCs Per Capita GDP ($,000) TAM Per 1000 people PCs per $100K GDP 2005 Saving Rate (%) Net FDI as % GDP* Household PC Penetration Rate (%) Workplace PC Penetration Rate (%) US PRC India Russia Brazil Source: Global Insight, MS&F (Q405), World Poll,UNCTAD 20

21 2005Q1 2005Q3 System Purchase Price Decline - Client Client SPP $1,700 $1,600 $1,500 $1,400 $1,300 $1,200 $1,100 $1,000 $900 $800 $700 $600 $1,700 $1,600 $1,500 $1,400 $1,300 $1,200 $1,100 $1,000 $900 $800 $700 $600 Client SPP 21 IDC 2000Q1 2000Q3 2001Q1 2001Q3 2002Q1 2002Q3 2003Q1 2003Q3 2004Q1 2004Q3 2005Q1 2005Q3 2000Q1 2000Q3 2001Q1 2001Q3 2002Q1 2002Q3 2003Q1 2003Q3 2004Q1 2004Q3 USA PRC WW USA PRC WW

22 System Purchase Price Decline Desktop Includes monitor $1,500 $1,400 $1,300 DT SPP $1,500 $1,400 $1,300 $1,200 $1,100 $1,000 $900 $800 $700 $600 $500 $400 DT SPP 2000Q1 2000Q3 2001Q1 2001Q3 2002Q1 2002Q3 2003Q1 2003Q3 2004Q1 2004Q3 2005Q1 2005Q3 $1,200 $1,100 $1,000 $900 $800 $700 $600 $500 $400 USA PRC WW 2000Q1 2000Q3 2001Q1 2001Q3 2002Q1 2002Q3 2003Q1 2003Q3 2004Q1 2004Q3 2005Q1 2005Q3 USA PRC WW IDC 22

23 System Purchase Price Decline - Notebook NB SPP NB SPP $2,800 $2,800 $2,600 $2,400 $2,600 $2,400 $2,200 $2,000 $1,800 $1,600 $1, Q1 2000Q3 2001Q1 2001Q3 2002Q1 2002Q3 $1,200 $1, Q1 2003Q3 2004Q1 2004Q3 2005Q1 2005Q3 $2,200 $2,000 $1,800 USA PRC WW $1,600 $1,400 $1,200 $1, Q1 2000Q3 2001Q1 2001Q3 2002Q1 2002Q3 2003Q1 2003Q3 2004Q1 2004Q3 2005Q1 2005Q3 USA PRC WW IDC 23

24 DT prices fall in all markets, prices higher in established than emerging 100% DT Priceband Share 80% 60% 40% 20% $2000+ $ $ $700-$999 $600-$699 $0-$599 0% US '02 US '05 PRC '02 PRC '05 India '02 India '05 Brazil '02 Brazil '05 DT TAM (Ku) 30,885 33,123 17,890 28,253 3,266 6,248 3,806 5, US India Brazil PRC 2005 DT SPP* $752 $679 $630 $ % change (24) (11) (23) (26) High price bands shrink and low bands expand in all markets Average system prices fall by 20% + in US, PRC, and Brazil, and by 10%+ in India $ band dominates in US, <$600 in PRC, and both bands in India and Brazil *Includes cost of monitor Excludes tax Source: IDC, MS&F (Q405)

25 NB prices fall even faster, prices higher in emerging than established 100% 80% 60% 40% 20% NB Priceband Share NB % Share of Client $2000+ $ $ $700-$999 $600-$699 $0-$599 0% US '02 US '05 PRC '02 PRC '05 4,045 India '02 India '05 Brazil '02 Brazil '05 NB TAM (Ku) 9,795 19, NB SPP* % change High price bands shrink in US and PRC Low bands expand in all markets India Brazil $1798 $1625 (21) (30) Avg system price fall by 30% + in US, PRC, Brazil, and by 20% + in India 25 PRC US $1180 $1032 *Excludes tax (31) (30) US and PRC price bands converging Source: IDC, MS&F (Q405)

26 Emerging market aspirations to use newer FFs provide price support $1,500 Desktop SPP 1 $250 Cell Phone Wholesale SPP 3 $1,200 $200 $900 $150 $600 $100 $300 US PRC $0 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan excludes tax source: IDC $50 $0 North America PRC includes VAT, excludes sales tax source: Gartner Notebook SPP 2 $3,000 $2,500 $2,000 $1,500 $1, $500 US PRC $0 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan excludes tax source: IDC

27 Same dynamic for TVs shift in emerging markets to better TVs supports prices $400 CRT SPP $1,000 $800 Television SPP 22% 25% 24% 27% 31% 33% 37% 41% $200 NA CRT avg size = 22 and falling $600 $400 5% % non-crt (LCD, PDP, RPTV) 3% 9% 4% 5% 6% 7% 9% $0 PRC CRT avg size = 26 and rising North America PRC 04Q1 Q2 Q3 Q4 05Q1 Q2 Q3 Q4 source: isuppli $200 $0 North America PRC 04Q1 Q2 Q3 Q4 05Q1 Q2 Q3 Q4 source: isuppli LCD, PDP, RPTV SPP $2,500 $2,000 $1,500 $1,000 $500 North America PRC Advanced TVs & increasing CRT size support TV SPP. People do not want $100 TV. They won t want $100 NB. $ Q1 Q2 Q3 Q4 05Q1 Q2 Q3 Q4 source: isuppli

28 Conclusion Worldwide PC Growth of 10% expected over next 10 years with PRC and other emerging market demand growth converging from above Is this the same mistake that we ve been making about PRC for the past 20 years? System price points expected to converge with PRC beginning to provide price support for generally rapidly falling prices PRC s role in PC industry spreading to include chip design and fabrication, software demand and piracy already affecting SW prices, Lenovo world-class OEM driving local NB assembly and world price 28