Accumulation of stock, price drops?

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Do you remember when, a few months ago, we began to point out that the last quarter of this year could be a great time to update your PC or build a new one? Well there are more and more signs that we were not wrong, although we still did not have, of course, all the information we have now. And it is that to the points that we have been collecting throughout this year, a new one is added that is not especially positive for manufacturers and distributors, but it can be for users.

Two key factors for lower component prices are the crypto winterwhich has practically eliminated the demand for graphics cards for the implementation of mining infrastructures for Bitcoin and other cryptocurrencies, and the imminent arrival of the new generations of AMD and NVIDIA graphics cards, as well as AMD and Intel processors, which are also advancing in terms of the adoption of DDR5 (mainly AMD, since it will only allow this type of memory with the Ryzen 7000, although Intel will also will give priority). Thus, in the coming months we can expect a drop in prices in graphics of the current and previous generations, in processors and in DDR4 memories, although DDR5 is also falling due to its popularity.

What we could not count on at the beginning of the year, when the word scarcity hit the technology market daily, was that a few months later it would be being solved and, at the same time, the demand could decrease. The consequence? That we have gone from a situation in which the distributors hardly had any stock and the warehouses were practically empty, to another in which their inventory continues to growto the point that the decrease in the rate of production is already a reality on the table of many manufacturers.

Adjusting the production rate to demand is a logical move, of course, but it does not solve the problem of accumulated stock, a fixed asset that entails costs for all parties involved, and that no longer only affects the component market, it has also spread to the already assembled computer market, especially laptops. And it is that their assemblers also begin to accumulate the raw material (in this case the components and devices already assembled) in their warehouses.

PC inventories explode, media report.
Acer NT$63.44 billion
Asustek NT$206.19 billion
MSI NT$38.45 bln
Compal NT$148.46 bln
Inventec NT$76.05 bln
How much NT$254.33 bln
Wistron NT$186.74 bln
Total NT$973.66 billion (US$32.30 billion)
Chart: Company – Q2 Inventory – YoY % rise pic.twitter.com/z7f1EEj891

— Dan Nystedt (@dnystedt) August 23, 2022

China Times today echoes the situation of several large manufacturers, stating that after two quarters (the first and second of this year) of production at full speed, begin to find themselves faced with the need to dispose of the accumulated stock, something that is problematic in any sector, but even more so in technology, in which leading products at one point are relegated to the second division within a year or even less. And the same would be happening with component manufacturers, who are affected both by the change in the production rates of manufacturers and by the demand of end users.

And all this leads us to an increasingly likely conclusion: a drop in prices of components and systems is coming which, in addition, will be pushed by the arrival of the new generations mentioned above. It will not affect some types of components (and therefore final products) to the same degree as others. The new generation graphics cards and processors will remain at their recommended prices or even higher, depending on the demand with respect to the initial volume of supply, but in everything else, we can expect good news in the form of prices. unthinkable just a few months ago.

It is not necessary to wait a few months to get a fast, versatile and cheap PC, just a few days ago we told you how to get a gaming PC for only 721 euros. But surely, in a couple of months, we can silver you any other equally interesting and economical option.

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Brian Adam
Professional Blogger, V logger, traveler and explorer of new horizons.