Back when the PC was just a toddler, memory prices dropped after spiking.
“About 1985, the personal computer market was tremendously overextended,” Texas Instruments spokesman Stan Victor told the Chicago Tribune. “There were a lot of manufacturers, all fighting for the same 10-percent share of the market. Then, demand for computers started slowing, and the computer manufacturers found themselves with a tremendous inventory. So they stopped buying chips. For about six months, there was no demand. People started selling chips for whatever price they could get.”
That flipped, and in 1988 there wasn’t enough RAM to meet demand. OEMs were knocking on every door they could find and placing orders—with no cancellation fees. The memory suppliers were not sharing data, so they didn’t know double (or quadruple) booking was going on. And, of course, memory prices spiked—classic supply and demand. Except the demand was artificial.
We saw similar episodes in the PC market over time; remember the cyber-coin run-up of AIBs in 2017–2018?
Are we poised for another sinusoidal swing?
Almost everyone who offers reports and projections is forecasting continued strong demand for notebooks in the second half of 2021—due to Covid. The pandemic is over a year old. People have been working at home for a year. And in the second half of 2021, they suddenly need a new notebook? Really?
That backs up through the supply chain, and memory suppliers are reporting strong demand, SO guess what? Memory prices are going up. What happens when component prices go up? System prices follow in a few months. And what happens when system prices go up? Demand falls—it’s called price elasticity.
The scooping up of AIBs by speculators and a few miners have placed demand on the fabs like TSMC and Samsung and has been reflected to the CPU supplier, so Intel feels it. And all of those players and more are reacting to it. And, all, or at least most of pundits and soothsayers, are reflecting it in their forecasts.
But the world’s population didn’t suddenly jump 20%. No, as we well know, many workers moved their office to their home.
If there was a genuine rise in the market, why haven’t table and chair sales gone up and become in short supply? Or coffee machines? Where is the ancillary demand that accompanies a market rise?
Whereas I don’t advocate moving the workforce back to the company’s main campus, clogging up the highways, and punishing workers with mid-numbing and polluting commutes, it will happen to some extent. What happens to that forecasted notebook demand then?
This means notebook prices may plummet in Q4 as OEMs and the channel offers fire sales to get rid of inventory.
Curb your enthusiasm.