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Supply chain normality returns for PCs but not servers, says Dell

Over at HP, CEO says a client price war is now looming

The supply chain for personal computers is back to normal after 30 months of plague-induced disruption – there is nothing more to worry heads of procurement teams at big corporate buyers.

Or rather this is the view of Dell, the logistics expert that got big fast by building desktops and notebooks to order, and selling them directly to customers.

"There's always going to be some issues in that chain, but in general from our perspective, it's operating more like the historical norm," chief financial officer Tom Sweet said this week.

It has helped that demand for computers by consumers has plunged, and that some components average sales prices are moving south as their availability has strengthened. Dell said it is trying to reduce stocks before it can benefit from these falling costs.

As revealed earlier today, chip lead delivery times fell slightly in August, according to Susquehanna International, although power management, microcontrollers and optoelectronic devices remain relatively scarce.

Dell's commercial PC client business is holding strong, driving the division that houses it. As for competitor HP, it has a higher number of shipments sold through retailers and it felt the pinch in its June-ended third quarter of fiscal 2022.

Speaking at the Evercore ISI Annual Technology Conference, HP CEO Enrique Lores said the company entered this latest quarter with "significant inventory in the channel," indicating the pressure in the supply chain is shifting.

"Traditionally, when this happens, the market becomes more aggressive on pricing, because it is the goal of reducing inventories. And this is what we think is going to have an impact in the short-term, we expect to see more price competition given how high inventories are, especially how high inventories are for some of our competitors.

"We expect that over time there is going to be a rationalization of pricing, given how favorable pricing has been [for PC vendors] during the last few years," Lores added.

A week ago IDC forecast a slump in the PC market, caused mostly by consumers worrying about how they'll cover household bills and having less discretionary spending. IDC said the market will still be bigger in 2022 than prior to the pandemic, and it is holding out some hope that Windows 11 will drive a PC refresh among larger enterprises.

One area of hardware that still isn't back to normal is servers, although Dell expects component availability to ease in the next three to six months.

Talking at the Citi 2020 Global Technology Conference this week, Dell boss Michael Dell said its infrastructure challenges were "not over. I wish it was. We still have shortages in some of the trailing nodes, and certain types of silicon are harder to get and on longer lead times."/p>

He said one lesson some tech brands learned during the pandemic is how important it is to retain elements of manufacturing.

"A number of companies, as they outsource to manufacturing, they decided to outsource the management of the components at a granular level. Maybe they kept the management of some of the big components. We never did that, but it would be a big mistake because any element of the supply chain that goes wrong, you're going to have a problem." ®

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