Semiconductor uptick hints at a PC market recovery

Orders for the basic components hit a sudden spike, hinting at a second half recovery.

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After years in the doldrums, PC sales might be poised for a comeback, if orders for base components are any indication.

Taiwan Semiconductor Manufacturing Company (TSMC) has reportedly landed a big batch of orders from PC and smartphone chip clients for delivery in the second half of January 2014, according to the Taiwan-based tech news site DigiTimes.

This would indicate a rebound in sales in the latter half of the year. It takes at least one quarter to manufacture notebooks, which are the predominant PCs sold now. Desktops take less than a quarter to mass produce because they are easier to build. Laptops, with so much crammed into them, just take a little longer to manufacture. So between the time needed for component manufacturing, computer build time, packaging and shipping, component orders placed now will probably hit stores in completed PCs in the third quarter of this year.

DigiTimes isn't known for going into details, so they didn't say why the demand had gone up beyond "a rebound of replenishment demand in the PC sector and an improvement in sales in the end market," according to its sources.

I'm just confused as to what will be the catalyst/driver beyond seasonality. PC sales are always up in the third quarter (back to school) and fourth quarter (Christmas). Beyond that, there is no new Windows version planned that might drive sales. If anything, sales should be spiking now. On April 8, Microsoft ends its support of Windows XP and those machines will no longer be supported. So it's time to retire your XP machines now.

TSMC isn't the only one seeing a PC rebound. A few weeks ago, Citi noted improving/stabilizing PC demand in an investor's note and upgraded Intel. Intel has been slapped around by analysts recently after it gave lowered guidance for the year. It projected PC sales would drop about 5 percent this year over last year.

The DigiTimes story also said chipset vendors have renewed their orders for high-end smartphones as handset vendors prepare to launch new models of phones in the first half of 2014. We have the Consumer Electronics Show and Mobile World Congress shows both taking place in the next few weeks, so expect a lot of unveilings and introductions.

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