PC Supply Chain Comments From Cleveland Research

In a report published Monday, Cleveland Research analysts Kevin Rottinghaus, Sean Muir and Chandler Converse look into the PC supply chain, following the Computex 2015 trade show held last week.

According to the note, the experts remain cautious on the PC supply chain as they see, “another downtick in PC & HDD shipments and DRAM demand/pricing for C2Q & 2015.”

Below are the key takeaways from the Computex event.

• PC builds estimates are 2 to 4 percent weaker than expected for the second quarter in calendar 2015.
• Microsoft Corporation MSFT’s Windows 10 is not viewed as demand catalyst; shipments are expected to ramp in mid-August or September.
• Hyperscale demand continues to see pockets of push-outs, particularly in China. The analysts think it's late for a 3Q15 pickup, but still hope to see some recuperation towards the end of said quarter.
• HDD TAM estimate for C2Q stands around 115 million (below guidance of 120-125 million), “on cuts in PC & high-cap enterprise; June Q often back-end loaded.”
• DRAM demand is softer across PC, server and mobile segments. PC pricing has a downside risk to roughly $20 or lower in C3Q.

The firm remains cautious of Micron Technology, Inc. MU, Seagate Technology PLC STX, Western Digital Corp WDC and Intel Corporation INTC, all Neutral rated, and positive on Buy-rated SanDisk Corporation SNDK.