China's slowing economy, supply chain disruptions to chipmakers

China's slowing economy, supply chain disruptions to chipmakers

A person uses a smartphone on a subway platform in Manhattan, New York City.

Reuters -- China's slowing economy and an inflation-driven drop in consumer spending are expected to drag down global shipments of computers and phones this year, according to Gartner.

Shipments to China -- the world's biggest smartphone market, are expected to shrink by 18% as demand takes a beating from the strict COVID 19 curbs that have halted activity in key economic hubs including Shanghai, Gartner said in a report on Thursday.

The research firm expects to see a 7% drop in worldwide smartphone shipments, as well as the expected toll of supply chain snarls and Russia-Ukraine conflict on demand.

A perfect storm of high inflation, currency fluctuations and supply chain disruptions have lowered business and consumer demand for devices across the world, and is expected to affect the PC market in the year 2022, said Ranjit Atwal, senior director analyst at Gartner.

Chipmaker Advanced Micro Devices Inc said earlier this month that the PC market was set for a slow down after two very strong years.

The soft demand for PCs and phones is likely to weigh on companies from chipmakers such as Nvidia Corp to mega-cap tech firms such as Apple and Microsoft Corp. The companies are expected to report second quarter earnings next month.