First-tier PC vendors reportedly are seeing serious inventory issues in Europe and may try to digest stocks by offering price cuts. At the same time, some channel retailers are reacting to the news by boycotting the vendors to avoid having inventory dumped on them, according to sources from the upstream supply chain.

The PC supply chain was originally optimistic about demand for PCs in the second quarter, but component suppliers have seen their orders from brand vendors weakening during the quarter as most vendors have high inventory levels on hand, which they are struggling to clear as most consumers have halted their notebook purchasing to wait for the release of Windows 10, which is scheduled for the end of July.

Entering the third quarter, the traditional peak season for the PC market, with the release of Windows 10 and Intel's Skylake series, PC brand vendors are expected to place new orders for models with the latest hardware. With the inventory from the first half and the third quarter's new orders, the sources are concerned that their shipment performances will be seriously impacted in the fourth quarter.

In addition, Windows 10's free upgrade strategy is also expected to weaken consumers' demand for buying new PCs.

Intel's recent delay of its desktop Skylake processors to the third quarter and the notebook version to the fourth quarter was meant to give vendors extra time to digest inventory. However, the delay is unlikely to benefit vendors much in the second half since the new Wintel platform no longer has any major influence on consumers replacing their PC products.

Intel is scheduled to announce its 10nm Cannonlake processors at the end of the second quarter 2016, but the platform also has a high chance of being delayed as the PC market is unlikely to see any major improvements shortly, the sources added.

To minimize the impact, some component makers have turned to focus on supplying products to mobile devices such as smartphones, tablets and wearables, while some have shifted their attention to server and embedded product lines.