The Taipei Times reported the forecast after Compal’s latest earnings conference, citing president Anthony Peter Bonadero. Compal shipped 12.1 million PCs in the first half, down 14.2% from a year earlier, and now expects a mid-teens full-year decline from 2025’s 28 million units. For an original-design manufacturer that builds notebooks for major PC brands, the figures are less a prediction about one vendor than a warning about the commercial PC pipeline behind many Windows deployments.
Compal says Windows 10 replacement demand is still present, but it is being outweighed by rising component bills. That distinction is important: IT departments have not suddenly stopped needing supported endpoints. They are deciding whether to buy now at higher prices, pay for Extended Security Updates, redeploy existing Windows 11-capable hardware, or delay non-critical refreshes.
Microsoft ended support for mainstream Windows 10 editions on October 14, 2025. Businesses can keep eligible Windows 10 version 22H2 devices receiving paid Extended Security Updates for up to three years, but ESU supplies critical and important security patches rather than new features, general support, or a permanent migration strategy. Compal’s forecast suggests that option is becoming more attractive to organizations facing a sharply higher acquisition cost for replacement laptops.
Memory inflation is reaching the Windows refresh budget
The key detail in Compal’s forecast is not simply that PC volumes are declining; it is the company’s explanation for why. Bonadero said higher memory-chip prices are making customers cautious even as Windows 10 replacement demand should ordinarily support commercial notebook sales. Compal reported that its gross margin slipped to 4.6% in the second quarter from 5.3% in the prior quarter, attributing the pressure to higher memory prices.
The wider market supports that explanation. Gartner forecast in February that global PC shipments would decline 10.4% in 2026 as DRAM and SSD prices rise, projecting a 17% increase in PC prices by year-end compared with 2025. IDC went further in a June outlook, forecasting an 11.3% annual decline in worldwide PC shipments and a 20% year-over-year drop in the fourth quarter, after buyers accelerated purchases earlier in the year to get ahead of expected component inflation.
Those forecasts explain an apparent contradiction in the market: there can be plenty of systems that need replacement while fewer systems are actually ordered. A Windows 10 PC that cannot meet Windows 11’s requirements is a clear technical candidate for retirement. But a finance team facing a higher unit price can still extend its useful life under ESU, especially where the device is in a low-risk role, has a stable workload, or can be isolated with tighter access controls.
The result is likely to be a more selective refresh cycle. High-priority devices—mobile systems used by executives, customer-facing employees, developers, employees handling sensitive data, and PCs incapable of meeting baseline performance requirements—will move first. Generic office endpoints, shared kiosks that do not fit consumer ESU eligibility, and fleets with several more months of operational value may wait, provided the organization has correctly budgeted for commercial ESU and can manage the security exposure.
AI PCs are protecting mix, not restoring unit demand
Compal says AI PCs now account for roughly half of its PC shipments and that the share should increase as the market moves through an AI PC refresh cycle. The company also said a greater mix of AI PCs and commercial PCs, higher selling prices, and operational efficiencies have kept its PC-unit profitability stable even as overall shipment volumes fall.
That is a useful warning against treating the “AI PC” label as proof of a broad hardware recovery. Higher-spec systems can lift average selling prices and stabilize an assembler’s margins while total unit demand declines. In practice, this means the systems still moving through the channel are likely to skew toward commercial configurations with more memory, more storage, newer processors, and longer support expectations—not toward the entry-level Windows laptops that once made fleet replacement easier to approve.
Gartner’s analysis points in the same direction. It expects rising component costs to concentrate demand around premium devices and predicts that low-margin entry-level laptops will become increasingly difficult for vendors to sustain. IDC likewise expects PC average selling prices to rise 17% during 2026. Compal’s results are consistent with that market split: fewer PCs, but a more valuable mix of PCs for the companies still buying.
For Windows administrators, the operational implication is straightforward. AI readiness should not become a blanket procurement requirement if the planned local AI workloads are undefined. A modern Windows 11 commercial notebook with adequate memory, storage, firmware support, and a manageable lifecycle can be a sound replacement even if it lacks the newest neural processing unit or a “Copilot+ PC” badge. Conversely, buying the lowest-spec Windows device available to preserve budget is riskier when memory constraints and Windows feature requirements are already pushing minimum practical specifications upward.
A procurement plan should separate three decisions that are often being bundled together: leaving Windows 10, replacing aging hardware, and adopting local AI features. They overlap, but they do not have to occur in the same purchase order. That separation gives IT teams a way to replace the systems that must move now without allowing an unsettled AI strategy to inflate every endpoint specification.
Compal’s server expansion shows where capacity is going
Compal’s PC outlook also contains a more revealing business shift. The company expects server revenue to rise by a high-double-digit percentage sequentially this quarter and to represent 10% of total revenue during 2026. It said AI servers made up about 70% of server revenue last quarter, and that much of its current AI-server portfolio consists of Nvidia B300-based systems in “Level 10” production.
In contract manufacturing language, Level 10 generally means system-level assembly and integration rather than the more extensive rack-level integration associated with Level 11. Compal says it plans to begin building larger AI server racks in the first quarter of 2027, while new manufacturing capacity in Taiwan and Texas comes online. Earlier reporting by the Taipei Times and Taiwan News had already described Compal’s Texas buildout as focused on AI-server production, so the latest comments fit a broader transition away from dependence on traditional client PC volumes.
The important consequence is not that server production directly deprives notebook makers of PC factory space. It is that the industry’s most attractive capital spending, engineering attention, and component demand are increasingly being pulled toward AI infrastructure. Memory is central to that shift. High-bandwidth memory for accelerators, server DRAM, enterprise SSDs, and client memory do not all come from interchangeable supply pools, but the broad race to serve AI data centers has changed supplier priorities and intensified pressure across memory markets.
That helps explain why a Windows endpoint refresh can be affected by a boom in hardware that has little to do with the desktop. The commercial PC market is competing in a supply environment shaped by data-center demand, even when the laptop itself is intended only for email, spreadsheets, browser-based applications, and device management tools.
What enterprise IT should do before budgets harden
Compal’s forecast does not mean every organization should rush to buy PCs before prices rise further. It means waiting needs to become a deliberate, documented risk decision rather than an assumption that next quarter’s devices will be cheaper and easier to obtain. IDC expects memory constraints to persist through 2027, while Gartner’s outlook sees upward pressure on PC prices through this year.
A practical response is to re-rank the fleet by security and migration urgency:
- Replace Windows 10 devices that cannot run Windows 11, have expired warranties, lack required security controls, or support high-risk roles.
- Confirm which remaining Windows 10 version 22H2 devices are eligible for commercial ESU, and treat that coverage as a temporary control with a defined exit date.
- Standardize on a smaller number of Windows 11 configurations so procurement can negotiate volume commitments and avoid purchasing fragmented, under-specified models at spot prices.
- Require vendors to disclose memory capacity, storage configuration, serviceability, firmware-update commitments, and delivery windows instead of comparing only processor generation and sticker price.
- Keep AI-PC premiums tied to a tested workload, such as local transcription, image processing, accessibility tooling, or a specific on-device model, rather than a generic promise of future capability.
The immediate lesson from Compal is that the Windows 10 deadline did not create the smooth commercial replacement wave many PC makers hoped for. It created demand, but memory inflation is deciding which organizations can act on it now. For IT teams still holding sizable Windows 10 fleets, the hardware refresh is no longer just a lifecycle project—it is a capacity, price, and security planning problem that will get harder if it is left to the fourth quarter.