June notebook ODM shipments were stronger than expected, but 3Q26 still faces year-over-year decline pressure

Overview

This report is Morgan Stanley's monthly databook on the Greater China technology hardware sector, focusing on June shipments, 2Q26 build performance, and the 3Q26 build outlook for the top five notebook ODMs. The report shows that June shipments were significantly better than expected, but the 3Q26 outlook remains cautious, mainly because component supply constraints persist and low-end notebook builds remain under pressure.

Core views

The core view is that better-than-expected June ODM notebook shipments do not equate to a broad-based demand strengthening; part of the performance came from quarter-end pull-ins and product mix prioritization. Morgan Stanley maintains its estimate of 28.9 million units for 3Q26 builds, forecasting a 5% quarter-over-quarter decline and a 15% year-over-year decline, clearly weaker than the historical 3Q peak-season pattern.

Analysis framework

The report uses monthly ODM shipment data, quarterly build estimates, comparisons against Morgan Stanley forecasts, and historical seasonality comparisons to assess supply chain conditions, while also evaluating the extent of build constraints across product tiers based on component availability.

Methodology notes

• Industry data trackingODM shipment and build tracking

  Notebook ODM shipment and build tracking

  It assesses notebook hardware supply chain conditions through monthly shipment volumes and quarterly build volumes of the top five ODMs, and compares them with house expectations as well as year-over-year and quarter-over-quarter changes.

• Cycle and seasonality analysisseasonality comparison

  3Q seasonality comparison

  It compares the expected 5% quarter-over-quarter decline in 3Q26 with the 15-year average seasonal 3Q quarter-over-quarter increase of 5% to identify whether performance is weaker than a normal peak season.

• Supply chain constraint analysiscomponent availability assessment

  Component supply constraints

  The report argues that component constraints remain a key bottleneck, causing ODMs to prioritize higher-end and higher-margin models, while low-end notebook builds continue to be constrained.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Top five notebook ODMs

  Core tracked subjects of the report

  Strengths

  June shipments were above expectations, and 2Q26 build volume also exceeded expectations.

  Weaknesses

  3Q26 is expected to decline both quarter over quarter and year over year, below normal seasonality.

  Comparison

  The 3Q26 forecast is for a 5% quarter-over-quarter decline, weaker than the 15-year average 3Q quarter-over-quarter seasonal increase of 5%.

  Risks

  Component supply constraints may continue to suppress actual shipments, especially for low-end models.

• Greater China technology hardware equity coverage universe

  Industry coverage scope

  Strengths

  Some high-end hardware, ODM, and component companies may benefit from prioritized production of premium models.

  Weaknesses

  The overall industry view remains In-Line, with no sign of a broad upgrade.

  Comparison

  The report covers multiple technology hardware companies in Taiwan, Hong Kong, and mainland China, but this piece is primarily an industry data update rather than an in-depth single-company report.

  Risks

  Disclosures on investment banking relationships, holdings, and market making indicate potential conflicts of interest, so investors should assess the report alongside the full research and their own risk tolerance.

• Low-end notebook supply chain

  Subsegment more heavily affected by component constraints

  Strengths

  If component supply improves, build volume may recover.

  Weaknesses

  It is currently ranked behind premium models in ODM production priority, constraining builds.

  Comparison

  Higher-end and more profitable models are relatively more likely to receive resource allocation.

  Risks

  Persistent supply bottlenecks could keep low-end model shipments below normal seasonal levels.

Key data

• June notebook shipments of the top five ODMs12.0M unitsUp 29% month over month, down 8% year over year, and 10% above Morgan Stanley's expectations.
• Estimated July notebook build volume8.6M unitsExpected to decline 28% month over month and 20% year over year.
• 2Q26 notebook build volume30.4M unitsUp 4% quarter over quarter, down 8% year over year, and 4% above Morgan Stanley's expectations.
• Estimated 3Q26 notebook build volume28.9M unitsForecast is basically unchanged, down 5% quarter over quarter and 15% year over year.
• Historical 3Q seasonality+5% q/q15-year average 3Q quarter-over-quarter seasonality; the report's projected 3Q26 quarter-over-quarter decline of 5% is weaker than this level.
• Industry viewIn-LineThe Greater China Technology Hardware Asia Pacific Industry View is In-Line.

Impact & implications

In terms of investment implications, the June data provided a short-term positive surprise, but the year-over-year decline in 3Q26 and weak seasonality indicate that sector fundamentals remain affected by supply bottlenecks and demand mix. Higher-end, higher-margin models may relatively benefit, while supply chains tied to low-end notebooks may remain under pressure.

Risks

• Component availability may continue to limit actual shipments and build volume.
• Strong June shipments may include quarter-end pull-ins and should not be simply extrapolated as sustained demand improvement.
• 3Q26 build volume is expected to be weaker than historical peak-season seasonality.
• Low-end notebook models may remain under pressure because of lower resource priority.
• The research report includes disclosures of potential business relationships and conflicts of interest between Morgan Stanley and covered companies.

What to watch

• Quantitative 3Q notebook build guidance from ODMs when they report 2Q results in early August.
• Whether actual July build volume comes close to the 8.6 million unit estimate.
• Whether component supply constraints ease, especially their impact on low-end notebook models.
• Whether actual 3Q26 shipments validate the expected 15% year-over-year decline.
• The impact of changes in premium versus low-end notebook product mix on ODM margins.