Analysts at odds over 2003 IT spending

Link: Fears for IT recovery in 2003

A survey by CIO magazine in the US predicts that spending on hardware and software will see moderate growth of 4.6% this year, while a rival report predicts a spending drop.

According to Goldman Sachs, companies will spend even less on software and hardware in the next 12 months than they did last year. Its December survey of 100 US chief information officers found that spending will drop by one per cent in 2003, compared to last year.

The CIO magazine report, conducted in partnership with Deutsche Bank Securities and Prudential Securities, surveyed senior executives on current and future IT spending, also in December. It found that 34% of companies planned to boost spending on infrastructure programs, 47% would spend about the same and that 18% will cut budgets.

The Goldman Sachs report, which had previously predicted two or three per cent growth, found that two-thirds of the survey respondents expected budgets to tighten, with 43% not expecting any acceleration in spending until 2004 or later.

A third report, by the Semiconductor Industry Association (SIA), said global chip sales hit $12.68bn in November last year, a 1.3% increase from the $12.51bn in revenue reported in October 2002. And this was almost 20% up on November 2001 sales of $10.60 billion.

Chip manufacturers are gearing up for a boost in business as market analysts, for the first time in two years, predict double-digit revenue growth in 2003 and 2004 for chipmakers such as Intel, Advanced Micro Devices, Texas Instruments and Micron Technologies.

The SIA said chip sales rose 5.8% in November in the European market and 1.3% in Asia Pacific, while semiconductor sales in the Americas declined slightly by 0.8% and 0.6% in Japan.

SIA president George Scalise said the November sales of the global chip industry underscored the healthy recovery that built momentum throughout the year.

Gartner findings back the SIA report. It predicts that after two years of negative growth, worldwide semiconductor spending and wafer fab equipment spending will return to double-digital growth in 2003.

Worldwide semiconductor capital spending is projected to grow 15% this year to $32bn, up from $27.8bn in 2002.

‘While there is an absence of a driving killer application and a catalyst to incite an end user spending spree, the temporal expanse of depressed spending is creating pent-up demand,’ Gartner analyst Klaus Rinnen said. ‘Spending will be more at corporations’ discretion, but there are competitive elements that could exert pressure on corporations once the wave starts.’

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