Belt-Tightening, but No Collapse, Is Forecast in Technology Spending
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The outlook for growth in technology spending is encouraging, according to corporate technology buyers and industry analysts.
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The top executive at Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), the world&#39;s biggest contract chipmaker, offered a mixed message Thursday about prospects for the global chip industry in 2008.Speaking at the company&#39;s third quarter investor conference, President and CEO Rick Tsai predicted that the chip industry will strengthen in 2008, but he also said TSMC will spend &quot;significantly less&quot; on new plants and equipment next year.TSMC announced net sales of NT$88.96 billion&#160;(US$2.73 billion) for the July to September period, up nearly 8 percent over the same time last year. Its net profit fell 6.5 percent to NT$30.37 billion, nearly in line with analyst&#39;s expectations.&quot;The third quarter was better than expected, not just for TSMC, but for the whole electronics industry,&quot; Tsai said. Sales of chips to the PC sector, mobile phone segment and consumer electronics products group were all brisk, he said.But many analysts considered TSMC&#39;s forecast to be more important than its third-quarter results. That&#39;s because of&#160;uncertainty about economic growth in the U.S.&#160;due to the housing loan problems there, high oil prices, and other troubles that could ultimately impact spending on electronics.TSMC is considered a&#160;bellwether for the tech industry&#160;because of the wide range of chips it manufactures, which end up in products including Xbox 360s, iPhones, PCs, and automobiles.&quot;We&#39;re expecting 2008 to be a better year than 2007 for the semiconductor industry,&quot; Tsai said. The chip industry will grow by a mid-to-high single digit percentage in 2008, the company forecast, compared to expected growth of 4 percent in 2007.Despite the rosy outlook, TSMC will reduce its 2008 capital spending from the expected US$2.6 billion in 2007. Spending cuts often indicate that a company isn&#39;t very bullish about business prospects, but TSMC said it wants to reduce spending next year because it spent heavily on production lines in 2007 that won&#39;t begin producing chips until next year.The change in spending plans is significant, said Eric Chen, research director at BNP Paribas Securities (Taiwan). If TSMC&#39;s capital spending drops by about 30 percent, as many analysts have predicted, it won&#39;t be a surprise, he said. But if the company reduces spending by a lot more, it suggests that TSMC may be more concerned about future economic growth than it is letting on.Tsai said TSMC hasn&#39;t determined a specific figure yet for its 2008 capital spending.BNP believes Europe and the U.S. may both face slowing economic growth next year.
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The past few years have seen companies doing everything they can to reduce costs. From outsourcing and offshoring to RIFs (reductions in force), the byword has been, âCut expenses.â But if most of the economists are right, 2005 will be a much better year, and companies will go back to concentrating on increasing revenue.
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Despite financial market volatility, U.S. technology companies had a strong 2007. The rising cost of energy, fears of recession, and forecasts of a slowdown in IT spending, however, point to a rocky 2008.
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Spotting the next disruptive technology, understanding the future and expecting less from insurance.
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TECHNOLOGY Neil Moses Chief financial officer, Parametric Technology Corp. "We are not seeing any decrease in customer spending as a result of an economic slowdown. However, if there is not an improvement in the real estate and debt markets over the next several months, this could have a negative impact on the economy."
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Spending in Eastern Europe and Asia is expected to lead a recovery in the global technology market over the next three years, according to an industry report released Tuesday.
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Here's a bit of advice for those of you planning IT budgets. For the next five to 10 years, set aside 10 percent to comply with new government regulations, both from the United States and from other governments in your major markets.
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Educational institutions will increase spending on open-source software and services over the next few years, but that doesn't mean proprietary software will be left in the dark, according to a new report covering 14 countries.
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It's beginning to look like 2001 in the general economy, with consumers tightening their purse strings and businesses shedding jobs. But in the technology business, which suffered more than any other in the last meltdown, there are fewer signs of strain this time around.
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The US National Institutes of Health invests $28bn annually in research. European spending is lower, although the European Union is closing the gap, helped by a shortsighted American policy of &quot;flatlining&quot; many scientific research budgets. (Perhaps this is because scientists have an annoying tendency to discuss things that conflict with the Bush administration&#39;s view of reality, such as global warming, evolution, the insufficiency of the New Orleans levee system and the medical potential of stem cells.)
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CAMBRIDGE, Mass.-- New research from Forrester Research, Inc. (Nasdaq: FORR) predicts that spending on IT goods, services, and staff will grow 7 percent in 2005 and continue at a similar pace through 2008
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The Motley Fool - Information technology spending is growing significantly -- that is, in other countries such as China and India. According to an IDC study, China's IT growth is expected to be 15% annually and India's about 20%.
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August 31, 2004 -- US technology executives are increasingly optimistic about the business climate, although plans for increased technology spending remain modest, according to a study released yesterday.
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NEW YORK - U.S. manufacturing activity unexpectedly contracted in January, but consumer spending closed out last year on a strong note, according to data on Thursday that gave conflicting signals on the direction of the economy.
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Forrester Research predicts the year ahead will be a slow one for IT spending, both in the U.S. and globally.
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Analysts turn gloomy, lowering their predictions on new technology spending as the nation slides into what may be a long economic recession.