Description
The ICT industry had a tough start to 2009, with almost all first quarter indicators declining, often very sharply. There are signs of recovery, with the rate of decline bottoming out and turning up in the most recent cyclical data (May/June 2009), with positive month-on-month growth for most countries, and inventories running down sharply.
The impact of the crisis on ICTs and
their role in the recovery
August 2009
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
The OECD is a unique forum where the governments of 30 democracies work together to
address the economic, social and environmental challenges of globalisation. The OECD is also at the
forefront of efforts to understand and to help governments respond to new developments and
concerns, such as corporate governance, the information economy and the challenges of an ageing
population. The Organisation provides a setting where governments can compare policy
experiences, seek answers to common problems, identify good practice and work to co-ordinate
domestic and international policies.
The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic,
Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea,
Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic,
Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of
the European Communities takes part in the work of the OECD.
© OECD 2009
No translation of this document may be made without written permission. Applications should be sent to [email protected].
©OECD 2009
FOREWORD
This report was presented to the Committee for Information, Computer and Communications
Policy (ICCP Committee) in March 2009 and to the Working Party on the Information Economy (WPIE)
in June 2009. The ICCP Committee agreed that it be declassified after review by the WPIE at its June
meeting. The report takes into account all comments and available data through 17 July 2009.
The reportwas prepared by an OECD Secretariat team consisting of Arthur Mickoleit, Christian
Reimsbach Kounatze, Cristina Serra-Vallejo, Graham Vickery and Sacha Wunsch-Vincent, under the
direction of Graham Vickery, OECD Secretariat. The report, also issued under the OECD code
DSTI/ICCP/IE(2009)1/FINAL, aims to contribute to a better understanding of the evolution and impacts
of the economic crisis on the ICT sector. It is part of OECD work on Innovation and the Crisis
(www.oecd.org/innovation/crisis). The report will contribute to preparation of the biennial OECD
Information Technology Outlook (www.oecd.org/sti/ito). It was originally issued under the code
DSTI/ICCP/IE(2009)1/FINAL.
4 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
TABLE OF CONTENTS
SUMMARY ....................................................................................................................................................... 5
INTRODUCTION ............................................................................................................................................. 7
PART 1. RECENT AGGREGATE ICT PRODUCTION TRENDS ................................................................. 9
PART 2. PERFORMANCE OF TOP ICT FIRMS IN EIGHT ICT SECTORS ............................................... 13
PART 3. ICT SECTOR CHALLENGES AND OPPORTUNITIES ........................................................ 31
PART 4. ICT POLICY AND THE ECONOMIC CRISIS ....................................................................... 35
REFERENCES ................................................................................................................................................ 40
ANNEX FIGURES .......................................................................................................................................... 42
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 5
©OECD 2009
SUMMARY
The ICT industry had a tough start to 2009, with almost all first quarter indicators declining,
often very sharply. There are signs of recovery, with the rate of decline bottoming out and turning up
in the most recent cyclical data (May/June 2009), with positive month-on-month growth for most
countries, and inventories running down sharply. Performance in the first quarter of 2009 tested
2001-2002 declines in most ICT sectors, but relative year-on-year declines were not a great deal
worse than in 2001-2002 and some sectors have performed better than in the earlier period. The ICT
industry is also performing considerably better in this crisis than industries such as automobiles.
There have been clear regional differences in the effects of the crisis. Asian OECD countries
were particularly hard hit by the down-turn, with slumping production and soaring inventories
particularly in Japan. De-coupling of non-OECD countries also proved to be an illusion with many
non-OECD Asian economies (Chinese Taipei; Hong Kong, China; and Singapore) severely affected.
Chinese Taipei’s output was down by 40% in the early part of 2009 as was Japan’s, and Asian ICT
trade has been down by 25-40% year-on-year as the crisis took its toll in integrated Asian
production networks. There are several reasons for this: currency fluctuations, especially
handicapping export-dependent ICT industries in Japan, and plunging exports and slowing domestic
demand for Chinese producers and their suppliers. However the recent month-on-month upturn has
been very rapid, particularly in Japan, Korea and Chinese Taipei, and China has returned to positive
growth after slipping below zero year-on-year at the start of 2009. Korean ICT manufacturing was
one of the first to turn up in early 2009 helped by a weaker KRW.
The semiconductor industry is a bellwether for developments in the ICT industry.
Semiconductor production fell particularly rapidly at the end of 2008 and in the first quarter of
2009, with world capacity use dropping towards 50% and semiconductor equipment manufacturers
seeing very rapid falls in orders. However the crash has not yet reached the scale of 2001-2002
except in Asian OECD countries, and there has been a recent sharp upturn in total month-on-month
semiconductor billings. Large semiconductor firms are generally in good financial shape, with net
cash positions considerably higher than in 2001. R&D and innovation activities continue to be
financed from internal sources as revenues contract, and so far semiconductor R&D has declined
much less than revenues.
In terms of sectors, the revenues of global ICT hardware firms have been more affected early in
the economic crisis than ICT services firms (IT services, software, Internet-related and
telecommunications), as was the case in 2001-2002. Semiconductors, electronics, communications
and IT equipment were hit by slumping business and consumer demand and growth dropped
sharply. But ICT services have also slowed, and year-on-year growth of IT services and software both
turned negative in the first quarter of 2009, with Internet business growth around zero. Internet and
software firms saw steep falls in growth of over 20 percentage points in the last four quarters, in
sharp contrast with their recent performance. Overall, hardware sectors such as semiconductors and
communications equipment are declining less than in 2001-2002, and in comparison some ICT
services are performing worse than in 2001-2002.
6 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
In general, despite a very difficult first quarter large firms in the ICT sector were stronger at the
end of Q1 2009 than following the 2001 dot.com bust. Strong points include higher cash to debt
ratios in company balance sheets, consolidated and stronger firms, and the greater importance of the
Internet economy. However some large hardware manufacturers, especially Japanese electronics
producers, face difficulties as growth in new business areas does not compensate for declines in
others.
ICT employment has trended downwards, but not as rapidly as in automobiles for example.
Announcements of major lay-offs have been more pronounced in the semiconductor and electronics
sectors and lower in IT services, software, and Internet-related activities. But layoffs are occurring in
both goods and services, and some firms have reported that they will be releasing over 10% of their
workforce in the near future. Company insolvencies also add to the pressure on ICT labour markets.
In general, up-to-date employment data for the ICT sector are patchy and net employment changes
difficult to quantify; announced layoffs are reported prominently and these reported data do not
take into account new and continuing recruitments [see DSTI/ICCP/IE(2009)2, Secretariat Working
document].
ICT R&D is declining, but it is performing somewhat better than employment and certainly
better than production and revenues, as was the case in the last downturn. Where R&D is declining it
is with a lag compared with turnover and employment, as investments in R&D and innovation are
clearly seen as necessary for future competitiveness and the development of new growth areas (see
OECD Information Technology Outlook 2008, Chapter 1). Despite generally good industry R&D
performance in Q1 2009 and continuing support for R&D in Q2, some hard hit sectors such as
electronics and semiconductors were however beginning to perform worse in R&D than in 2001. On
the new firm side, venture capital slowed very markedly from mid-2008. Nevertheless around one-
half continues to flow into the ICT sector and ICT-intensive clean technologies, and surveys suggest
that software, new media and particularly clean technologies will continue to attract a major share of
venture investments.
ICT policies need re-examination and refinement in the crisis and recovery. In recent years
these policies have been increasingly integrated into broader strategies to use ICTs, the Internet and
other networks to achieve growth, employment and wider socio-economic objectives. These
objectives include addressing national challenges (e.g. social cohesion, ageing societies, national
security) and global ones (e.g. climate change, energy-efficiency, global health), and using e-
government to make the delivery of such services more efficient. The crisis and launching of
economic recovery measures are a propitious time to re-evaluate these policies.
Economic stimulus packages to address the economic crisis affect the ICT sector directly and
indirectly. The immediate aim of these packages has been to restore the health of the banking sector
and stimulate demand in the short-term; re-financing banks, injecting cash into the economy and
protecting jobs. These measures may help counteract downward pressures on the ICT sector and
sustain the diffusion of ICTs. Most governments also plan to foster growth through long-term
investments which have potentially providing an anti-cyclical stimulus on the supply-side. In many
cases these long-term plans are directly related to the ICT sector or ICT applications, including
“smart” applications in urban systems, transport systems, electricity distribution, etc. The question is
how current ICT policies should be maintained or rethought in the context of the economic crisis and
what is the appropriate balance between continuity in proven ICT policies and change in the form of
ad hoc crisis measures.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 7
©OECD 2009
INTRODUCTION
The 2008 edition of the OECD Information Technology Outlook (December 2008) showed that
the downturn in the ICT sector was deepening rapidly and that official short-term indicators had not
yet started to show the depth and rapidity of the decline. Tracking the rapid slump in the ICT sector
has been particularly difficult.
1
Unlike the 2001-2002 recession which began with the bursting of the
Internet bubble, the current recession began in the financial services sector due to deep-seated
systemic weaknesses in OECD banks and insurance companies. The financial crisis rapidly worsened
and spilled over from the United States to other countries and fed the subsequent crisis in the real
economy. Despite massive government attempts to stabilise it, the financial system remains fragile,
undermining global economic activity, and unemployment is rising rapidly.
The magnitude of the financial crisis and subsequent deep economic recession were difficult to
foresee. OECD macroeconomic projections shifted down sharply in the 10 weeks from early
September 2008 to mid-November 2008, from a rapid slowdown in growth and the onset of
recession in some OECD countries to the OECD area as a whole entering recession and
unemployment rising in many OECD countries.
2
The subsequent OECD Interim Economic Outlook in
March 2009 and the OECD Economic Outlook in June 2009 have tracked the development of the
deepest and most wide-spread global recession for more than 50 years, with real GDP declining in all
OECD countries in 2009, non-OECD countries slowing sharply, real world growth turning negative,
and trade declining rapidly in real terms.
Tight financial conditions and a generalised loss of confidence were projected to continue, but
the June 2009 Economic Outlook was the first in two years to revise upwards the growth projections.
Recovery appeared to be in motion in large non-OECD countries, particularly China, US activity could
potentially bottom out in the second half of 2009, and Japan’s trade-induced contraction looked to be
close to the end, although the euro area was not displaying clearly visible signs of recovery.
3
Against
this background, the outlook for the ICT sector has been particularly hazardous to position. A major
challenge has been to develop an indicator base to better assess near-term trends.
There are three drivers of ICT production. First, longer-term prospects and trends for the ICT
sector remain good, with cyclical and structural growth continuing across many segments, as ICTs
become embedded in all economic, social and cultural activities (see OECD, The Seoul Declaration on
the future of the Internet economy, 17-18 June 2008). Second, ICT investment is volatile. On the
investment side this is due to the “acceleration principle”. Investment is approximately proportional
to the rate of change of output. This magnifies changes both upwards and downwards in periods of
growth and slump. Third, consumer spending is under pressure and has dropped sharply. Consumer
confidence has fallen very rapidly with the collapse of the house price bubble and stock markets.
People feel less rich despite unchanged income (the “wealth effect”), there is rapidly rising
unemployment (potentially reducing consumption expenditure) and increasing worries about job
security (increasing household savings). Thus there are major downward pressures on ICT
expenditures, particularly on goods expenditures.
1
OECD (2008a, b), “Tough year ahead for IT industry, warns OECD”, Press release, 22 December, at
www.oecd.org/sti/ito
2
OECD (2008d), What is the economic outlook for OECD countries? An interim assessment, 2 September; OECD,
OECD Economic Outlook, Number 84, 25 November.
3
OECD (2009a), OECD Interim Economic Outlook, 31 March 2009; OECD Economic Outlook, Number 85, June 2009.
8 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
To map the impacts of the crisis the next section analyses the performance of the ICT sector
with data drawn from official statistical sources. The following section reports OECD analysis of
quarterly reports of the largest ICT firms. The third section elaborates on the likely supply and
demand factors re-shaping the sector in the economic crisis and the impacts on ICT diffusion and
use. The paper closes with a discussion of ICT policy, a brief survey of relevant programmes in
current government economic crisis packages, and interactions between current ICT policy and
economic crisis packages.
The analysis in this report is designed to address the following questions:
? What is the depth and extent of the current downturn in the ICT sector?
? How does it compare with the 2000-2001 recession? Are some sectors and countries
performing better than others?
? What are the likely near-term effects of the recession and recovery in the sector?
? Is there a changing role for ICT policy? What impacts will crisis packages have on the ICT
sector and the use of ICTs across the economy?
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 9
©OECD 2009
PART 1. RECENT AGGREGATE ICT PRODUCTION TRENDS
Short-term ICT production
4 5
By product area: ICT goods and services
Production of semiconductors has been leading the way down in this downturn, as it does
habitually, and just as it leads the way up in upturns. Semiconductor production in current terms has
been turning down in some countries since 2006, and the downturn accelerated in the second half of
2008. On the other hand communications equipment has tended to trend slowly down towards zero,
and measuring and controlling instruments turned down later as industrial investment dried up (see
Annex Figures).
ICT goods inventories built up rapidly in countries for which data are available. In Japan the
build-up in the producer inventory ratio (inventory over shipments) rose rapidly to unprecedented
levels at the end of 2008/early in 2009, particularly in electronic components and to a lesser extent
in IT equipment, although inventory levels have now been pared back. Similarly in Korea producer
inventories for computers rose to unprecedented levels in the last half of 2008 and semiconductor
inventories to close to record highs. However they dropped sharply through the first quarter of 2009
as ICT manufacturers slashed production and as competitiveness improved with the declining KRW.
The very rapid inventory build-up in Japan and Korea was due to the precipitous decline in exports
as business and consumer confidence dropped in importing countries. On the other hand ICT
inventories rose in the United States but to lower levels than in previous cycles.
Computer and IT services are slowing, but have still retained positive growth in most countries.
In most countries for which data are presented, computer and IT services have recently been
performing somewhat better than telecommunications services in monthly activity, output or
turnover, and telecommunications services are even declining in China albeit from a high level.
Comparisons with the cyclical downturn of 2001-2002
Comparisons of production in the current period compared with the last cyclical downturn vary
considerably across countries. In general, aggregate production of ICT goods in the United States and
Europe is worse in terms of year-on-year changes than in 2001-2002. Historically very sharp falls in
goods production in Japan, Korea and Chinese Taipei took year-on-year production indices down 30-
40%, far below their 2001 cyclical lows. But all have shown equally sharp signs of upturns in Q1
2009, with Korea leading the way (see Figures 31, 34, 44 and 47).
4
All data is drawn from official national monthly statistics, most of which are released with an approximate
6 week lag. In this paper most national data are through May 2009, with some through June 2009. 3-month
moving averages on seasonally adjusted data have generally been used to iron out short-term fluctuations, and
to provide a better picture of recent movements than the 12-month moving averages in the Information
Technology Outlook. A sample of the figures used to prepare analysis in this section is presented in Annex
Figures 28-50.
5
This section benefited from inputs and comments on Asian developments from Dieter Ernst, Economics Study
Area, East-West Center, Honolulu.
10 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
In non-OECD Asia, Chinese Taipei was hit by a very sharp slump in flat-screen products and
semiconductors, and Chinese ICT value-added data dropped below zero at the start of 2009, but they
have now picked up to around 3% year-on-year, a far cry from close to 20% growth in June-July
2008. The producer inventory ratio for electronics and ICT equipment in Japan was very high
compared with the previous cycle in 2001-2002. In Korea the inventory buildup in the second half of
2008 was higher and sharper than the previous 2000-2001 cycle, although semiconductor
inventories did not see the prolonged two-year buildup beginning late-1999. For the United States,
inventory buildup was lower than previously and inventories are now dropping.
IT and computer-related services were generally performing better in most countries than
during the last cyclical downturn in 2002, but have continued to trend down even as ICT goods pick
themselves up from the bottom of the slump. Telecommunications services are often performing
worse than IT and computer–related services in the current slump, after having performed better in
the last one.
Performance compared with other product groups
In the previous slump in 2001-2002, ICT goods production was worse than the manufacturing
aggregate and worse than both motor vehicles and chemicals in all countries for which detailed
monthly data are available.
In the current slump, ICTs goods are generally performing better than aggregate manufacturing
and in particular better than motor vehicles, which is the worst performing major sector across all
countries surveyed except China. ICT goods are performing somewhat better than chemicals except
in all Asian countries. In Japan and Korea ICT goods production is somewhat worse than total
manufacturing and close to motor vehicles in its slump.
In Japan the producer inventory ratio in electronics and IT equipment rose much more rapidly
than for total manufacturing, chemicals and motor vehicles, even though inventories in
manufacturing, chemicals and motor vehicles reached historic highs in Q1 2009. Similarly in Korea,
ICT manufacturing producer inventories rose to record highs in the second half of 2008. They
peaked much sooner and more rapidly than chemicals and motor vehicles (which both remained
relatively low) and were well above total manufacturing. In the United States ICT inventories started
decreasing only very recently, later than for manufacturing as a whole and much later than for motor
vehicles and parts. As a sign of relative resilience in US ICT goods production, the computer and
professional equipment industries have had among the lowest year-on-year increases in their
inventory to sales ratios amongst all US goods categories.
6
IT and computer services remains positive in most countries and is performing much better
than ICT goods. IT services performance is now generally better than aggregate services although
continuing to trend down. In most countries IT services are now performing better than financial
services, and better than communications services. In the previous slump in 2001-2002 IT services
generally performed worse than total services, and considerably worse than both communications
services and financial services.
6
Data from Econompic Data, 2009.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 11
©OECD 2009
Performance across countries
The ICT production slump has been about as deep as in 2001-2002 with the exception of Japan,
Korea and Chinese Taipei where the slump has been particularly severe (see Figures 31, 34 and 47).
This is in part due to the continuing restructuring of the ICT goods-producing industry away from
many OECD countries towards Asia, particularly China, and to Eastern Europe, following the last
slump, increasing synchronization with global demand. In Korea and Japan the deep slump in ICT
goods production approximately equals that in motor vehicles, but the rapid run-down in ICT
inventories suggests that ICT goods production is now likely to improve in the remainder of 2009.
Services performance has been consistently trending downwards in most of the sample set of
countries, with no particularly major differences across them. This may be due to the domestic
nature of most service transactions, so that they are not buffeted by the rapid collapse of export
markets seen for ICT goods trade, but are now declining in 2009 along with the rest of the economy.
Semiconductors
Semiconductors are always seen as the bellwether for the ICT goods industry. They are major
intermediate inputs into production, leading the rest of the sector into slumps and pulling out first.
Analysis of the performance of the semiconductor sector provides a good leading indication of what
will later happen across the wider ICT goods industries.
The world-wide semiconductor market remained flat overall in the first three quarters of 2008,
but with a sharp and continued drop since Q4 2008 with the onset of the global recession. The global
market volume is expected to decline by at least 20% during 2009 and recovery is not expected
before the end of 2009 or 2010 (see Annex Figure 25). Annex Figure 26 for semiconductor markets
shows the rapid decline in billings in the last quarter of 2008 and the first one of 2009. The shape of
the accelerating slump in Q4 2008 resembles that of the sharp down-turn from Q3 2001. A modest
month-on-month upturn since March 2009 suggests that demand is beginning to stabilise, albeit at
substantially lower levels than one year earlier and some commentators see a return to growth
towards the end of 2009, following Q2/Q1 growth in the first half of 2009 (2009, IC Insights), as, for
example, declines in PC sales level off.
Falling sales are exacerbating manufacturing over-capacity. Utilisation rates for semiconductor
facilities in Q1 2009 have fallen to 55%, lower than the equivalent trough in 2001 (see Figure 1).
These data suggest the current downturn is much sharper than in 2001. In the short term, continued
price declines are leading to plant closures, delayed and reduced investments. In the medium to
longer term, this might lead to product shortages and production under-capacities, especially in
newer, more cost-efficient manufacturing facilities (e.g. for 300 mm wafers).
12 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
Figure 1. Utilisation rate of semiconductor manufacturing facilities
In percentages
50
55
60
65
70
75
80
85
90
95
100
2Q
00
3Q
00
4Q
00
1Q
01
2Q
01
3Q
01
4Q
01
1Q
02
2Q
02
3Q
02
4Q
02
1Q
03
2Q
03
3Q
03
4Q
03
50
55
60
65
70
75
80
85
90
95
100
1Q
06
2Q
06
3Q
06
4Q
06
1Q
07
2Q
07
3Q
07
4Q
07
1Q
08
2Q
08
3Q
08
4Q
08
1Q
09
Note: The two graphics indicate utilisation of state-of-the-art manufacturing facilities. There is a break in series in Q1 2006 due to
changing technologies. These statistics are based on data supplied by merchant semiconductors manufacturers who together
represent the great majority of world semiconductor production.
Source: Semiconductor Industry Association, May 2009.
Venture capital
Shifts in current flows of venture capital (VC) give an idea of where risk-taking investors see
future innovations and the most promising areas for investment. The volume of these funds is
currently very constrained by the availability of finance, and the potential for successful exit
strategies through stock market listings or purchases of successful firms, e.g. by private funds. These
data are often published very rapidly by VC industry associations, but are not readily comparable
across countries. Detailed quarterly US data is available with a lag of around one month and as the
United States is by far the largest VC market, these data are indicative of global trends in funding ICT
innovations.
The most recent US data (through Q1, 2009, see Annex Figure 27) show that ICT VC has held up
moderately well, and the share of ICTs in total venture capital remains stable at around 50% even if
it has declined from over 75% at its peak in the Internet bubble. However US ICT venture capital
declined substantially in current terms to around USD 1.5 billion in the first quarter of 2009 from
close to USD 3 billion in the last quarter 2008. The current level of ICTs in venture capital
investments is almost as low as it was in 1996. These venture capital investments indicate the
continuing importance of ICTs as promising sources of innovation and growth despite the US-led
financial market crash, and this importance is expected to continue, although with some shifts,
particularly towards ICT-intensive clean technologies.
7
7
A recent survey of 725 venture capitalists globally suggests that over the next 3 years investment interest will
continue in telecommunications and semiconductors but it will be decreasing, that software and new media will
attract increasing investment interest, and that clean technologies will attract the greatest increase in
investments. Governments are expected to be most likely to increase venture capital investments compared to
other actors, and governments should implement favourable tax policies for entrepreneurial development and
develop policies to motivate institutional investors to invest in venture capital (2009, Deloitte Touche
Tohmatsu, Global trends in venture capital: 2009 global report).
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 13
©OECD 2009
PART 2. PERFORMANCE OF TOP ICT FIRMS IN EIGHT ICT SECTORS8
To analyse recent performance in more detail, this section looks at the ten largest firms in each
of eight different ICT sectors. These firms are drawn from the top-250 ICT firms as identified in the
OECD Information Technology Outlook 2008. The relative performance through to Q1 2009 (quarterly
year-on-year growth) is compared with 2001 and Q1 2002. Year-on-year quarterly changes are
calculated for each firm and then pooled to make up the Top-10 firm sector groupings.
9
These give
an overview of the recent evolution of large ICT firms and the sector. Balance sheet net cash
positions are analysed for the first time, with net cash defined as: cash plus short-term
investments/marketable securities minus debt. These net cash data, although very variable across
firms, give a forward indicator of their likely survival and their potential to self-finance R&D and
innovation.
The results show considerable variation across sectors as would be expected in the recession
and geographical and firm-specific factors also account for a large share of variability. Aggregate
trends described in the first part of this report are largely confirmed by firm-level developments in
the ICT sub-sectors analysed below. However, detailed data in this section of the report goes through
the first quarter 2009. It does not capture the upturn in ICT goods which can be seen in the most
recent cyclical data presented in this report and in the very preliminary analysis of firms reporting
second quarter 2009 results.
Semiconductors
The semiconductor industry as usual was the earliest to be hit by the recession. Demand for
semiconductors fell significantly throughout 2008 and severely during the final quarter, and
continuing into Q1 2009. However there has been a modest recent uptake of demand and firms
which have released results show that 2009 Q2 year-on-year results, although still negative, are
better than for Q1, and that there is quarter-on-quarter growth.10 However the rapid fall has
affected the entire sector, including semiconductor equipment suppliers (e.g. ASML, Applied
Materials, Kla-Tencor, Tokyo Electron) and subcontractors. Utilisation rates dropped rapidly
through Q1 2009 (see Figure 1 above). Despite positive headlines (e.g. Intel investing USD 7 billion in
manufacturing facilities over the next two years, and positive quarter-on-quarter results and
improving year-on-year results) 2009 is expected to see a year-on-year revenue decline for the
sector of at least 20% (Annex Figure 25).
Memory semiconductors have been particularly affected with rapidly falling demand and large
overcapacities. Gartner reported that the total market for DRAM memories contracted by over one-
third in the final quarter, both on the previous quarter and year-on-year (Fabtech, 2009). Memory
prices continue to fall and companies affected go beyond Asian manufacturers as German Qimonda’s
insolvency case shows. Some growth for the semiconductor industry in 2009 is expected from
8
These data are drawn from quarterly and annual data provided by Yahoo! Finance (based on Capital IQ), MSN
Money (based on EDGAR Online, SEC) and Google Finance (based on Thomson Reuters). Where audited Q4 2008
and Q1 2009 data were not available from these sources, they are taken from press releases on firms’ websites.
9
To reduce the effect of exchange rate fluctuations, March 2008 OECD exchange rates were applied to all of the
quarterly results for 2009, 2008, 2007 and 2002, 2001, 2000.
10
Quarter 2 results for Intel, Micron Technology and Texas Instruments. Their improving results compare
favourably with e.g. IT services and software, where early reporting firms had worse year-on-year results in Q2
2009.
14 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
increasing demand for “netbooks”, smartphones, GPS systems, energy-efficient semiconductors and
photovoltaic technologies.
Year on year revenue growth for the top-10 companies throughout 2008 was on average higher
than in 2001.
11
However, combined quarterly revenues then dropped by 34% in the first quarter of
2009 compared to the first quarter in 2008. This drop was stronger than revenue declines witnessed
for these companies in the beginning of 2002, but still above the lowest growth rate of 2001-2002
(Figure 2).
Figure 2. Quarterly revenue growth (year-on-year), Top-10 "Semiconductors"
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. Quarterly revenues of ASM International for Q1
to Q4 2000 and 2001 has been estimated using annual revenues.
Semiconductor companies seem better placed in terms of cash availability than seven years ago.
Semiconductor companies have more net cash at the end of 2007, 2008 and the first quarter of 2009 than
seven years ago (Figure 3).
12
Intel, Texas Instruments and Taiwan Semiconductor had several USD billions
net cash in their balance sheets in the beginning of 2009. However, only Taiwan Semiconductor (together
with three other firms) has increased its net cash since 2007. Increasing net cash together with falling
quarterly revenues indicate successful cost reduction measures in the industry.
11
Annual data are from annual reports (i.e. they are not the sum of four quarters).
12
This does not include the net cash of Freescale and NXP, as their long-term debt has increased dramatically after
buyouts by private equity firms in 2006. In 2008, for example, Freescale had net cash of
USD -8.3 billion and NXP USD -4.5 billion.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 15
©OECD 2009
Figure 3. Net cash by year, Top-10 "Semiconductors"
In billion current USD
0
2
4
6
8
10
12
14
16
18
20
2000 / 2007 2001 / 2008 2002 / 2009 Q1
2000 - 2001 - 2002 2007 - 2008 - 2009 Q1
Note: Based on March 2008 USD exchange rates. Values do not include net cash of Freescale and NXP.
R&D did not show dramatic decreases until the last quarter of 2008, where R&D spending fell at
7%, followed by a drop of 14% in the first quarter of 2009 (Figure 4). Overall, semiconductor firms
rank at the bottom regarding their quarterly R&D spending growth in the first quarter of 2009 when
compared with the top-10 firms of other sectors (NXP: -48%; Taiwan Semiconductor Manufacturing:
-29%; Infineon: -28%; and Texas Instruments: -25%). Only one semiconductor firm
(STMicroelectronics NV) increased its R&D expenditures in the first quarter of 2009. Intel, which
spent 35% of total annual R&D expenditures of the top-10 semiconductors in 2008, reduced its
quarterly R&D spending by 10% in the first quarter of 2009 and cut by the same amount year-on-
year in the second quarter, although year-on-year revenues were well below both. Spending cuts on
R&D typically lag behind revenue declines. This cyclical lag in R&D cuts was also the case in the
previous business cycle in the early 2000s (see OECD Information Technology Outlook 2008).
Figure 4. Quarterly R&D spending growth, Top-10 "Semiconductors"
-20%
-10%
0%
10%
20%
30%
40%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. Quarterly R&D spending by ASM International for
Q1 to Q4 2000 and 2001 has been estimated through annual R&D expenditures.
16 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
I T equipment
Slowing demand for computers, consumer electronics devices and semiconductors and
decreased spending on enterprise servers hit IT equipment manufacturers hard. During the final
quarter of 2008, year-on-year global PC shipments declined for the first time since 2002; the decline
accelerated during the first quarter of 2009 (IDC, 2009a; iSuppli, 2009). New growth areas are
expanding, e.g. “netbooks”, but they were not expected to compensate for the overall weakening
market in 2009. As consumers generally see cheaper “netbooks” as a substitute for higher-priced
traditional notebooks, total revenues from PC sales will in the short term decline despite the
increasing number of units being shipped.
During 2008, major IT equipment companies followed a similar trajectory to that of
semiconductor manufacturers. Whereas revenues grew strongly most of the year, the decline in the
final quarter was much stronger than revenue declines witnessed in 2001 and 2002 for the same
companies (Figure 5). The downwards trend of revenues continued into 2009.
Major US companies in this category HP and IBM were in total not as strongly hit by the
downturn over the whole year as Asian firms because of stronger growth rates in first half of 2008
and a strong focus on software and services provision. In contrast, Dell suffered higher revenues
declines because of its greater focus on hardware sales. Manufacturers from Chinese Taipei
(ASUSTeK, Quanta Computer) and Japan were severely affected, the latter also due to a strong JPY
slowing exports. Apple is the only top-10 company to have positive revenue growth since the last
quarter of 2008, mainly due to continuing high sales of iPhones and PCs, underpinned by the
availability of Internet downloads of entertainment and applications (see Internet section).
Figure 5. Quarterly revenue growth (year-on-year), Top-10 "IT Equipment"
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. Quarterly revenues of NEC and ASUSTeK for Q1
09 have been estimated using Q4 08 revenues as proxies. All quarterly revenues of HonHai and all quarterly revenues of ASUSTeK
and Quanta for 2002 to 2000 have been estimated through annual revenues.
Major IT equipment firms had more net cash at the outset of the recent economic downturn
than before the dot.com bust. However, a decline of total net cash can be observed (Figure 6). At the
end of 2008, only Apple, Dell, ASUSTeK and Quanta had positive net cash in their balance sheets
(USD 24 billion, USD 7 billion, USD 5 billion and USD 5 billion respectively). Toshiba, IBM and HP had
the lowest net cash positions with USD -16 billion, USD -12 billion and USD -8 billion respectively (in
the case of HP, debts “inherited” through the acquisition of EDS).
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 17
©OECD 2009
Figure 6. Net cash at end of year, Top-10 "IT Equipment"
In billion USD
-70
-60
-50
-40
-30
-20
-10
0
10
20
2000 / 2007 2001 / 2008 2002 / 2009 Q1
2000 - 2001 - 2002 2007 - 2008 - 2009 Q1
Note: Based on March 2008 USD exchange rates. Net cash of NEC, ASUSTeK and Quanta for Q1 2009 has been estimated using
2008 values.
Quarterly R&D spending of top-10 IT equipment firms followed the same trajectory as their
quarterly revenues (Figure 7). HP, IBM and NEC, which spent together more than 75% of total
annual R&D spending among the top-10 firms in 2008 (with IBM accounting for 35% of the total),
have all reduced their R&D expenditures in the first quarter of 2009 (HP: -21%, IBM: -6%, and NEC: -
2%). However, two IT equipment firms have increased R&D expenditure in the beginning of 2009:
Apple (17%) and Fujitsu (2%).
Figure 7. Quarterly R&D spending growth, Top-10 "IT Equipment"
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. Quarterly R&D spending by NEC and ASUSTeK
for Q1 09 have been estimated using Q4 08 R&D spending as proxies. All quarterly R&D spending by HonHai and all quarterly R&D
spending by ASUSTeK and Quanta for 2002 to 2000 have been estimated through annual R&D spending.
Communications equipment
Different developments in markets for handsets and ICT infrastructures have led to
heterogenous trends in the sector’s top-10 companies. In 2008, global growth of handset sales
18 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
slowed down to 3.5% and was especially weak during the holiday season (-13% in the final quarter,
compared to one year earlier; IDC, 2009b). The trend continued into 2009, although smartphones
have become a major area of growth globally. Samsung, LG, Apple, RIM and to some degree Nokia
were able to benefit from these developments. Motorola and SonyEricsson lost significant market
shares, partly due to weaker positions in smartphones and touch-screen mobile phones.
Investments in infrastructure networks are expected to slow in 2009, but demand for advanced
wireless broadband networks persists. Economic stimulus packages in OECD countries include
expanding broadband networks and smart electricity grids, which depend on broadband (see Part 3
of this paper). China’s government has announced it will invest over USD 40 billion in 3G
infrastructures over the next two years. Companies such as Cisco Systems, Ericsson, Nokia Siemens
Networks and Huawei are likely to benefit most from these public initiatives when implemented in
response to the crisis.
Revenues of communications equipment firms grew more slowly during the course of 2008 and
declined strongly from the final quarter of 2008, both in total and as an unweighted average.
Ericsson and L-3 were the only top-10 firms with positive growth in the beginning of 2009 (Ericsson
12% and L-3 4%). Strikingly, Nokia, Motorola and Cisco (the top-3), which generated more than 50%
of the total annual revenues of the top-10 communications equipment firms in 2008, all suffered the
highest decline in quarterly revenues in the first quarter of 2009 among top-10 firms (Nokia -27%,
Motorola -28%, and Cisco -17%). Overall, however, communications equipment companies fared
better in 2008 and in the beginning of 2009 than they did in 2001-2002 (Figure 8).
Figure 8. Quarterly revenue growth (year-on-year), Top-10 "Communications Equipment"
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. All quarterly revenues of Huawei and all quarterly
revenues of Avaya for 2008 have been calculated from annual revenues. Quarterly revenues of Alcatel-Lucent for 2002 and earlier
are based on combined annual revenues of Alcatel and Lucent Technologies.
Another indicator of the better state of communications equipment companies is higher net
cash than in 2000-2001 (Figure 9). At the beginning of 2009, major firms had on average
USD 7.8 billion in net cash on their balance sheets. Whereas Nokia’s net cash declined during 2008,
companies such as Cisco Systems, Ericsson and Qualcomm were all able to increase their net cash.
Nortel Networks’ bankruptcy filing, however, points to more severe competition in the current
downturn.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 19
©OECD 2009
Figure 9. Net cash at end of year, Top-10 "Communications Equipment"
In billion USD
0
5
10
15
20
25
30
35
40
45
50
2000 / 2007 2001 / 2008 2002 / 2009 Q1
2000 - 2001 - 2002 2007 - 2008 - 2009 Q1
Note: Based on March 2008 USD exchange rates. Net cash of Huwei for 2009 Q1 is based on 2008 values.
Quarterly R&D spending of communications equipment firms almost follows the same
trajectory as quarterly revenues (Figure 10). Among the top-3 communications equipment firms
(Nokia, Motorola and Cisco), which together accounted for more than 50% of total annual R&D
expenditure in 2008,
13
only Nokia has increased quarterly R&D spending in the beginning of 2009
(+2% in the first quarter of 2009 compared to +7% in the last quarter of 2008 and +6% in the third
quarter of 2008). The other two firms have significantly dropped their quarterly R&D spending in
the beginning of 2009 (Motorola -20% and Cisco -16%). The highest increase in R&D spending in the
beginning of 2009 has been realised by Qualcomm (9%), and this is in line with the company’s
announcement to recruit additional engineers.
Figure 10. Quarterly R&D spending growth, Top-10 "Communications Equipment"
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. All quarterly R&D spending by Huawei and L3
Communications Holding, and all quarterly R&D spending by Avaya for 2008 have been calculated from annual R&D spending.
13
Nokia accounts for 27% of total R&D spending in 2008, followed by Cisco (16%) and Motorola (12%).
20 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
Quarterly R&D spending by Alcatel-Lucent for 2002 and earlier are based on combined annual R&D spending by Alcatel and Lucent
Technologies.
Electronics
The electronics sector was hit by declining global sales, as was IT equipment. Demand plunged
for a wide range of consumer electronics and related components, e.g. LCD panel displays for
notebooks and other screens, and Japanese firms were hit particularly hard. Growth is expected from
emerging clean technologies and related electronics, e.g. efficient battery technologies and
development of “smart” electricity grids. Solar cells are another example: the Japanese firm Sharp
saw overall revenues decline by 20% in the final quarter of 2008, but its solar cells division
increased revenues by 18%.
Many major electronics firms are highly diversified, which also brings challenges. Japanese
firms particularly seem to suffer from “over-diversification” in the current downturn, e.g. producing
“white goods” such as freezers and air conditioners (The Economist, 2009). On the other hand,
Korean firms Samsung and LG have focused their operations around high-growth mobile phones and
home entertainment devices. The share of revenues of these business divisions at Samsung, for
example, has grown from under 50% to over 60% in the most recent year.
Overall, revenues of top-10 electronic firms continued to decline in 2009 from the rapid fall at
the end of 2008 (see Figure 11). The largest drops in the first quarter of 2009 were at Japanese
electronics firms, representing more than half of top-10 electronics companies (Canon -32%,
Panasonic -30%, Hitachi -25%, and Sony -22%). This is partly due to a strong JPY and consequently
slowing exports. Korean firms Samsung and LG displayed positive quarterly growth rates
throughout 2009, in part due to a weak KRW. German company Siemens saw positive revenues
growth in Q1 2009.
Electronics revenue declines have accelerated more strongly during the current economic crisis
than was the case during the dot.com bust (see Figure 11). This is partly due to slumping demand,
but a strong Japanese Yen is throttling growth of export-oriented Japanese manufacturers which are
the majority of top-10 electronics companies. Official statistics confirm the steep decline of
electronics production in Japan, in the early part of 2009, but they also show the equally rapid turn-
up apparent by May 2009 (Annex Figures 31 and 32; summarised in Part 1).
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 21
©OECD 2009
Figure 11. Quarterly revenue growth (year-on-year), Top-10 "Electronics"
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Q1 08 | Q1 01 Q2 08 | Q2 01 Q3 08 | Q3 01 Q4 08 | Q4 01 Q1 09 | Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. All quarterly revenues for Mitsubishi, quarterly
revenues for Hitachi for 2007 and earlier, and quarterly revenues for Samsung for 2002 and earlier have been estimated through
annual revenues. For Sharp half-yearly revenue data have been used to estimate quarterly revenues.
Net cash of top-10 electronics firms has decreased since 2008, partly due to falling revenues
(Figure 12). Over half of the companies had negative net cash (i.e. were indebted) at the end of first
quarter 2009. The average net cash position was USD -3.5 billion. Canon had the highest net cash
among electronic firms with USD 6 billion. Hitachi and Siemens had the lowest net cash with USD -21
billion and USD -15 billion respectively.
Figure 12. Net cash at end of year, Top-10 "Electronics"
In billion USD
-50
-40
-30
-20
-10
0
10
20
2000 | 2007 2001 | 2008 2002 | Q1 2009
2000 - 2001 - 2002 2007 - 2008 - 2009 Q1
Note: Based on March 2008 USD exchange rates. Net cash of Samsung, Mitsubishi and LG for 2009 Q1 has been estimated using
2008 annual balance sheet values.
Where available, quarterly R&D expenditures in the electronics industry increased slightly until
the last quarter of 2008 and have since decreased (Figure 13). Falling revenues in combination with
negative net cash have increased the pressure on R&D budgets in this sector. This is especially true
for Japanese electronics firms, which had the strongest fall in R&D expenditures in the beginning of
22 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
2009 (e.g. Sony -10%, and Canon -9%). On the other side, Siemens and Philips Electronics were
leading the sector in terms of quarterly R&D spending growth in the first quarter of 2009 with 6%
and 5% growth respectively. These two firms account for 25% of total annual R&D spending among
top-10 electronics firms in 2008.
Figure 13. Quarterly R&D spending growth, Top-10 "Electronics"
-15%
-10%
-5%
0%
5%
10%
15%
20%
Q1 08 | Q1 01 Q2 08 | Q2 01 Q3 08 | Q3 01 Q4 08 | Q4 01 Q1 09 | Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. All quarterly R&D spending by Samsung,
Panasonic, and Mitsubishi, and quarterly R&D spending by Hitachi in 2007 and earlier has been estimated using annual R&D
spending. For all firms besides Sony and Philips Electronics quarterly R&D spending in 2002 and earlier has been estimated through
annual R&D spending.
I T services
IT services providers were able to maintain growth throughout most of 2008, slowing during
the final quarter. Demand for IT and Business Process Outsourcing (ITO/BPO) persists as IT
executives continue to focus on reducing costs via (offshore) outsourcing (see Box 1). However,
outsourcing revenue growth was expected to decline in 2009 with small and short-term IT projects
(with short amortisation periods) being favoured over high-value and long-term IT investments.
Banking and financial services firms account for around one–fifth of global outsourcing deals
(Everest Research, 2009) and the severe crisis in these sectors has had a pronounced effect on
demand for ITO/BPO services. In 2008, the total value of deals in the sector dropped by 28% to
USD 18 billion, the lowest since 2001 (TPI, 2009). On the other hand, pressures to cut internal costs
is favouring IT services outsourcing, network services have increased particularly in Asia, and Indian
IT services firms are optimistic about the future of their business.
The top-10 services firms had almost constant revenue growth rates of around 9% during the
first three–quarters of 2008, but quarterly revenues slipped by 6% in the first quarter of 2009
(Figure 14). SAIC, Affiliated Computer Services and Cap Gemini had the highest revenue growth in
the beginning of 2009 (12%, 4% and 1%). In contrast, Tech Data, Unisys and Computer Sciences
Corporation suffered the strongest decline with -18%, -15% and -12% respectively. Some IT service
providers from other sectors also saw flat or slightly declining revenues in their IT services divisions
in the first quarter of 2009, e.g. -4% at IBM’s services division.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 23
©OECD 2009
Box 1. Trends in IT outsourcing for 2009
The economic crisis has put IT services costs, as is the case for all costs, under pressure. This may benefit
outsourcing due to increased internal cost-cutting and perceived benefits from more flexible external sourcing of
IT services. In terms of total IT budgets, forward surveys undertaken in 2008 for the 2009 year showed that many
IT executives planned to increase their IT budget in 2009 but some were already planning to cut budgets as they
had done in 2008. For example, a survey conducted by the Society for Information Management (SIM) of 230
firms in the United States revealed that “44% of IT leaders plan to increase their IT budgets in 2009, 37% plan to
leave their budgets at the same level as in 2008 and 19% of respondents admitted planning to cut their IT
budgets”. For comparison: in 2008, IT spending significantly increased in 46% of IT companies over 2007, 28%
kept their budget at 2007 levels, and 28% reduced their IT budgets (TEAM International, 2008).
Other surveys conducted in the United States showed that IT (offshore) outsourcing is seen by IT executives as a
mean to reduce costs and to improve cash-flow. Info-Tech Research, for instance, surveyed more than 150 IT
companies, and showed that more than 60% of the IT departments are “focusing on reducing costs via offshore
outsourcing". According to the survey of Robert Half Technology, 43% of 1 400 CIOs were planning to increase
offshore transactions in 2009 (TEAM International, 2008).
The European Information Technology Observatory (EITO) has also projected an increase in revenues for IT and
BP outsourcing in 2009 in Europe. In Germany, for instance, annual revenues generated by IT and BP
outsourcing are expected to increase by 7.2% in 2009 compared to 7.4% in 2008 (BITKOM, 2009).
Recent quarterly data of the outsourcing market indicates that revenue growth through IT and BP outsourcing will
probably decline in 2009, due to the current highly uncertain economic outlook. This is reflected by an increasing
number of contracts, but with a decreasing Total Contract Value (TCV). According to Technology Partners
International (TPI), the TCV of outsourcing deals fell by 22% in H1 2009 compared with H1 2008, and annual TCV
in 2009 could “easily fall below USD 80 billion” (TPI, 2009). The last time TCV was below USD 80 billion was
during the 2001 recession. However, quarter-by-quarter comparison shows signs of stabilisation. TCV in Q2 2009
increased by 5% compared to Q1 2009. In the Asia Pacific region TCV even increased by more than 150% in
H1 2009 over H1 2008, but from a low base, and Indian firms providing outsourcing services have remained
relatively optimistic as they change their service product mix to adapt to changing market demands.
Figure 14. Quarterly revenue growth (year-on-year), Top-10 “IT services”
In billion USD
-10%
-5%
0%
5%
10%
15%
20%
25%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. The quarterly revenue of SAIC for Q1 09 has
been estimated using its Q4 08 revenue.
24 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
The better overall performance of IT services firms in 2008 and the beginning of 2009 is also
reflected by improved net cash compared to 2001-2002 (Figure 15).
14
In the first quarter of 2009,
the top IT services firms had positive net cash of USD 1.5 billion, compared to a negative net cash of
USD -577 million in 2002. Accenture had almost USD 3 billion in net cash, and Cap Gemini and
Automatic Data Processing around USD 1 billion.
Figure 15. Net cash at end of year, Top-10 “IT services”
In billion USD
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
2000 / 2007 2001 / 2008 2002 / 2009 Q1
2000 - 2001 - 2002 2007 - 2008 - 2009 Q1
Note: Based on March 2008 USD exchange rates. Values do not include net cash of First Data. The net cash of SAIC has been
estimated using 2008 balance sheet values.
Software
Major software firms maintained positive growth in their quarterly revenues throughout 2008,
but with a steep fall in growth rates since the second quarter and negative overall growth in the first
quarter of 2009. Declining business confidence in the current economic downturn is likely to
continue to slow investments in long-term and high-valued software projects.
The top-10 software firms had a total annual revenue growth of 12% in 2008 compared to 6%
in 2001. During the first two quarters of 2008, they had high revenue growth rates with a peak in Q2
of 20%. However, in the second half of 2008 there was a dramatic drop in their combined revenue
growth to 12% and 3% year-on-year (e.g. Oracle: 24% in Q2, 18% in Q3, and 6% in Q4 2008; SAP:
18% in Q2, 14% in Q3, and 8% in Q4 2008). In the beginning of 2009, quarterly revenues then
started to fall (-5%), these were below the lowest growth rates of 2001-2002 (Figure 16). In the
beginning of 2009, only Intuit and Oracle were able to maintain positive growth rates (9% and 2%
respectively).
14
This does not include the net cash of First Data, as its long–term debt has increased dramatically after a buyout
by a private equity firm in 2007. In 2008, for example, First Data had net cash of USD -22 billion.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 25
©OECD 2009
Figure 16. Quarterly revenue growth (year-on-year), Top-10 “Software”
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
Q1 08 | Q1 01 Q2 08 | Q2 01 Q3 08 | Q3 01 Q4 08 | Q4 01 Q1 09 | Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates..
Top-10 software firms in the beginning of 2009 had USD 2 billion less net cash than in 2007.
This is an opposite trend that observed in 2000-2002, where total net cash increased by more than
USD 20 billion (Figure 17). In both timeframes, Microsoft alone accounts for more than 70% of the
total net cash with USD 23 billion in the first quarter of 2009 compared with USD 39 billion in 2002.
Figure 17. Net cash at end of year, Top-10 "Sotfware"
In billion USD
0
10
20
30
40
50
60
2000 | 2007 2001 | 2008 2002 | Q1 2009
2000 - 2001 - 2002 2007 - 2008 - 2009 Q1
Note: Based on March 2008 USD exchange rates.
Top-10 software firms increased their annual R&D spending in 2008 by 10% compared to 2007,
with Microsoft accounting for more than 46% of total annual R&D expenditure in 2008 (USD 8
billion) and Intuit having the highest increase in quarterly R&D spending compared to 2007 (28%).
Quarterly year-on-year comparisons, however, reveal decreasing growth rates in R&D expenditures,
falling below zero for most of the top-10 firms in the final quarter of 2008 (see non-weighted
average growth in Figure 18). In the first quarter of 2009, total R&D expenditure increased by 1%,
26 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
mainly because Microsoft increased its quarterly R&D spending to USD 2.2 billion in the first
quarter of 2009 from USD 2 billion in the first quarter of 2008.
Figure 18. Quarterly R&D spending growth, Top-10 "Software"
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
Q1 08 | Q1 01 Q2 08 | Q2 01 Q3 08 | Q3 01 Q4 08 | Q4 01 Q1 09 | Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates.
I nternet
The fate of top-10 Internet companies depends on factors different from other sectors: a mix of
developments in consumer demand as online transactions continue to grow as a share of total retail
purchases (Amazon, eBay, Expedia), advertising spending (Google, AOL, Yahoo!, IAC), financial
markets (E*Trade, TD Ameritrade), as well as growth in broadband subscriber numbers. Slower
overall growth in some of these sectors can benefit Internet companies as consumers look for better
deals online and advertisers focus on online advertising (see ZenithOptimedia, 2008). This is likely
to benefit the most successful firms and encourage further consolidation, e.g. Amazon for online
retailing, Google for online advertising, Apple for digital content. Apple’s iTunes Store, for example,
makes up over 12% of Apple’s revenues, driven by downloads of music, films and iPhone
applications.
Total top-10 quarterly revenues increased throughout 2008, but at falling growth rates
(Figure 19). Total growth dropped to just below zero in the first quarter of 2009, indicating that
Internet businesses are not crisis-proof. Whereas Amazon continued double-digit growth, Google
had a one-digit growth rate for the first time since its IPO in 2004. The remaining firms had year-on-
year quarterly revenue declines, mostly over 10% (TD Ameritrade: -24%; AOL and E*Trade: -23%;
Yahoo Inc: -13%; IAC: -11%). eBay, one of the firms with the highest growth rates in 2001 and 2002,
suffered a decline of quarterly revenues from the end of 2008 (-7% in Q4 2008 and -8% in Q1 2009).
Combined revenue growth during 2008 is considerably higher than the average growth because
revenue growth at Google and Amazon strongly influences the sector’s total performance. In 2001-
2002, on the other hand, average growth was much higher than the combined growth of revenues
because of Google’s three-digit growth.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 27
©OECD 2009
Figure 19. Quarterly revenue growth (year-on-year), Top-10 “Internet”
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. All quarterly revenues of Google and AOL for
2002 and earlier have been calculated from annual revenues.
The top-10 Internet firms are better placed financially than in 2001-2002. In the first quarter of
2009, they had an aggregated net cash of around USD 6 billion compared to USD -3 billion in 2002
(Figure 20). Those data, however, do not include Google, which was not yet public in 2002 – the
company has almost USD 18 billion in net cash, making it one of the most cash-rich ICT firms.
Figure 20. Net cash at end of year, Top-10 “Internet”
In billion USD
-12
-10
-8
-6
-4
-2
0
2
4
6
8
2000 / 2007 2001 / 2008 2002 / 2009 Q1
2000 - 2001 - 2002 2007 - 2008 - 2009 Q1
Note: Based on March 2008 USD exchange rates. Does not include the net cash of Google.
Where available, annual R&D expenditures increased in 2008 compared to 2007 (e.g. Google:
32%, eBay: 17%, and Expedia: 15%). However, quarterly R&D expenditures had falling growth rates
(Figure 21). For example, Google, the Internet firm with the highest annual R&D spending in 2008,
increased its quarterly R&D expenditures by 65% in the beginning of 2008 compared with 2007. In
the middle of 2008, Google then increased R&D expenditures by 28%, then by 16%, and in the first
quarter of 2009 R&D spending fell by 5% year-on-year. Nevertheless, most Internet firms still
28 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
increased their R&D spending in the first quarter of 2009 (e.g. Amazon 18%, eBay 14% and Expedia
8%).
Figure 21. Quarterly R&D spending growth, Top-10 "Internet"
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. All quarterly R&D spending of Google and AOL
for 2002 and earlier have been calculated from annual R&D spending.
Telecommunications
Diversification in telecommunication services has led to heterogeneous trends in the industry.
While the fixed-line usage and subscriber base continue to decline – partly due to the increasing use
of cheap or entirely free Voice over Internet Protocol (VoIP) services – the number of mobile
subscribers is increasing worldwide. Estimations suggest that global mobile subscribers were over 4
billion by the end of 2008 (an 18% increase compared to 2007) with China, India, Russia and Brazil
the fastest growing mobile markets and China also the largest market (over 600 million subscribers
in 2008) (ITU, 2008). Mobile data services rather than mobile voice telephony are expected to be the
major source of revenue growth in major EU countries (IDATE, 2009).
Another increasing segment is Internet access and services. In some cases they also include
VoIP access, which has become a widely accepted substitute for fixed-line voice telephony. In OECD
countries, broadband penetration (i.e. broadband subscribers per 100 inhabitants) increased by
13% during 2008 (OECD, 2009b). Although growth is losing momentum, Internet access and
services can be expected to profit from investments in broadband networks stimulated by economic
recovery packages in OECD countries (see Part 3).
Top-10 telecommunications firms maintained their positive quarterly revenue growth rates in
the beginning of 2009. However, revenue growth rates were lower than during the dot.com bust
(Figure 22). Companies with strong mobile segments had growing revenues throughout 2008 and
the beginning of 2009 (e.g. Vodafone: 17% in the last quarter of 2008, and 8% in the first quarter of
2009). The strong Chinese mobile market is especially favourable for China Mobile, which still had
double digit growth rates in the first quarter of 2009 (14% in the second half of 2008, and 10% in
the first quarter of 2009). Companies with a focus on broadband services also maintained positive
growth rates (e.g. Verizon: 3% in the last quarter of 2008, and 12% in the first quarter of 2009).
Companies with the strongest fall in quarterly revenues in the first quarter of 2009 are Spring Nextel
(-12%), Telecom Italia (-7%), and NTT (-5%).
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 29
©OECD 2009
Figure 22. Quarterly revenue growth (year-on-year), Top-10 “Telecommunications”
-5%
0%
5%
10%
15%
20%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. All quarterly revenues of France Telecom,
Vodafone and China Mobile are based on half-yearly data. Quarterly revenues before 2002 of Nippon Telegraph, Deutsche Telekom,
France Telecom, and Vodafone are based on annual revenues.
Top-10 telecommunications firms are deeply in debt with around USD -350 billion net cash
throughout 2008 and the first quarter of 2009 (Figure 23). All but one telecommunications firms
(China Mobile) had negative net cash in the beginning of 2009. With more than USD 18 billion China
Mobile is one of the richest firms in the ICT sector (after Microsoft with USD 23 billion). In contrast,
NTT had the lowest net cash with USD -31 billion among telecommunication firms.
Figure 23. Net cash at end of year, Top-10 "Telecommunications"
In billion USD
-400
-350
-300
-250
-200
-150
-100
-50
0
2000 / 2007 2001 / 2008 2002 / 2009 Q1
2000 - 2001 - 2002 2007 - 2008 - 2009 Q1
Note: Based on March 2008 USD exchange rates. Net cash for Q1 2009 of France Telecom, Vodafone and China Mobile are based
on 2008 balance sheet data.
Summary of sectoral performance of large I CT firms
Overall, different ICT segments are performing differently through Q1 2009, but with some
common features. Revenues are generally declining, and hardware has been hardest hit in absolute
30 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
terms, but some hardware segments (semiconductors and communications equipment) are still out-
performing compared with the slump of the early 2000s. On the other hand, although services are
slowing rather than contracting, they are generally performing worse than in the previous slump.
Furthermore, hardware firms appear to be rebounding somewhat in Q2 with positive quarter-on-
quarter growth while services firms still appear to be declining.
Net cash is higher across almost all segments than in the early 2000s, suggesting that large
ICT firms learned important lessons from the previous slump and are in a much stronger position to
survive and maintain R&D and innovation. R&D is declining but with a lag or at a considerably
slower pace than revenue declines, and some firms are increasing R&D during the slump. Finally,
employment is also holding up better than revenues but is starting to decline (see
DSTI/ICCP/IE(2009)2).
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 31
©OECD 2009
PART 3. ICT SECTOR CHALLENGES AND OPPORTUNITIES
Information and communication technologies (ICTs) have been a major source of innovation,
growth, and employment. The ICT sector itself contributes a considerable share of business sector
value-added (around 8% in 2006 for the OECD) and employment (5.5% of business sector
employment in the OECD). The ICT sector is also highly R&D-intensive and a source of innovation.
Furthermore, ICTs and the Internet are a fundamental economic infrastructure, driving productivity
and innovation.
Given the central nature of ICTs in the economy the impact of the economic crisis on ICTs is
two-fold, i.e. direct and indirect impacts on the ICT sector itself, but also on the productive and
innovative use of ICTs across the economy and society. The two impacts are mutually reinforcing. A
slowing ICT sector will generate lower productivity increases and potentially fewer ICT innovations.
Slower uptake of ICTs slows the productivity- and innovation-enhancing features of ICTs from
diffusing throughout the economy. Network effects induced by a broadly installed ICT infrastructure
do not materialise.
When assessing the economic crisis and its interactions with ICT production, diffusion and use,
the special nature of ICTs has to be considered. The next section deals with the direct and indirect
impact on the ICT sector before shifting to impacts on the side of diffusion.
Impacts on the I CT sector
Short- to medium-term impacts
The economic crisis is having a direct impact on the ICT sector itself. Table 1 shows potential
opportunities and challenges over the short and longer terms.
The first block looks at short- to medium-term impacts on the ICT sector. On the side of
opportunities, it shows the factors that may benefit the ICT sector relative to other industries. In a
period of economic contraction, the greater centrality of ICTs in business, government and society
may make it harder to radically compress IT budgets, or at least any faster than the declines in
economic activity. Moreover, ICTs are essential in times of restructuring, value chain
reconfigurations and new regulations, potentially leading to increased demand for certain types of
ICT services (e.g. software).
On the side of challenges, the ICT sector is not isolated from the economic crisis. As shown in
Parts 2 and 3, despite potential resilience ICT production and sales are falling under the twin
impacts of pressures on business IT budgets and significant falls in business and consumer
confidence and demand. The impacts are being felt most immediately by suppliers to the top ICT
firms and low-cost production locations which have seen their activity plummet, for example in
semiconductors. Although the ICT sector maintained R&D and innovation expenditures in the last
cyclical down-turn and these only showed a lagged decline, decreased revenues, faltering growth
and a lack of capital may influence longer-term capacities to invest in R&D, innovation and ICT-
related human capital in this economic downturn.
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Table 1. ICT sector challenges and opportunities
Opportunities Challenges
Short- to
medium-
term
Downturn leads to ICT sector restructuring and
greater efficiencies
Despite pressures to reduce capital investments,
ICT budgets are harder to compress with greater
reliance on ICTs and the Internet
Restructuring and cost-cutting in other sectors
leads to more use of ICTs (information
management and productivity tools, CRM)
ICT cost cutting measures could lead to more
outsourcing of services (hosting etc.), software-
as-a service, open source software, more
sustainable energy efficient ICTs
Public sector and emerging economies continue to
invest in ICTs
Stimulus coming from economic recovery
packages
Declines in R&D and innovation activities
Decreasing access to capital (including venture capital)
for the ICT sector, financial difficulties of ICT suppliers
and SMEs / falling investments in the ICT sector
Pressures on IT budgets in all sectors / regions leading
firms to operate with current ICT infrastructure
Potential reduction in outsourced services
Countries specialised in ICT manufacturing see
operations rapidly reduced (China, E.Europe) with
declines in ICT trade
Fall in consumer ICT spending as confidence drops and
unemployment rises
Fall in demand from emerging economies
Longer-
term
ICT sector continues as a leading source of value-
added, employment and innovations
New ICT R&D and innovation priorities as
growth driver (IT, nano- and bio-tech)
Growth in digital content applications
Low-carbon economy and green IT as growth
drivers: remote working, sensors, smart grid
Socio-economic challenges as driver: climate
change, energy efficiency, health & aging
Consolidation and globalisation of value chains
and back-office operations, resulting in greater
use of information management, e.g. to improve
transparency of financial markets and public
sector
Spending on ICT security up
Longer-term stimulus from economic recovery
packages
Dropping ICT R&D priorities and pre-recession
innovation opportunities lowering future growth /
weakening ICT innovation and value chain networks
Prolonged ICT sector financing problems
Slow or no development of ICT and digital content
business models and products (e.g. advanced broadband
services) to drive industry growth
Slowdown in supply of ICT professionals and ICT skills
Resistance to change and decreasing trust slows ICT-
enabled innovation (e.g. organisational change)
Continued fall in business / consumer ICT spending
Prolonged underinvestment in ICT infrastructure (supply
and demand) lowering future growth
Backlash to globalisation putting pressure on efficient
globalised ICT value chains / permanent effects on
production ability of low-cost production locations
Slower ICT uptake and diffusion through economy and
society slows growth of ICT sector
Longer–term impacts on the ICT sector
The second block looks at longer-term impacts on the ICT sector. On the side of opportunities, a
range of factors will foster the central role of ICTs in our economy and society. In the business sector,
it can be argued that enterprise models will continue to evolve around ICT-enabled networks and
the rationalisation of production. Different forms of business and social innovations will add to the
growth potential of the ICT sector. New trends such as the further dematerialisation of production,
and the shift to a low–carbon economy will provide further boosts. Finally, solutions to ever-central
socio-economic challenges in fields such as climate change, health and aging, and mobility will be
ICT-based.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 33
©OECD 2009
The economic stimulus packages of OECD countries may provide further growth and diffusion
of ICTs. Most governments plan to foster growth through smart investments which have
repercussions on the supply-side, helping to restore favourable conditions for innovation and long–
term growth. In many cases these plans will be directly relevant to the ICT sector and technology
diffusion. The way these ICT investments could feed into the economy and society also illustrates the
broader interactions between the ICT supply and the use side. Figure 24 sketches out some of these
interactions.
Potential longer-term down-side risks to the ICT sector are shown in Table 1. Some of these are
a direct prolongation or outcome of short-term challenges. Depending on the overall business cycle
and the evolution of the crisis, a continued fall in ICT spending and uptake and a prolonged period of
under–investment in the ICT infrastructure is a possibility. The inability of the ICT sector to generate
finance in the longer-term and potential under-investment in R&D and innovation might also be felt
or become more chronic. A neglect of key R&D priorities would also mean that the ICT sector will be
less able to deliver solutions to societal challenges. A slowdown in the supply of ICT professionals
and ICT skills could also have important long-term effects. Given the international nature of ICT
production and sales, a backlash to globalisation and protectionism will also have a direct impact on
ICT sector production.
Impacts on I CT diffusion and use
ICTs and the Internet are a fundamental economic infrastructure (OECD, 2008c). The benefits of
ICTs are amplified by their use throughout the economy and society, and the innovations that they
drive. ICT investments spur competitiveness and productivity at the firm and aggregate level, in
particular when combined with investment in skills, organisational change (and industry
restructuring), innovation and new firm creation (OECD, 2003; OECD Information Technology
Outlook, various years). Investment in ICT contributes to overall capital deepening helping to raise
labour productivity. Technological progress in the production of ICTs may contribute to more rapid
multifactor productivity growth in the ICT-producing sector. Finally and most importantly, greater
use of ICT outside the ICT sector throughout the economy helps firms, public and social institutions
to increase efficiency and enhance innovation, develop new products and services and raise
multifactor productivity growth. The Internet is an increasingly important platform for much of this
creativity and innovation.
15
Figure 24 provides a snapshot of the interactions between the ICT supply and demand side, by
highlighting how certain policy measures promoting the ICT infrastructure or the ICT demand side
'ripple' through the economy and foster growth, employment and innovation. Initially ICT spending
yields first order effects in terms of wages and jobs. Second- and third-order effects are however also
engendered which increase the stimulus impact.
As partly shown in Table 1 a fall in sales and shipments from the ICT sector is the mirror of
falling demand and declining ICT uptake by businesses, the public sector and households. At a
minimum new investments and upgrades of the existing ICT infrastructure are delayed. The result
could be a slowdown in ICT diffusion and uptake (potentially to firms and sectors which had been
special policy targets) and slowdowns in the development of ICT skills, potentially leading to longer-
term skill mis-matches and shortages. ICT uptake and use still have an important role to play if
countries are to return to the productivity growth path of the late 1990s and early 2000s and the
15
Chairman’s summary, Ministerial on the Future of the Internet Economy, Seoul, June 2008,
www.oecd.org/dataoecd/53/49/40989438.pdf.
34 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
crisis will probably slow this return. In this case expected productivity-enhancing impacts and ICT-
enabled innovations will be less frequent and overall ICT-induced job and growth will remain below
potential.
Figure 24. ICTs in the economy
ICT industry and supply side Non-ICT industry and demand-side
Measures
fostering
demand for
ICTs
Supporting infrastructure investment,
either in unserved or underserved areas or
fostering next-generation networks
Upgrading ICT infrastructure in schools, public
sector, healthcare, research, education, etc.
Introducing “smart” and “green” ICT-related
infrastructure (e.g. health IT, smart grid)
First-order
effects
Immediate positive revenue impact for
communication companies and equipment
vendors and others involved in the
deployment of infrastructure
Preservation and creation of jobs for
infrastructure deployment. Workers
continue to spend money in other sectors
Creates demand for ICT industry products and
services feeding into ICT sector revenues and
employment
Rise of new specialised hardware, service and
consultancy providers (smart grid, health IT, etc.)
Preservation & creation of ICT technical and related
jobs in other sectors
Second- and
third-order
effects
Increase of business and consumer
spending (including from newly connected
areas and ICT sector wages)
Preservation of revenues and jobs related
to infrastructure
Stimulus for ICT hardware demand
Multifactor productivity growth in the
ICT-producing sector
Demand for broadband content &
applications and creation/preservation of
related jobs
Investment in ICT contributes to overall capital
deepening and raises labour productivity
Re–organisation of these sectors and productivity
impacts (efficiency and MFP)
New products and services (distance education,
telework, online medicine, etc.)
Demand for more infrastructure or servicing that
infrastructure
New skills
New business opportunities and generation of new revenue flows through new products and
services (e-commerce, healthcare, online education, knowledge-intensive professional services,
digital content, entertainment)
ICTs enable other innovation at firm, sector and country level and drive productivity & growth
The use of ICTs can also contribute to better education, health care and solving societal problems.
Finally, lack of ICT infrastructure and broader ICT uptake throughout the economy in areas of
smart applications in e.g. transport, development of energy-efficient buildings, and the health sector,
will have long-term negative consequences and slow the ability to address key social challenges.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 35
©OECD 2009
PART 4. ICT POLICY AND THE ECONOMIC CRISIS
This section focuses on potential implications for ICT policy. The questions are whether and
how ICT policies may need to be adjusted or reinforced in the economic crisis and whether current
economic stimulus packages to foster short-term demand and provide foundations for long-term
sustainable growth coherently address ICT policy goals. The section first sets out OECD ICT policy
themes and approaches before the crisis and asks questions about their new directions. Then it
discusses how economic stimulus packages and associated policies are directly or indirectly related
to ICT policies.
The ‘pre-crisis’ OECD ICT policy framework
ICT policies have been increasingly integrated into overall strategies for enhancing economic
growth, employment and welfare in OECD countries (OECD Information Technology Outlook 2008,
Chapter 7). They have shifted in the last decade from dealing with sector-specific infrastructure
issues towards long-term strategies on how ICTs, the Internet and other types of networks can
achieve wider socio-economic objectives. E-government activities are a part of strategies to boost
public-sector efficiencies, and ICTs are increasingly used to address wider issues at national level
(e.g. social cohesion, aging, national security) and globally (e.g. climate change, energy efficiency,
global health issues).
ICT policies of OECD countries range from "Fostering ICT innovation" to "Promoting trust
online". Table 2 lists the top ten ICT policy priorities in OECD countries as summarised in the OECD
Information Technology Outlook 2008. At the top of the ranking are government online activities and
policies to promote broadband uptake and use. Specific policies to foster innovation in the top ten
are ICT R&D programmes and ICT innovation support. Policies to promote IT education and to
encourage industry-based/on-the-job IT training also feature prominently.
These policy areas need reviewing in the context of the economic crisis and their adjustment /
reinforcement. The recession will, for example, create pressures for government-supported build-
out of the infrastructure (due to lack of finance or hesitance of companies to invest), for ICT
innovation (e.g. R&D expenditures, venture finance, support for small firms), for the diffusion of ICTs
to businesses, etc. In times of a crisis, trust online or the security of ICT networks might decrease as
evidenced by the increase in viruses or malware and governments cannot walk away from this policy
priority. At macroeconomic level, trade and foreign direct investment are down and protectionism
may increase.
ICT policy can be affected in two ways. With pressures on government budgets attention may
shift away from current ICT policy approaches. On the other hand, expansionary fiscal policies and
the desire to craft new 'anti-crisis' stimulus packages may provide additional resources and political
will to reinforce or modify existing ICT policies.
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Table 2. Top ten ICT policy priorities, 2008
1 Government online, government as model users
2 Broadband
3 ICT R&D programmes
4 Promoting IT education
5 Technology diffusion to businesses
6 Technology diffusion to individuals and households
7 Industry-based and on-the-job training
8 General digital content development
9 Public sector information and content
10 ICT innovation support
Source: OECD Information Technology Outlook 2008.
OECD governments have been updating ICT policies with the announcement of new broadband
strategies (e.g. Australian Broadband Plan, Ireland national broadband scheme, Korean broadband
plan
16
) or new ICT policies (France numérique 2012, Spain Avanza, United Kingdom Digital Britain).
Beyond broadband, themes include the improved use of wireless spectrum, new UMTS licenses,
mobile and digital TV, developing digital content services and advanced broadband uses (e.g.
telework, distance education, e-government and health applications). The United Kingdom’s Digital
Britain plan aims to modernise digital networks, create an investment climate for digital content,
applications and services, foster universal availability coupled with the skills and digital literacy, and
enable the widespread online delivery of public services. Spain’s Plan Avanza 2 is designed to
contribute to the economic recovery through the widespread and intensive use of ICTs (with a focus
on the future Internet and digital content). Korea has re-launched its New Growth Engines Initiative
focused on new ICT goods, ICT services and software.
Some OECD governments have identified ICTs as an important direct or indirect component of
economic stimulus plans. This is based on the rationale that ICTs are a fundamental economic
infrastructure and a precondition for competitiveness. The idea is that ICT infrastructure and
applications throughout the economy and society induce large benefits through their productivity-
and innovation-enhancing features (see above). Figure 24 sets out some of the direct and indirect
impacts of ICT-specific and ICT-related economic stimulus measures including adoption and use
throughout the economy.
I CTs in economic stimulus packages
Governments in OECD and major non-OECD countries are setting up economic stimulus
packages to address the economic crisis.
17
The aim of these packages is to stimulate demand in the
short term, i.e. re-financing banks, injecting cash into the economy and protecting existing jobs.
However, most governments also plan to foster growth through smart investments which have
repercussions on the supply-side, helping to restore favourable conditions for innovation and long
term growth. In most cases these plans are directly relevant to the ICT sector and technology
16
Korea has initiated plans to bring 1 GB/s broadband connections to homes by 2012.
17
See OECD, 2009c. Within “Measures relating to innovation and long term growth”, these include: (i) Improving
the infrastructure, (ii) Support for R&D and innovation, (iii) Investment in human capital, education/training,
(iv) Green technologies and innovation to foster energy-efficiency and sustainable economic growth, and (v)
Support for innovation and entrepreneurship.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 37
©OECD 2009
diffusion, and many include ICT-related elements which should prove a positive stimulus to the ICT
sector.
Measures aimed at the ICT infrastructure
Many of the stimulus packages recognise the importance of modern fixed and wireless
communication infrastructure to support innovative products and services and the need to devote
some public resources to improve or accelerate deployment (see Table 3).
These cover two key areas: extending broadband to areas without connectivity and upgrading
existing networks to support very-high speed communications. Many plans focus on closing the
broadband gap by providing universal broadband coverage. These investments will be largely
devoted to rural and remote areas. Depending on the country, plans also devote resources to
building out new, very-high-speed networks (next-generation networks). In most cases, the exact
meaning of ‘broadband’ and ‘unserved’ or ‘underserved’ are not defined in terms of geography,
speeds or technology. Some plans make explicit reference to the fostering of wireless services or
fibre deployment.
In all cases, the deployment of broadband is to ensure more widespread connectivity and lay the
foundation for broadband applications and content development (for details see OECD, 2009c, and
for principles to guide any government investment, see OECD, 2009d). Most plans do or will entail
non-budgetary, regulatory measures to sustain policy targets (e.g. facilitating fibre roll-out) largely
pursuing policy targets and regulation analysed in previous OECD work (see OECD, 2008c and OECD
Council Recommendation on Broadband Development). Governments are also planning to foster
convergence and drive demand for the ICT infrastructure and services. As part of their stimulus
packages, the United States, Korea and Japan for example, are using regulatory measures to foster
the transition to digital broadcasting.
Table 3. "Networked recovery": Investing in ICT infrastructure
Planned
investment
Goals Penetration targets Speed targets
Australia AUS 43 billion (USD
34.4 billion)
(public-private)
Combination of fibre to the premises (FTTP) and next
generation wireless and satellite technology
90% for FTTP and
10% for wireless/satellite
100 Mbit/s for
fibre
Austria EUR 25 million
(government) – EUR
100 million (public-
private)
Extending high speed broadband and usage of broadband n.a. over 25 Mbit/s
Canada CAD 225 million (USD
211 million)
Extending broadband coverage to un-served rural and
remote communities
as many households as
possible by 2012
n.a.
Finland EUR 66 million (USD 96
million) of EUR 200
million (public-private)
Extending high-speed
broadband
all permanent
residences, business,
public administration
establishments
1 Mbit/s by end
of 2010
100 Mbit/s by
end of 2015
France n.a.
EUR 750 million for
three years
(government share n.a.)
Development of broadband network in small or medium-
sized cities, extending (fixed / mobile) broadband.
Internet on TGV Est lines (EUR 15 million), and
development of networks for education and research
Funds provided by a French public bank and the private
sector to develop next-generation networks in less
connected areas
access to broadband by
2010 and mobile
broadband by 2012 for
everyone
n.a.
n.a.
n.a.
EU EUR 1 billion (USD 1.46
billion)
Extending and upgrading high-speed Internet (focus on rural
communities)
100% coverage of high
speed Internet by 2010
n.a.
Germany an estimated EUR 150
million (USD 219
million)
Accelerating the spread of broadband networks. By 2010 all
unserved areas connected. Nationwide capable broadband
access by no later than the end of 2010
by 2014, ¾ of
households should have
access to high-speed
Internet (all by 2018)
target is 50
Mbit/s
Japan Yen 185 billion
(USD1.9 billion)
Eliminating the digital divide, promoting the development of
wireless broadband and fostering digital terrestrial
broadcasting
broadband: 100% by
2010
ultra-high speed: 90% by
2010
n.a.
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©OECD 2009
Planned
investment
Goals Penetration targets Speed targets
Luxembo
urg
EUR 195 million (USD
285 million)
Accelerating the build-out of Luxconnect information
highway, including through boosting public
telecommunications works
n.a. n.a.
Portugal EUR 50 million – fiscal
incentives
1
(USD 73 million)
Subsidised investments in new generation broadband
networks
optic fibre that will allow
1,5 million users to
connect
n.a.
Spain n.a. Measures for overseeing the installation of new generation
fibre and regulating broadband
n.a. up to 30 Mbit/s,
“at cost-oriented
prices”
United
Kingdom
2
GBP 200 million
(USD 328 million)
GBP 150-175 million a
year raised by levy on
fixed copper lines
Universal service commitment for broadband
Next Generation Final Third project which is aimed at
developing next generation networks
virtually every
community
90% coverage by 2017
2 Mbit/s per
second by 2012
United
States
USD 7.2 billion
(EUR 4.9 billion)
To foster broadband service to unserved / underserved
areas, promote broadband in schools, libraries, health-care
providers, and other entities.
n.a. no set minimum
data speeds
Note: n.a. stands for not available.
1
In parallel to its stimulus package, Portugal is planning to increase broadband Internet and local area network access in schools (EUR 61 million).
2
The UK also pursues the 'Digital Region' project, a GBP 100 million (USD 145.7 million) project for next-generation broadband in South Yorkshire.
Other OECD countries are developing their broadband stimulus plans in parallel to their
recovery package. Italy is aiming to foster broadband networks in unserved areas (99% coverage by
2011) and upgrading the network for an approximate EUR 1.25 billion. Ireland is planning to deliver
broadband to targeted areas in which it is not available by October 2012 (download speeds of 1.2
Mbit/s and a minimum upload speed of 200 KP/s). Korea is planning to boost broadband by USD
27 billion (KRW 34.1 billion) until 2012 to achieve speeds between 50 Mbit/s and 1 Gbit/s by 2012
(with the government paying a little more than USD 1 billion) while New Zealand has plans to spend
USD 1.7 billion (government paying half) to develop fibre optic networks covering three-quarters of
the nation at speeds of 100 Mbit/s.
Other targets involving ICTs
Besides direct investment in broadband, stimulus packages often have a more indirect but
larger impact on ICT deployment and use, for example investment in "intelligent" transport systems,
greener cars with more electronics and embedded software, smart buildings and electricity grids
(see Box 2), health, the environment, and modernising public services. Planned investments in these
areas are much bigger in monetary terms than those for broadband (e.g. in the US, USD 19 billion for
health care ICTs and USD 100 billion for modern infrastructure, compared with USD 7 billion for
broadband).
The fostering of ICT infrastructure and services in for example health care or research networks
will also provide the technological basis for ICT innovation, new infrastructure and services in other
fields, and there are for example synergies between broadband deployment and smart electricity
grids and transport systems. Most new infrastructure investments in areas such as modernising
schools, health care, and transport systems will have an impact on deployment of ICTs and fostering
ICT applications, and projects in the fields of education, R&D and green technologies also feature ICT
components.
A list of specific ICT examples includes:
Modernising research institutions and facilities (including advanced ICT research networks).
Some of the proposed public R&D expenditures will positively impact ICT research. This also applies
to R&D support aimed at green technologies.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 39
©OECD 2009
? Modernising educational and training institutions (including ICT infrastructure and
hardware, software and digital content applications).
? Modernising public services (including e-government).
? Modernising the healthcare sector.
? Modernising the transport infrastructure (intelligent transport systems).
? Modernising and developing the energy infrastructure (e.g. smart electrical grids, Box 2).
Box 2. Smart grids for a greener economic recovery
A few governments have announced programmes to develop and deploy “smart grids” as part of “green” economic
stimulus packages. This includes the United States with around USD 11 billion for the smart electricity grid and Korea
with specific measures as part of its “Green New Deal”. The central idea behind smart grids is to use two-way
communication and electricity flows, sensors and advanced ICTs to create a connected, secure and reliable power grid
to optimise energy distribution, consumption and conservation.
Smart grids can help reduce greenhouse gas emissions through technology-based efficiency gains as well as wide-
scale systemic changes. A smart electricity grid includes smart meters to optimise household energy consumption, but
it also facilitates plug-in electric and hybrid vehicles infrastructures, distributed electricity generation, improved energy
storage and peak demand management. Smart grids can also help identify locations and reasons for electricity losses
along the distribution chain. Projections of overall emissions reductions depend on the scenarios applied, but can be
as high as 2 gigatonnes of CO2e emissions reductions worldwide in 2020 (GeSI, 2008).
Widespread modernisation of electricity grids has economic implications for the ICT and energy sectors. For the ICT
sector this will be most obvious in the areas of communications equipment, electronics, software and services to
develop and implement complex grid management systems. The energy sector will increasingly rely on computer
engineers and ICT-skilled workers to develop and maintain the new infrastructures. Impacts will also be felt by
suppliers (e.g. steel) and adjacent sectors (e.g. renewable energy technologies).
Challenges persist in the deployment of a smart grid: the roll-out of smart grids requires high initial investments that the
private sector cannot always carry alone; further R&D and better technologies are needed; open international
standards for communication between the components within a smart grid and between national grids are necessary;
business models in the energy sector will need to be adapted; demand for skilled labour might not be met immediately;
privacy and security issues need to be addressed. Finally, existing grid infrastructures are different across countries
and especially so in developing economies.
Sources: OECD (2009c) and GeSI (2008), “SMART 2020: Enabling the Low Carbon Economy in the Information Age”.
For example, the United States healthcare sector has a major computerisation initiative aimed at
reducing healthcare costs (e.g, digitisation of health records of every American over the next
five years) and fostering health IT systems. Canada plans to invest CAD 500 million to develop
electronic health records and to further existing ICT health plans. Japan is drawing up a three-year IT
strategy, increasing total public- and private-sector investment by JPY 3 trillion, mainly focussed on
IT infrastructure in the medical sector, the promotion of e-government and green IT (e.g. intelligent
transport systems). France is fostering web 2.0 platforms and the video and computer game industry
(serious games).
The objective to develop energy-efficient and green infrastructure will also have major ICT
dimensions, e.g. more energy-efficient smart homes, smart transport systems and the smart grid.
Korea, for instance, has “Green IT” as a specific component of its stimulus plan. Spain will also foster
the widespread use of ICTs, in particular for projects leading to sustainability and energy-saving.
Hungary and Japan will promote the use of teleworking. Second order effects include the
developments enabled by that same infrastructure, i.e. new products, services, business
opportunities and productivity-enhancing features resulting from the availability of ICT
infrastructure.
40 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
REFERENCES
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EITO (2008), The financial crisis and ICT markets in Europe: New market forecasts 2008-2009, EITO
Special Report, 12 December.
Everest Research (2009), Market Vista: Key Market Developments in Q3 and Q4 2008, 19 February.
Fabtech (2009), Samsung and Micron gain most market share in DRAM crisis, 17 February,
www.fabtech.org/news/_a/samsung_and_micron_gain_most_market_share_in_dram_crisis/.
IC Insights (2009), Research Bulletin, 1 July www.icinsights.com/news/bulletins/
bulletins2009/bulletin20090701.html.
IDC (2009a), Consumer Portable PCs Limit Volume Decline, But Shipment Value Suffers, press release,
11 June, www.idc.com/getdoc.jsp?containerId=prUS21879209.
IDC (2009b), Worldwide Quarterly Mobile Phone Tracker, press release, 4 February,
www.idc.com/getdoc.jsp?containerId=prUS21659209.
iSuppli (2009), Global PC Shipments Plunge at Historic Rate in the First Quarter, press release, 19 June,
www.isuppli.com/NewsDetail.aspx?ID=20376.
ITU (2008), Worldwide mobile cellular subscribers to reach 4 billion mark late 2008, www.itu.int/ITU-
D/ict/newslog/.
OECD (2003), ICT and economic growth: Evidence from OECD countries, industries and firms, OECD,
Paris.
OECD (2008a), OECD Information Technology Outlook 2008, OECD, Paris.
OECD (2008b), “Tough year ahead for IT industry, warns OECD”, Press release, 22 December, at
www.oecd.org/sti/ito
OECD (2008c), Broadband Growth and Policies in OECD Countries, OECD, Paris.
OECD (2008d), What is the economic outlook for OECD countries? An interim assessment,
2 September; OECD Economic Outlook, Number 84, 25 November, OECD, Paris.
OECD (2009a), OECD Interim Economic Outlook, 31 March; OECD Economic Outlook, Number 85, June,
OECD Paris.
OECD (2009b), OECD Broadband Portal, www.oecd.org/sti/ict/broadband.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 41
©OECD 2009
OECD (2009c), Policy responses to the Economic crisis. Investing in Innovation for Long-Term Growth,
June 2009, OECD, Paris, at www.oecd.org/dataoecd/59/45/42983414.pdf.
OECD (2009d), The Role of Communication Infrastructure Investment in Economic Recovery,
DSTI/ICCP/CISP(2009)1/FINAL, Directorate for Science, Technology and Industry, OECD,
Paris.
TEAM International (2008), IT Offshore Outsourcing: Early Predictions for 2009, 20 November,
www.teaminternational.com/knowledge_center_outsourcing_predictions_2009.html.
The Economist (2009), “Unplugged. Japan’s electronics giants”, 7 February.
TPI (2009), The TPI Index: An Informed View of the State of the Global Commercial Outsourcing Market
Second Quarter and First Half 2009, July,
www.tpi.net/pdf/index/2Q09_TPI_Index_Presentation.pdf.
ZenithOptimedia (2008), No growth in global adspend in 2009, December 8,
www.zenithoptimedia.com/gff/pdf/Adspend%20forecasts%20December%202008.pdf.
42 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
ANNEX FIGURES
Figure 25. Worldwide semiconductor market by region, 1990–2010
USD billions, current prices
0
50
100
150
200
250
300
1
9
9
0
1
9
9
1
1
9
9
2
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
Americas Europe Japan Asia Pacif ic
Note: 2009 and 2010 are forecast.
Source: OECD based on World Semiconductor Trade Statistics, July 2009.
Figure 26. Growth in the monthly semiconductors worldwide market billings, December 1995 – May 2009
Year-on-year percentage, 3-month moving average
-60
-40
-20
0
20
40
60
D
e
c
-
9
5
A
p
r
-
9
6
A
u
g
-
9
6
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
%
Source: World Semiconductor Trade Statistics (WSTS), July 2009.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 43
©OECD 2009
Figure 27. Quarterly venture capital investments in the ICT sector in the United States, Q1 1995 - Q1 2009
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
5
10
15
20
25
1
9
9
5
-
1
1
9
9
6
-
1
1
9
9
7
-
1
1
9
9
8
-
1
1
9
9
9
-
1
2
0
0
0
-
1
2
0
0
1
-
1
2
0
0
2
-
1
2
0
0
3
-
1
2
0
0
4
-
1
2
0
0
5
-
1
2
0
0
6
-
1
2
0
0
7
-
1
2
0
0
8
-
1
2
0
0
9
-
1
Amount of ICT VC investments (billion USD) % of ICT VC Investments on Total
Source: MoneyTree survey report, PricewaterhouseCoopers, May 2009.
44 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
CANADA
Figure 28. Growth in the real output (GDP), Q1 2003 – Q1 2009
Year-on-year percentage change
-15
-10
-5
0
5
10
15
20
2
0
0
3
.
Q
1
2
0
0
3
.
Q
3
2
0
0
4
.
Q
1
2
0
0
4
.
Q
3
2
0
0
5
.
Q
1
2
0
0
5
.
Q
3
2
0
0
6
.
Q
1
2
0
0
6
.
Q
3
2
0
0
7
.
Q
1
2
0
0
7
.
Q
3
2
0
0
8
.
Q
1
2
0
0
8
.
Q
3
2
0
0
9
.
Q
1
ICT Manufacturing ICT Services Manufacturing Canada Services Canada
%
Source: Industry Canada, Quarterly Monitor of the Canadian ICT Sector, First Quarter 2009, June 2009.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 45
©OECD 2009
FRANCE
Figure 29. Growth in monthly production in ICT and selected goods sectors, December 1995 – May 2009
Year-on-year percentage change, monthly volume index, seasonally adjusted, 3-month moving average
-40
-30
-20
-10
0
10
20
30
40
50
D
e
c
-
9
5
A
p
r
-
9
6
A
u
g
-
9
6
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Computers and peripherals Electronic components
Communication equipment Measuring, testing, navigation
%
-50
-40
-30
-20
-10
0
10
20
30
D
e
c
-
9
5
A
p
r
-
9
6
A
u
g
-
9
6
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Motor vehicles Chemicals Manufacturing Computer, electronic and optical products
%
Note: ISIC REV4 sector classification.
Source: INSEE, Indice et séries statistiques, July 2009.
46 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
GERMANY
Figure 30. Growth in monthly production in ICT and selected goods sectors, December 1995 – May 2009
Year-on-year percentage change, volume index, seasonally adjusted, 3-month moving average
-60
-40
-20
0
20
40
60
80
D
e
c
-
9
5
A
p
r
-
9
6
A
u
g
-
9
6
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Computers and peripherals Communication equipment
Measurement, testing, navigation Electronic components
%
-40
-30
-20
-10
0
10
20
30
D
e
c
-
9
5
A
p
r
-
9
6
A
u
g
-
9
6
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Computer, electronic and optical products Chemicals Motor vehicles Manufacturing
%
Note: ISIC REV4 sector classification.
Source: Statistisches Bundesamt, Produktionsindex, July 2009.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 47
©OECD 2009
JAPAN
Figure 31. Growth in monthly production in ICT and selected goods sectors, December 1999 – May 2009
Year-on-year percentage change, volume index, seasonally adjusted, 3-month moving average
-60
-50
-40
-30
-20
-10
0
10
20
30
40
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Inform and Comm Electron. equip Electronics parts Motor Vehicles Chemicals
IT equipment
Electronics parts
Motor Vehicles
Chemicals
Manufacturing
%
Source: Japanese Ministry of Economy, Trade and Industry, June 2009.
Figure 32. Growth in monthly inventories in ICT selected goods sectors, December 1999 – May 2009
Year-on-year percentage change, producer inventory ratio index, seasonally adjusted, 3-month moving average
-50
-30
-10
10
30
50
70
90
110
130
150
170
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Inform and Comm Electron. equip Electronics parts Motor Vehicles Chemicals
IT equipment
Electronics parts
Motor Vehicles
Chemicals
Manufacturing
%
Source: Japanese Ministry of Economy, Trade and Industry, June 2009.
48 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
Figure 33. Growth in monthly industrial activity in IT and selected services, December 1999 – May 2009
Year-on-year percentage change, production indices, seasonally adjusted, 3-month moving average
-10
-5
0
5
10
15
20
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
IT services Telecomms Computer related activities
-10
-5
0
5
10
15
20
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
All services IT Services Finance and insurance
%
Note: The indices have been rebased 100 = 2005. No data available for Finance and insurance services prior to 2003.
See www.stat.go.jp/english/index/official/208.htm for details.
Source: Japanese Ministry of Economy, Trade and Industry, July 2009.http://www.meti.go.jp/english/statistics/tyo/sanzi/index.html
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 49
©OECD 2009
KOREA
Figure 34. Growth in monthly production in ICT and selected goods sectors, December 1996 - May 2009
Year-on-year percentage change, monthly volume index, seasonally adjusted, 3-month moving average
-50
-30
-10
10
30
50
70
90
110
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Chemicals ICT manufacturing Motor vehicles
%
Source: Korea National Statistics Office, July 2009.
Figure 35. Growth in monthly inventories in ICT and selected goods sectors, December 1996 - May 2009
Year-on-year percentage change, monthly volume index, seasonally adjusted, 3-month moving average
-50
-30
-10
10
30
50
70
90
110
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Chemicals ICT manufacturing Motor vehicles
%
Source: Korea National Statistics Office, July 2009.
50 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
Figure 36. Growth in monthly activity of ICT and selected services, December 2000 - May 2009
Year-on-year percentage change, volume index, 3-month moving average
-20
-10
0
10
20
30
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
All Services Telecommunications
Computer & related activities Financial Institutions %
Source: Korea National Statistics Office, July 2009.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 51
©OECD 2009
SWEDEN
Figure 37. Growth in monthly production in ICT and selected goods sectors, December 2001 – May 2009
Year-on-year percentage change, volume index, seasonally adjusted, 3-month moving average
-60
-50
-40
-30
-20
-10
0
10
20
30
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Computer, electronic and optical Chemicals Motor Vehicles %
Note: ISIC REV4 sector classification.
Source: Statistics Sweden, July 2009.
Figure 38. Growth in monthly trade in selected goods, December 1999 – April 2009
Year-on-year percentage change, 3-month moving average
-50
-40
-30
-20
-10
0
10
20
30
40
50
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Total Chemicals Vehicles ICT goods
%
Note: Classified by SITC commodity group.
Source: Statistics Sweden, June 2009.
52 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
UNITED KINGDOM
Figure 39. Growth in monthly production in ICT and selected goods sectors, December 1995 – May 2009
Year-on year percentage change, volume index, seasonally adjusted, 3-month moving average
-50
-40
-30
-20
-10
0
10
20
30
40
D
e
c
-
9
5
A
p
r
-
9
6
A
u
g
-
9
6
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Computers and office machinery
Radio, TV, communication equip. Chemicals
Motor vehicles and parts
%
Note: Sectors according to ISIC rev. 3.1
Source: National Statistics Office, July 2009.
Figure 40. Growth of monthly output in ICT and selected services, December 1995 – April 2009
Year-on-year percentage change, volume index, seasonally adjusted, 3-month moving average
-10
0
10
20
30
40
D
e
c
-
9
5
A
p
r
-
9
6
A
u
g
-
9
6
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Post and Telecomms Banking Computer services Total Services
%
Note: Division 64 used as proxy for 64.2 Telecommunications.
Source: National Statistics Office, June 2009.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 53
©OECD 2009
UNITED STATES
Figure 41. Growth in monthly production in ICT and selected goods sectors, December 1995 – June 2009
Year-on-year percentage change, index, seasonally adjusted, 3-month moving average
-50
-40
-30
-20
-10
0
10
20
30
40
D
e
c
-
9
5
J
u
n
-
9
6
D
e
c
-
9
6
J
u
n
-
9
7
D
e
c
-
9
7
J
u
n
-
9
8
D
e
c
-
9
8
J
u
n
-
9
9
D
e
c
-
9
9
J
u
n
-
0
0
D
e
c
-
0
0
J
u
n
-
0
1
D
e
c
-
0
1
J
u
n
-
0
2
D
e
c
-
0
2
J
u
n
-
0
3
D
e
c
-
0
3
J
u
n
-
0
4
D
e
c
-
0
4
J
u
n
-
0
5
D
e
c
-
0
5
J
u
n
-
0
6
D
e
c
-
0
6
J
u
n
-
0
7
D
e
c
-
0
7
J
u
n
-
0
8
D
e
c
-
0
8
J
u
n
-
0
9
Chemicals Motor vehicles Manufacturing Computer and electronics
%
Source: The Federal Reserve Board, July 2009.
Figure 42. Growth in monthly inventories in ICT and selected goods sectors, December 1995 – May 2009
Year-on-year percentage change, current cost or pre-LIFO, seasonally adjusted, 3-month moving average
-30
-20
-10
0
10
20
30
D
e
c
-
9
5
A
p
r
-
9
6
A
u
g
-
9
6
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Computer and electronic products Chemicals Motor vehicles and parts %
Source: OECD, based on US Bureau of the Census, Manufacturer’s Shipments, Inventories and Orders (M3) survey, July 2009.
54 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
Figure 43. Growth in quarterly ICT goods trade, Q1 2000 – Q1 2009
Year-on-year percentage change, trade values, seasonally adjusted
-40
-30
-20
-10
0
10
20
30
2
0
0
0
1
Q
2
0
0
0
2
Q
2
0
0
0
3
Q
2
0
0
0
4
Q
2
0
0
1
1
Q
2
0
0
1
2
Q
2
0
0
1
3
Q
2
0
0
1
4
Q
2
0
0
2
1
Q
2
0
0
2
2
Q
2
0
0
2
3
Q
2
0
0
2
4
Q
2
0
0
3
1
Q
2
0
0
3
2
Q
2
0
0
3
3
Q
2
0
0
3
4
Q
2
0
0
4
1
Q
2
0
0
4
2
Q
2
0
0
4
3
Q
2
0
0
4
4
Q
2
0
0
5
1
Q
2
0
0
5
2
Q
2
0
0
5
3
Q
2
0
0
5
4
Q
2
0
0
6
1
Q
2
0
0
6
2
Q
2
0
0
6
3
Q
2
0
0
6
4
Q
2
0
0
7
1
Q
2
0
0
7
2
Q
2
0
0
7
3
Q
2
0
0
7
4
Q
2
0
0
8
1
Q
2
0
0
8
2
Q
2
0
0
8
3
Q
2
0
0
8
4
Q
2
0
0
9
1
Q
US ICT goods exports US ICT goods imports
%
Source: OECD, based on Bureau of Economic Analysis and US Bureau of the Census Foreign Trade, June 2009.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 55
©OECD 2009
CHINA
Figure 44. Growth in monthly value added of ICT and selected goods sectors, April 2007 – May 2009
Year-on-year percentage change, 3-month moving average
-5
0
5
10
15
20
25
30
A
p
r
-
0
7
M
a
y
-
0
7
J
u
n
-
0
7
J
u
l
-
0
7
A
u
g
-
0
7
S
e
p
-
0
7
O
c
t
-
0
7
N
o
v
-
0
7
D
e
c
-
0
7
J
a
n
-
0
8
F
e
b
-
0
8
M
a
r
-
0
8
A
p
r
-
0
8
M
a
y
-
0
8
J
u
n
-
0
8
J
u
l
-
0
8
A
u
g
-
0
8
S
e
p
-
0
8
O
c
t
-
0
8
N
o
v
-
0
8
D
e
c
-
0
8
J
a
n
-
0
9
F
e
b
-
0
9
M
a
r
-
0
9
A
p
r
-
0
9
M
a
y
-
0
9
CommunicationEquipment, Computer andOther Electronic Equipment Measuring Instruments andMachinery for Cultural Activity andOffice Work
Chemical Raw Material andChemical Products Transport Equipment
Total
%
Source: National Bureau of Statistics of China, June 2009.
Figure 45. Growth in monthly output of telecommunication services, December 2001 – May 2009
Year-on-year percentage change, values, 3-month moving average
-30
-20
-10
0
10
20
30
40
50
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
%
Source: Ministry of Industry and Information Technology, July 2009.
56 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
Figure 46. Growth in monthly trade of selected goods, December 1999 – May 2009
Year-on-year percentage change, trade values, 3-month moving average
-60
-40
-20
0
20
40
60
80
100
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Chemicals Vehicles ICT goods
%
-30
-20
-10
0
10
20
30
40
50
60
70
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Chinese ICT goods exports
Chinese total exports
%
Note: Classified by SITC commodity group.
Source: General Administration of Customs of China, July 2009.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 57
©OECD 2009
CHINESE TAIPEI
Figure 47. Growth of monthly production in selected manufacturing industries in Chinese Taipei,
December 1999 - April 2009
Year-on-year percentage change, seasonally adjusted, 3-month moving average
-50
-40
-30
-20
-10
0
10
20
30
40
50
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Information & Electronic industry Chemicals Motor Vehicles
%
Source: Ministry of Economic Affairs of Taiwan, July 2009.
Figure 48. Growth in monthly trade of selected goods, December 1999 - June 2009
Year-on-year percentage change, values, 3-month moving average
-50
-40
-30
-20
-10
0
10
20
30
40
50
60
D
e
c
-
9
9
J
u
n
-
0
0
D
e
c
-
0
0
J
u
n
-
0
1
D
e
c
-
0
1
J
u
n
-
0
2
D
e
c
-
0
2
J
u
n
-
0
3
D
e
c
-
0
3
J
u
n
-
0
4
D
e
c
-
0
4
J
u
n
-
0
5
D
e
c
-
0
5
J
u
n
-
0
6
D
e
c
-
0
6
J
u
n
-
0
7
D
e
c
-
0
7
J
u
n
-
0
8
D
e
c
-
0
8
J
u
n
-
0
9
Total Chemicals ICT goods Vehicles
%
Source: Ministry of Finance, R.O.C., July 2009.
58 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
HONG KONG, CHINA
Figure 49. Growth in monthly trade of selected goods, December 1999 - May 2009
Year-on-year percentage change, values, 3-month moving average
-50
-40
-30
-20
-10
0
10
20
30
40
50
60
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Chemicals Vehicles ICT goods %
Source: Census & Statistic Department, July 2009.
SINGAPORE
Figure 50. Growth of monthly trade of selected goods in Singapore, December 2001 - May 2009
Year-on-year percentage change, values, 3-month moving average
-60
-40
-20
0
20
40
60
80
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Total Chemicals ICT goods
%
Source: International Entreprise Singapore, July 2009.
doc_909434781.pdf
The ICT industry had a tough start to 2009, with almost all first quarter indicators declining, often very sharply. There are signs of recovery, with the rate of decline bottoming out and turning up in the most recent cyclical data (May/June 2009), with positive month-on-month growth for most countries, and inventories running down sharply.
The impact of the crisis on ICTs and
their role in the recovery
August 2009
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
The OECD is a unique forum where the governments of 30 democracies work together to
address the economic, social and environmental challenges of globalisation. The OECD is also at the
forefront of efforts to understand and to help governments respond to new developments and
concerns, such as corporate governance, the information economy and the challenges of an ageing
population. The Organisation provides a setting where governments can compare policy
experiences, seek answers to common problems, identify good practice and work to co-ordinate
domestic and international policies.
The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic,
Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea,
Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic,
Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of
the European Communities takes part in the work of the OECD.
© OECD 2009
No translation of this document may be made without written permission. Applications should be sent to [email protected].
©OECD 2009
FOREWORD
This report was presented to the Committee for Information, Computer and Communications
Policy (ICCP Committee) in March 2009 and to the Working Party on the Information Economy (WPIE)
in June 2009. The ICCP Committee agreed that it be declassified after review by the WPIE at its June
meeting. The report takes into account all comments and available data through 17 July 2009.
The reportwas prepared by an OECD Secretariat team consisting of Arthur Mickoleit, Christian
Reimsbach Kounatze, Cristina Serra-Vallejo, Graham Vickery and Sacha Wunsch-Vincent, under the
direction of Graham Vickery, OECD Secretariat. The report, also issued under the OECD code
DSTI/ICCP/IE(2009)1/FINAL, aims to contribute to a better understanding of the evolution and impacts
of the economic crisis on the ICT sector. It is part of OECD work on Innovation and the Crisis
(www.oecd.org/innovation/crisis). The report will contribute to preparation of the biennial OECD
Information Technology Outlook (www.oecd.org/sti/ito). It was originally issued under the code
DSTI/ICCP/IE(2009)1/FINAL.
4 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
TABLE OF CONTENTS
SUMMARY ....................................................................................................................................................... 5
INTRODUCTION ............................................................................................................................................. 7
PART 1. RECENT AGGREGATE ICT PRODUCTION TRENDS ................................................................. 9
PART 2. PERFORMANCE OF TOP ICT FIRMS IN EIGHT ICT SECTORS ............................................... 13
PART 3. ICT SECTOR CHALLENGES AND OPPORTUNITIES ........................................................ 31
PART 4. ICT POLICY AND THE ECONOMIC CRISIS ....................................................................... 35
REFERENCES ................................................................................................................................................ 40
ANNEX FIGURES .......................................................................................................................................... 42
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 5
©OECD 2009
SUMMARY
The ICT industry had a tough start to 2009, with almost all first quarter indicators declining,
often very sharply. There are signs of recovery, with the rate of decline bottoming out and turning up
in the most recent cyclical data (May/June 2009), with positive month-on-month growth for most
countries, and inventories running down sharply. Performance in the first quarter of 2009 tested
2001-2002 declines in most ICT sectors, but relative year-on-year declines were not a great deal
worse than in 2001-2002 and some sectors have performed better than in the earlier period. The ICT
industry is also performing considerably better in this crisis than industries such as automobiles.
There have been clear regional differences in the effects of the crisis. Asian OECD countries
were particularly hard hit by the down-turn, with slumping production and soaring inventories
particularly in Japan. De-coupling of non-OECD countries also proved to be an illusion with many
non-OECD Asian economies (Chinese Taipei; Hong Kong, China; and Singapore) severely affected.
Chinese Taipei’s output was down by 40% in the early part of 2009 as was Japan’s, and Asian ICT
trade has been down by 25-40% year-on-year as the crisis took its toll in integrated Asian
production networks. There are several reasons for this: currency fluctuations, especially
handicapping export-dependent ICT industries in Japan, and plunging exports and slowing domestic
demand for Chinese producers and their suppliers. However the recent month-on-month upturn has
been very rapid, particularly in Japan, Korea and Chinese Taipei, and China has returned to positive
growth after slipping below zero year-on-year at the start of 2009. Korean ICT manufacturing was
one of the first to turn up in early 2009 helped by a weaker KRW.
The semiconductor industry is a bellwether for developments in the ICT industry.
Semiconductor production fell particularly rapidly at the end of 2008 and in the first quarter of
2009, with world capacity use dropping towards 50% and semiconductor equipment manufacturers
seeing very rapid falls in orders. However the crash has not yet reached the scale of 2001-2002
except in Asian OECD countries, and there has been a recent sharp upturn in total month-on-month
semiconductor billings. Large semiconductor firms are generally in good financial shape, with net
cash positions considerably higher than in 2001. R&D and innovation activities continue to be
financed from internal sources as revenues contract, and so far semiconductor R&D has declined
much less than revenues.
In terms of sectors, the revenues of global ICT hardware firms have been more affected early in
the economic crisis than ICT services firms (IT services, software, Internet-related and
telecommunications), as was the case in 2001-2002. Semiconductors, electronics, communications
and IT equipment were hit by slumping business and consumer demand and growth dropped
sharply. But ICT services have also slowed, and year-on-year growth of IT services and software both
turned negative in the first quarter of 2009, with Internet business growth around zero. Internet and
software firms saw steep falls in growth of over 20 percentage points in the last four quarters, in
sharp contrast with their recent performance. Overall, hardware sectors such as semiconductors and
communications equipment are declining less than in 2001-2002, and in comparison some ICT
services are performing worse than in 2001-2002.
6 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
In general, despite a very difficult first quarter large firms in the ICT sector were stronger at the
end of Q1 2009 than following the 2001 dot.com bust. Strong points include higher cash to debt
ratios in company balance sheets, consolidated and stronger firms, and the greater importance of the
Internet economy. However some large hardware manufacturers, especially Japanese electronics
producers, face difficulties as growth in new business areas does not compensate for declines in
others.
ICT employment has trended downwards, but not as rapidly as in automobiles for example.
Announcements of major lay-offs have been more pronounced in the semiconductor and electronics
sectors and lower in IT services, software, and Internet-related activities. But layoffs are occurring in
both goods and services, and some firms have reported that they will be releasing over 10% of their
workforce in the near future. Company insolvencies also add to the pressure on ICT labour markets.
In general, up-to-date employment data for the ICT sector are patchy and net employment changes
difficult to quantify; announced layoffs are reported prominently and these reported data do not
take into account new and continuing recruitments [see DSTI/ICCP/IE(2009)2, Secretariat Working
document].
ICT R&D is declining, but it is performing somewhat better than employment and certainly
better than production and revenues, as was the case in the last downturn. Where R&D is declining it
is with a lag compared with turnover and employment, as investments in R&D and innovation are
clearly seen as necessary for future competitiveness and the development of new growth areas (see
OECD Information Technology Outlook 2008, Chapter 1). Despite generally good industry R&D
performance in Q1 2009 and continuing support for R&D in Q2, some hard hit sectors such as
electronics and semiconductors were however beginning to perform worse in R&D than in 2001. On
the new firm side, venture capital slowed very markedly from mid-2008. Nevertheless around one-
half continues to flow into the ICT sector and ICT-intensive clean technologies, and surveys suggest
that software, new media and particularly clean technologies will continue to attract a major share of
venture investments.
ICT policies need re-examination and refinement in the crisis and recovery. In recent years
these policies have been increasingly integrated into broader strategies to use ICTs, the Internet and
other networks to achieve growth, employment and wider socio-economic objectives. These
objectives include addressing national challenges (e.g. social cohesion, ageing societies, national
security) and global ones (e.g. climate change, energy-efficiency, global health), and using e-
government to make the delivery of such services more efficient. The crisis and launching of
economic recovery measures are a propitious time to re-evaluate these policies.
Economic stimulus packages to address the economic crisis affect the ICT sector directly and
indirectly. The immediate aim of these packages has been to restore the health of the banking sector
and stimulate demand in the short-term; re-financing banks, injecting cash into the economy and
protecting jobs. These measures may help counteract downward pressures on the ICT sector and
sustain the diffusion of ICTs. Most governments also plan to foster growth through long-term
investments which have potentially providing an anti-cyclical stimulus on the supply-side. In many
cases these long-term plans are directly related to the ICT sector or ICT applications, including
“smart” applications in urban systems, transport systems, electricity distribution, etc. The question is
how current ICT policies should be maintained or rethought in the context of the economic crisis and
what is the appropriate balance between continuity in proven ICT policies and change in the form of
ad hoc crisis measures.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 7
©OECD 2009
INTRODUCTION
The 2008 edition of the OECD Information Technology Outlook (December 2008) showed that
the downturn in the ICT sector was deepening rapidly and that official short-term indicators had not
yet started to show the depth and rapidity of the decline. Tracking the rapid slump in the ICT sector
has been particularly difficult.
1
Unlike the 2001-2002 recession which began with the bursting of the
Internet bubble, the current recession began in the financial services sector due to deep-seated
systemic weaknesses in OECD banks and insurance companies. The financial crisis rapidly worsened
and spilled over from the United States to other countries and fed the subsequent crisis in the real
economy. Despite massive government attempts to stabilise it, the financial system remains fragile,
undermining global economic activity, and unemployment is rising rapidly.
The magnitude of the financial crisis and subsequent deep economic recession were difficult to
foresee. OECD macroeconomic projections shifted down sharply in the 10 weeks from early
September 2008 to mid-November 2008, from a rapid slowdown in growth and the onset of
recession in some OECD countries to the OECD area as a whole entering recession and
unemployment rising in many OECD countries.
2
The subsequent OECD Interim Economic Outlook in
March 2009 and the OECD Economic Outlook in June 2009 have tracked the development of the
deepest and most wide-spread global recession for more than 50 years, with real GDP declining in all
OECD countries in 2009, non-OECD countries slowing sharply, real world growth turning negative,
and trade declining rapidly in real terms.
Tight financial conditions and a generalised loss of confidence were projected to continue, but
the June 2009 Economic Outlook was the first in two years to revise upwards the growth projections.
Recovery appeared to be in motion in large non-OECD countries, particularly China, US activity could
potentially bottom out in the second half of 2009, and Japan’s trade-induced contraction looked to be
close to the end, although the euro area was not displaying clearly visible signs of recovery.
3
Against
this background, the outlook for the ICT sector has been particularly hazardous to position. A major
challenge has been to develop an indicator base to better assess near-term trends.
There are three drivers of ICT production. First, longer-term prospects and trends for the ICT
sector remain good, with cyclical and structural growth continuing across many segments, as ICTs
become embedded in all economic, social and cultural activities (see OECD, The Seoul Declaration on
the future of the Internet economy, 17-18 June 2008). Second, ICT investment is volatile. On the
investment side this is due to the “acceleration principle”. Investment is approximately proportional
to the rate of change of output. This magnifies changes both upwards and downwards in periods of
growth and slump. Third, consumer spending is under pressure and has dropped sharply. Consumer
confidence has fallen very rapidly with the collapse of the house price bubble and stock markets.
People feel less rich despite unchanged income (the “wealth effect”), there is rapidly rising
unemployment (potentially reducing consumption expenditure) and increasing worries about job
security (increasing household savings). Thus there are major downward pressures on ICT
expenditures, particularly on goods expenditures.
1
OECD (2008a, b), “Tough year ahead for IT industry, warns OECD”, Press release, 22 December, at
www.oecd.org/sti/ito
2
OECD (2008d), What is the economic outlook for OECD countries? An interim assessment, 2 September; OECD,
OECD Economic Outlook, Number 84, 25 November.
3
OECD (2009a), OECD Interim Economic Outlook, 31 March 2009; OECD Economic Outlook, Number 85, June 2009.
8 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
To map the impacts of the crisis the next section analyses the performance of the ICT sector
with data drawn from official statistical sources. The following section reports OECD analysis of
quarterly reports of the largest ICT firms. The third section elaborates on the likely supply and
demand factors re-shaping the sector in the economic crisis and the impacts on ICT diffusion and
use. The paper closes with a discussion of ICT policy, a brief survey of relevant programmes in
current government economic crisis packages, and interactions between current ICT policy and
economic crisis packages.
The analysis in this report is designed to address the following questions:
? What is the depth and extent of the current downturn in the ICT sector?
? How does it compare with the 2000-2001 recession? Are some sectors and countries
performing better than others?
? What are the likely near-term effects of the recession and recovery in the sector?
? Is there a changing role for ICT policy? What impacts will crisis packages have on the ICT
sector and the use of ICTs across the economy?
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 9
©OECD 2009
PART 1. RECENT AGGREGATE ICT PRODUCTION TRENDS
Short-term ICT production
4 5
By product area: ICT goods and services
Production of semiconductors has been leading the way down in this downturn, as it does
habitually, and just as it leads the way up in upturns. Semiconductor production in current terms has
been turning down in some countries since 2006, and the downturn accelerated in the second half of
2008. On the other hand communications equipment has tended to trend slowly down towards zero,
and measuring and controlling instruments turned down later as industrial investment dried up (see
Annex Figures).
ICT goods inventories built up rapidly in countries for which data are available. In Japan the
build-up in the producer inventory ratio (inventory over shipments) rose rapidly to unprecedented
levels at the end of 2008/early in 2009, particularly in electronic components and to a lesser extent
in IT equipment, although inventory levels have now been pared back. Similarly in Korea producer
inventories for computers rose to unprecedented levels in the last half of 2008 and semiconductor
inventories to close to record highs. However they dropped sharply through the first quarter of 2009
as ICT manufacturers slashed production and as competitiveness improved with the declining KRW.
The very rapid inventory build-up in Japan and Korea was due to the precipitous decline in exports
as business and consumer confidence dropped in importing countries. On the other hand ICT
inventories rose in the United States but to lower levels than in previous cycles.
Computer and IT services are slowing, but have still retained positive growth in most countries.
In most countries for which data are presented, computer and IT services have recently been
performing somewhat better than telecommunications services in monthly activity, output or
turnover, and telecommunications services are even declining in China albeit from a high level.
Comparisons with the cyclical downturn of 2001-2002
Comparisons of production in the current period compared with the last cyclical downturn vary
considerably across countries. In general, aggregate production of ICT goods in the United States and
Europe is worse in terms of year-on-year changes than in 2001-2002. Historically very sharp falls in
goods production in Japan, Korea and Chinese Taipei took year-on-year production indices down 30-
40%, far below their 2001 cyclical lows. But all have shown equally sharp signs of upturns in Q1
2009, with Korea leading the way (see Figures 31, 34, 44 and 47).
4
All data is drawn from official national monthly statistics, most of which are released with an approximate
6 week lag. In this paper most national data are through May 2009, with some through June 2009. 3-month
moving averages on seasonally adjusted data have generally been used to iron out short-term fluctuations, and
to provide a better picture of recent movements than the 12-month moving averages in the Information
Technology Outlook. A sample of the figures used to prepare analysis in this section is presented in Annex
Figures 28-50.
5
This section benefited from inputs and comments on Asian developments from Dieter Ernst, Economics Study
Area, East-West Center, Honolulu.
10 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
In non-OECD Asia, Chinese Taipei was hit by a very sharp slump in flat-screen products and
semiconductors, and Chinese ICT value-added data dropped below zero at the start of 2009, but they
have now picked up to around 3% year-on-year, a far cry from close to 20% growth in June-July
2008. The producer inventory ratio for electronics and ICT equipment in Japan was very high
compared with the previous cycle in 2001-2002. In Korea the inventory buildup in the second half of
2008 was higher and sharper than the previous 2000-2001 cycle, although semiconductor
inventories did not see the prolonged two-year buildup beginning late-1999. For the United States,
inventory buildup was lower than previously and inventories are now dropping.
IT and computer-related services were generally performing better in most countries than
during the last cyclical downturn in 2002, but have continued to trend down even as ICT goods pick
themselves up from the bottom of the slump. Telecommunications services are often performing
worse than IT and computer–related services in the current slump, after having performed better in
the last one.
Performance compared with other product groups
In the previous slump in 2001-2002, ICT goods production was worse than the manufacturing
aggregate and worse than both motor vehicles and chemicals in all countries for which detailed
monthly data are available.
In the current slump, ICTs goods are generally performing better than aggregate manufacturing
and in particular better than motor vehicles, which is the worst performing major sector across all
countries surveyed except China. ICT goods are performing somewhat better than chemicals except
in all Asian countries. In Japan and Korea ICT goods production is somewhat worse than total
manufacturing and close to motor vehicles in its slump.
In Japan the producer inventory ratio in electronics and IT equipment rose much more rapidly
than for total manufacturing, chemicals and motor vehicles, even though inventories in
manufacturing, chemicals and motor vehicles reached historic highs in Q1 2009. Similarly in Korea,
ICT manufacturing producer inventories rose to record highs in the second half of 2008. They
peaked much sooner and more rapidly than chemicals and motor vehicles (which both remained
relatively low) and were well above total manufacturing. In the United States ICT inventories started
decreasing only very recently, later than for manufacturing as a whole and much later than for motor
vehicles and parts. As a sign of relative resilience in US ICT goods production, the computer and
professional equipment industries have had among the lowest year-on-year increases in their
inventory to sales ratios amongst all US goods categories.
6
IT and computer services remains positive in most countries and is performing much better
than ICT goods. IT services performance is now generally better than aggregate services although
continuing to trend down. In most countries IT services are now performing better than financial
services, and better than communications services. In the previous slump in 2001-2002 IT services
generally performed worse than total services, and considerably worse than both communications
services and financial services.
6
Data from Econompic Data, 2009.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 11
©OECD 2009
Performance across countries
The ICT production slump has been about as deep as in 2001-2002 with the exception of Japan,
Korea and Chinese Taipei where the slump has been particularly severe (see Figures 31, 34 and 47).
This is in part due to the continuing restructuring of the ICT goods-producing industry away from
many OECD countries towards Asia, particularly China, and to Eastern Europe, following the last
slump, increasing synchronization with global demand. In Korea and Japan the deep slump in ICT
goods production approximately equals that in motor vehicles, but the rapid run-down in ICT
inventories suggests that ICT goods production is now likely to improve in the remainder of 2009.
Services performance has been consistently trending downwards in most of the sample set of
countries, with no particularly major differences across them. This may be due to the domestic
nature of most service transactions, so that they are not buffeted by the rapid collapse of export
markets seen for ICT goods trade, but are now declining in 2009 along with the rest of the economy.
Semiconductors
Semiconductors are always seen as the bellwether for the ICT goods industry. They are major
intermediate inputs into production, leading the rest of the sector into slumps and pulling out first.
Analysis of the performance of the semiconductor sector provides a good leading indication of what
will later happen across the wider ICT goods industries.
The world-wide semiconductor market remained flat overall in the first three quarters of 2008,
but with a sharp and continued drop since Q4 2008 with the onset of the global recession. The global
market volume is expected to decline by at least 20% during 2009 and recovery is not expected
before the end of 2009 or 2010 (see Annex Figure 25). Annex Figure 26 for semiconductor markets
shows the rapid decline in billings in the last quarter of 2008 and the first one of 2009. The shape of
the accelerating slump in Q4 2008 resembles that of the sharp down-turn from Q3 2001. A modest
month-on-month upturn since March 2009 suggests that demand is beginning to stabilise, albeit at
substantially lower levels than one year earlier and some commentators see a return to growth
towards the end of 2009, following Q2/Q1 growth in the first half of 2009 (2009, IC Insights), as, for
example, declines in PC sales level off.
Falling sales are exacerbating manufacturing over-capacity. Utilisation rates for semiconductor
facilities in Q1 2009 have fallen to 55%, lower than the equivalent trough in 2001 (see Figure 1).
These data suggest the current downturn is much sharper than in 2001. In the short term, continued
price declines are leading to plant closures, delayed and reduced investments. In the medium to
longer term, this might lead to product shortages and production under-capacities, especially in
newer, more cost-efficient manufacturing facilities (e.g. for 300 mm wafers).
12 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
Figure 1. Utilisation rate of semiconductor manufacturing facilities
In percentages
50
55
60
65
70
75
80
85
90
95
100
2Q
00
3Q
00
4Q
00
1Q
01
2Q
01
3Q
01
4Q
01
1Q
02
2Q
02
3Q
02
4Q
02
1Q
03
2Q
03
3Q
03
4Q
03
50
55
60
65
70
75
80
85
90
95
100
1Q
06
2Q
06
3Q
06
4Q
06
1Q
07
2Q
07
3Q
07
4Q
07
1Q
08
2Q
08
3Q
08
4Q
08
1Q
09
Note: The two graphics indicate utilisation of state-of-the-art manufacturing facilities. There is a break in series in Q1 2006 due to
changing technologies. These statistics are based on data supplied by merchant semiconductors manufacturers who together
represent the great majority of world semiconductor production.
Source: Semiconductor Industry Association, May 2009.
Venture capital
Shifts in current flows of venture capital (VC) give an idea of where risk-taking investors see
future innovations and the most promising areas for investment. The volume of these funds is
currently very constrained by the availability of finance, and the potential for successful exit
strategies through stock market listings or purchases of successful firms, e.g. by private funds. These
data are often published very rapidly by VC industry associations, but are not readily comparable
across countries. Detailed quarterly US data is available with a lag of around one month and as the
United States is by far the largest VC market, these data are indicative of global trends in funding ICT
innovations.
The most recent US data (through Q1, 2009, see Annex Figure 27) show that ICT VC has held up
moderately well, and the share of ICTs in total venture capital remains stable at around 50% even if
it has declined from over 75% at its peak in the Internet bubble. However US ICT venture capital
declined substantially in current terms to around USD 1.5 billion in the first quarter of 2009 from
close to USD 3 billion in the last quarter 2008. The current level of ICTs in venture capital
investments is almost as low as it was in 1996. These venture capital investments indicate the
continuing importance of ICTs as promising sources of innovation and growth despite the US-led
financial market crash, and this importance is expected to continue, although with some shifts,
particularly towards ICT-intensive clean technologies.
7
7
A recent survey of 725 venture capitalists globally suggests that over the next 3 years investment interest will
continue in telecommunications and semiconductors but it will be decreasing, that software and new media will
attract increasing investment interest, and that clean technologies will attract the greatest increase in
investments. Governments are expected to be most likely to increase venture capital investments compared to
other actors, and governments should implement favourable tax policies for entrepreneurial development and
develop policies to motivate institutional investors to invest in venture capital (2009, Deloitte Touche
Tohmatsu, Global trends in venture capital: 2009 global report).
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 13
©OECD 2009
PART 2. PERFORMANCE OF TOP ICT FIRMS IN EIGHT ICT SECTORS8
To analyse recent performance in more detail, this section looks at the ten largest firms in each
of eight different ICT sectors. These firms are drawn from the top-250 ICT firms as identified in the
OECD Information Technology Outlook 2008. The relative performance through to Q1 2009 (quarterly
year-on-year growth) is compared with 2001 and Q1 2002. Year-on-year quarterly changes are
calculated for each firm and then pooled to make up the Top-10 firm sector groupings.
9
These give
an overview of the recent evolution of large ICT firms and the sector. Balance sheet net cash
positions are analysed for the first time, with net cash defined as: cash plus short-term
investments/marketable securities minus debt. These net cash data, although very variable across
firms, give a forward indicator of their likely survival and their potential to self-finance R&D and
innovation.
The results show considerable variation across sectors as would be expected in the recession
and geographical and firm-specific factors also account for a large share of variability. Aggregate
trends described in the first part of this report are largely confirmed by firm-level developments in
the ICT sub-sectors analysed below. However, detailed data in this section of the report goes through
the first quarter 2009. It does not capture the upturn in ICT goods which can be seen in the most
recent cyclical data presented in this report and in the very preliminary analysis of firms reporting
second quarter 2009 results.
Semiconductors
The semiconductor industry as usual was the earliest to be hit by the recession. Demand for
semiconductors fell significantly throughout 2008 and severely during the final quarter, and
continuing into Q1 2009. However there has been a modest recent uptake of demand and firms
which have released results show that 2009 Q2 year-on-year results, although still negative, are
better than for Q1, and that there is quarter-on-quarter growth.10 However the rapid fall has
affected the entire sector, including semiconductor equipment suppliers (e.g. ASML, Applied
Materials, Kla-Tencor, Tokyo Electron) and subcontractors. Utilisation rates dropped rapidly
through Q1 2009 (see Figure 1 above). Despite positive headlines (e.g. Intel investing USD 7 billion in
manufacturing facilities over the next two years, and positive quarter-on-quarter results and
improving year-on-year results) 2009 is expected to see a year-on-year revenue decline for the
sector of at least 20% (Annex Figure 25).
Memory semiconductors have been particularly affected with rapidly falling demand and large
overcapacities. Gartner reported that the total market for DRAM memories contracted by over one-
third in the final quarter, both on the previous quarter and year-on-year (Fabtech, 2009). Memory
prices continue to fall and companies affected go beyond Asian manufacturers as German Qimonda’s
insolvency case shows. Some growth for the semiconductor industry in 2009 is expected from
8
These data are drawn from quarterly and annual data provided by Yahoo! Finance (based on Capital IQ), MSN
Money (based on EDGAR Online, SEC) and Google Finance (based on Thomson Reuters). Where audited Q4 2008
and Q1 2009 data were not available from these sources, they are taken from press releases on firms’ websites.
9
To reduce the effect of exchange rate fluctuations, March 2008 OECD exchange rates were applied to all of the
quarterly results for 2009, 2008, 2007 and 2002, 2001, 2000.
10
Quarter 2 results for Intel, Micron Technology and Texas Instruments. Their improving results compare
favourably with e.g. IT services and software, where early reporting firms had worse year-on-year results in Q2
2009.
14 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
increasing demand for “netbooks”, smartphones, GPS systems, energy-efficient semiconductors and
photovoltaic technologies.
Year on year revenue growth for the top-10 companies throughout 2008 was on average higher
than in 2001.
11
However, combined quarterly revenues then dropped by 34% in the first quarter of
2009 compared to the first quarter in 2008. This drop was stronger than revenue declines witnessed
for these companies in the beginning of 2002, but still above the lowest growth rate of 2001-2002
(Figure 2).
Figure 2. Quarterly revenue growth (year-on-year), Top-10 "Semiconductors"
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. Quarterly revenues of ASM International for Q1
to Q4 2000 and 2001 has been estimated using annual revenues.
Semiconductor companies seem better placed in terms of cash availability than seven years ago.
Semiconductor companies have more net cash at the end of 2007, 2008 and the first quarter of 2009 than
seven years ago (Figure 3).
12
Intel, Texas Instruments and Taiwan Semiconductor had several USD billions
net cash in their balance sheets in the beginning of 2009. However, only Taiwan Semiconductor (together
with three other firms) has increased its net cash since 2007. Increasing net cash together with falling
quarterly revenues indicate successful cost reduction measures in the industry.
11
Annual data are from annual reports (i.e. they are not the sum of four quarters).
12
This does not include the net cash of Freescale and NXP, as their long-term debt has increased dramatically after
buyouts by private equity firms in 2006. In 2008, for example, Freescale had net cash of
USD -8.3 billion and NXP USD -4.5 billion.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 15
©OECD 2009
Figure 3. Net cash by year, Top-10 "Semiconductors"
In billion current USD
0
2
4
6
8
10
12
14
16
18
20
2000 / 2007 2001 / 2008 2002 / 2009 Q1
2000 - 2001 - 2002 2007 - 2008 - 2009 Q1
Note: Based on March 2008 USD exchange rates. Values do not include net cash of Freescale and NXP.
R&D did not show dramatic decreases until the last quarter of 2008, where R&D spending fell at
7%, followed by a drop of 14% in the first quarter of 2009 (Figure 4). Overall, semiconductor firms
rank at the bottom regarding their quarterly R&D spending growth in the first quarter of 2009 when
compared with the top-10 firms of other sectors (NXP: -48%; Taiwan Semiconductor Manufacturing:
-29%; Infineon: -28%; and Texas Instruments: -25%). Only one semiconductor firm
(STMicroelectronics NV) increased its R&D expenditures in the first quarter of 2009. Intel, which
spent 35% of total annual R&D expenditures of the top-10 semiconductors in 2008, reduced its
quarterly R&D spending by 10% in the first quarter of 2009 and cut by the same amount year-on-
year in the second quarter, although year-on-year revenues were well below both. Spending cuts on
R&D typically lag behind revenue declines. This cyclical lag in R&D cuts was also the case in the
previous business cycle in the early 2000s (see OECD Information Technology Outlook 2008).
Figure 4. Quarterly R&D spending growth, Top-10 "Semiconductors"
-20%
-10%
0%
10%
20%
30%
40%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. Quarterly R&D spending by ASM International for
Q1 to Q4 2000 and 2001 has been estimated through annual R&D expenditures.
16 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
I T equipment
Slowing demand for computers, consumer electronics devices and semiconductors and
decreased spending on enterprise servers hit IT equipment manufacturers hard. During the final
quarter of 2008, year-on-year global PC shipments declined for the first time since 2002; the decline
accelerated during the first quarter of 2009 (IDC, 2009a; iSuppli, 2009). New growth areas are
expanding, e.g. “netbooks”, but they were not expected to compensate for the overall weakening
market in 2009. As consumers generally see cheaper “netbooks” as a substitute for higher-priced
traditional notebooks, total revenues from PC sales will in the short term decline despite the
increasing number of units being shipped.
During 2008, major IT equipment companies followed a similar trajectory to that of
semiconductor manufacturers. Whereas revenues grew strongly most of the year, the decline in the
final quarter was much stronger than revenue declines witnessed in 2001 and 2002 for the same
companies (Figure 5). The downwards trend of revenues continued into 2009.
Major US companies in this category HP and IBM were in total not as strongly hit by the
downturn over the whole year as Asian firms because of stronger growth rates in first half of 2008
and a strong focus on software and services provision. In contrast, Dell suffered higher revenues
declines because of its greater focus on hardware sales. Manufacturers from Chinese Taipei
(ASUSTeK, Quanta Computer) and Japan were severely affected, the latter also due to a strong JPY
slowing exports. Apple is the only top-10 company to have positive revenue growth since the last
quarter of 2008, mainly due to continuing high sales of iPhones and PCs, underpinned by the
availability of Internet downloads of entertainment and applications (see Internet section).
Figure 5. Quarterly revenue growth (year-on-year), Top-10 "IT Equipment"
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. Quarterly revenues of NEC and ASUSTeK for Q1
09 have been estimated using Q4 08 revenues as proxies. All quarterly revenues of HonHai and all quarterly revenues of ASUSTeK
and Quanta for 2002 to 2000 have been estimated through annual revenues.
Major IT equipment firms had more net cash at the outset of the recent economic downturn
than before the dot.com bust. However, a decline of total net cash can be observed (Figure 6). At the
end of 2008, only Apple, Dell, ASUSTeK and Quanta had positive net cash in their balance sheets
(USD 24 billion, USD 7 billion, USD 5 billion and USD 5 billion respectively). Toshiba, IBM and HP had
the lowest net cash positions with USD -16 billion, USD -12 billion and USD -8 billion respectively (in
the case of HP, debts “inherited” through the acquisition of EDS).
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 17
©OECD 2009
Figure 6. Net cash at end of year, Top-10 "IT Equipment"
In billion USD
-70
-60
-50
-40
-30
-20
-10
0
10
20
2000 / 2007 2001 / 2008 2002 / 2009 Q1
2000 - 2001 - 2002 2007 - 2008 - 2009 Q1
Note: Based on March 2008 USD exchange rates. Net cash of NEC, ASUSTeK and Quanta for Q1 2009 has been estimated using
2008 values.
Quarterly R&D spending of top-10 IT equipment firms followed the same trajectory as their
quarterly revenues (Figure 7). HP, IBM and NEC, which spent together more than 75% of total
annual R&D spending among the top-10 firms in 2008 (with IBM accounting for 35% of the total),
have all reduced their R&D expenditures in the first quarter of 2009 (HP: -21%, IBM: -6%, and NEC: -
2%). However, two IT equipment firms have increased R&D expenditure in the beginning of 2009:
Apple (17%) and Fujitsu (2%).
Figure 7. Quarterly R&D spending growth, Top-10 "IT Equipment"
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. Quarterly R&D spending by NEC and ASUSTeK
for Q1 09 have been estimated using Q4 08 R&D spending as proxies. All quarterly R&D spending by HonHai and all quarterly R&D
spending by ASUSTeK and Quanta for 2002 to 2000 have been estimated through annual R&D spending.
Communications equipment
Different developments in markets for handsets and ICT infrastructures have led to
heterogenous trends in the sector’s top-10 companies. In 2008, global growth of handset sales
18 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
slowed down to 3.5% and was especially weak during the holiday season (-13% in the final quarter,
compared to one year earlier; IDC, 2009b). The trend continued into 2009, although smartphones
have become a major area of growth globally. Samsung, LG, Apple, RIM and to some degree Nokia
were able to benefit from these developments. Motorola and SonyEricsson lost significant market
shares, partly due to weaker positions in smartphones and touch-screen mobile phones.
Investments in infrastructure networks are expected to slow in 2009, but demand for advanced
wireless broadband networks persists. Economic stimulus packages in OECD countries include
expanding broadband networks and smart electricity grids, which depend on broadband (see Part 3
of this paper). China’s government has announced it will invest over USD 40 billion in 3G
infrastructures over the next two years. Companies such as Cisco Systems, Ericsson, Nokia Siemens
Networks and Huawei are likely to benefit most from these public initiatives when implemented in
response to the crisis.
Revenues of communications equipment firms grew more slowly during the course of 2008 and
declined strongly from the final quarter of 2008, both in total and as an unweighted average.
Ericsson and L-3 were the only top-10 firms with positive growth in the beginning of 2009 (Ericsson
12% and L-3 4%). Strikingly, Nokia, Motorola and Cisco (the top-3), which generated more than 50%
of the total annual revenues of the top-10 communications equipment firms in 2008, all suffered the
highest decline in quarterly revenues in the first quarter of 2009 among top-10 firms (Nokia -27%,
Motorola -28%, and Cisco -17%). Overall, however, communications equipment companies fared
better in 2008 and in the beginning of 2009 than they did in 2001-2002 (Figure 8).
Figure 8. Quarterly revenue growth (year-on-year), Top-10 "Communications Equipment"
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. All quarterly revenues of Huawei and all quarterly
revenues of Avaya for 2008 have been calculated from annual revenues. Quarterly revenues of Alcatel-Lucent for 2002 and earlier
are based on combined annual revenues of Alcatel and Lucent Technologies.
Another indicator of the better state of communications equipment companies is higher net
cash than in 2000-2001 (Figure 9). At the beginning of 2009, major firms had on average
USD 7.8 billion in net cash on their balance sheets. Whereas Nokia’s net cash declined during 2008,
companies such as Cisco Systems, Ericsson and Qualcomm were all able to increase their net cash.
Nortel Networks’ bankruptcy filing, however, points to more severe competition in the current
downturn.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 19
©OECD 2009
Figure 9. Net cash at end of year, Top-10 "Communications Equipment"
In billion USD
0
5
10
15
20
25
30
35
40
45
50
2000 / 2007 2001 / 2008 2002 / 2009 Q1
2000 - 2001 - 2002 2007 - 2008 - 2009 Q1
Note: Based on March 2008 USD exchange rates. Net cash of Huwei for 2009 Q1 is based on 2008 values.
Quarterly R&D spending of communications equipment firms almost follows the same
trajectory as quarterly revenues (Figure 10). Among the top-3 communications equipment firms
(Nokia, Motorola and Cisco), which together accounted for more than 50% of total annual R&D
expenditure in 2008,
13
only Nokia has increased quarterly R&D spending in the beginning of 2009
(+2% in the first quarter of 2009 compared to +7% in the last quarter of 2008 and +6% in the third
quarter of 2008). The other two firms have significantly dropped their quarterly R&D spending in
the beginning of 2009 (Motorola -20% and Cisco -16%). The highest increase in R&D spending in the
beginning of 2009 has been realised by Qualcomm (9%), and this is in line with the company’s
announcement to recruit additional engineers.
Figure 10. Quarterly R&D spending growth, Top-10 "Communications Equipment"
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. All quarterly R&D spending by Huawei and L3
Communications Holding, and all quarterly R&D spending by Avaya for 2008 have been calculated from annual R&D spending.
13
Nokia accounts for 27% of total R&D spending in 2008, followed by Cisco (16%) and Motorola (12%).
20 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
Quarterly R&D spending by Alcatel-Lucent for 2002 and earlier are based on combined annual R&D spending by Alcatel and Lucent
Technologies.
Electronics
The electronics sector was hit by declining global sales, as was IT equipment. Demand plunged
for a wide range of consumer electronics and related components, e.g. LCD panel displays for
notebooks and other screens, and Japanese firms were hit particularly hard. Growth is expected from
emerging clean technologies and related electronics, e.g. efficient battery technologies and
development of “smart” electricity grids. Solar cells are another example: the Japanese firm Sharp
saw overall revenues decline by 20% in the final quarter of 2008, but its solar cells division
increased revenues by 18%.
Many major electronics firms are highly diversified, which also brings challenges. Japanese
firms particularly seem to suffer from “over-diversification” in the current downturn, e.g. producing
“white goods” such as freezers and air conditioners (The Economist, 2009). On the other hand,
Korean firms Samsung and LG have focused their operations around high-growth mobile phones and
home entertainment devices. The share of revenues of these business divisions at Samsung, for
example, has grown from under 50% to over 60% in the most recent year.
Overall, revenues of top-10 electronic firms continued to decline in 2009 from the rapid fall at
the end of 2008 (see Figure 11). The largest drops in the first quarter of 2009 were at Japanese
electronics firms, representing more than half of top-10 electronics companies (Canon -32%,
Panasonic -30%, Hitachi -25%, and Sony -22%). This is partly due to a strong JPY and consequently
slowing exports. Korean firms Samsung and LG displayed positive quarterly growth rates
throughout 2009, in part due to a weak KRW. German company Siemens saw positive revenues
growth in Q1 2009.
Electronics revenue declines have accelerated more strongly during the current economic crisis
than was the case during the dot.com bust (see Figure 11). This is partly due to slumping demand,
but a strong Japanese Yen is throttling growth of export-oriented Japanese manufacturers which are
the majority of top-10 electronics companies. Official statistics confirm the steep decline of
electronics production in Japan, in the early part of 2009, but they also show the equally rapid turn-
up apparent by May 2009 (Annex Figures 31 and 32; summarised in Part 1).
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 21
©OECD 2009
Figure 11. Quarterly revenue growth (year-on-year), Top-10 "Electronics"
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Q1 08 | Q1 01 Q2 08 | Q2 01 Q3 08 | Q3 01 Q4 08 | Q4 01 Q1 09 | Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. All quarterly revenues for Mitsubishi, quarterly
revenues for Hitachi for 2007 and earlier, and quarterly revenues for Samsung for 2002 and earlier have been estimated through
annual revenues. For Sharp half-yearly revenue data have been used to estimate quarterly revenues.
Net cash of top-10 electronics firms has decreased since 2008, partly due to falling revenues
(Figure 12). Over half of the companies had negative net cash (i.e. were indebted) at the end of first
quarter 2009. The average net cash position was USD -3.5 billion. Canon had the highest net cash
among electronic firms with USD 6 billion. Hitachi and Siemens had the lowest net cash with USD -21
billion and USD -15 billion respectively.
Figure 12. Net cash at end of year, Top-10 "Electronics"
In billion USD
-50
-40
-30
-20
-10
0
10
20
2000 | 2007 2001 | 2008 2002 | Q1 2009
2000 - 2001 - 2002 2007 - 2008 - 2009 Q1
Note: Based on March 2008 USD exchange rates. Net cash of Samsung, Mitsubishi and LG for 2009 Q1 has been estimated using
2008 annual balance sheet values.
Where available, quarterly R&D expenditures in the electronics industry increased slightly until
the last quarter of 2008 and have since decreased (Figure 13). Falling revenues in combination with
negative net cash have increased the pressure on R&D budgets in this sector. This is especially true
for Japanese electronics firms, which had the strongest fall in R&D expenditures in the beginning of
22 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
2009 (e.g. Sony -10%, and Canon -9%). On the other side, Siemens and Philips Electronics were
leading the sector in terms of quarterly R&D spending growth in the first quarter of 2009 with 6%
and 5% growth respectively. These two firms account for 25% of total annual R&D spending among
top-10 electronics firms in 2008.
Figure 13. Quarterly R&D spending growth, Top-10 "Electronics"
-15%
-10%
-5%
0%
5%
10%
15%
20%
Q1 08 | Q1 01 Q2 08 | Q2 01 Q3 08 | Q3 01 Q4 08 | Q4 01 Q1 09 | Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. All quarterly R&D spending by Samsung,
Panasonic, and Mitsubishi, and quarterly R&D spending by Hitachi in 2007 and earlier has been estimated using annual R&D
spending. For all firms besides Sony and Philips Electronics quarterly R&D spending in 2002 and earlier has been estimated through
annual R&D spending.
I T services
IT services providers were able to maintain growth throughout most of 2008, slowing during
the final quarter. Demand for IT and Business Process Outsourcing (ITO/BPO) persists as IT
executives continue to focus on reducing costs via (offshore) outsourcing (see Box 1). However,
outsourcing revenue growth was expected to decline in 2009 with small and short-term IT projects
(with short amortisation periods) being favoured over high-value and long-term IT investments.
Banking and financial services firms account for around one–fifth of global outsourcing deals
(Everest Research, 2009) and the severe crisis in these sectors has had a pronounced effect on
demand for ITO/BPO services. In 2008, the total value of deals in the sector dropped by 28% to
USD 18 billion, the lowest since 2001 (TPI, 2009). On the other hand, pressures to cut internal costs
is favouring IT services outsourcing, network services have increased particularly in Asia, and Indian
IT services firms are optimistic about the future of their business.
The top-10 services firms had almost constant revenue growth rates of around 9% during the
first three–quarters of 2008, but quarterly revenues slipped by 6% in the first quarter of 2009
(Figure 14). SAIC, Affiliated Computer Services and Cap Gemini had the highest revenue growth in
the beginning of 2009 (12%, 4% and 1%). In contrast, Tech Data, Unisys and Computer Sciences
Corporation suffered the strongest decline with -18%, -15% and -12% respectively. Some IT service
providers from other sectors also saw flat or slightly declining revenues in their IT services divisions
in the first quarter of 2009, e.g. -4% at IBM’s services division.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 23
©OECD 2009
Box 1. Trends in IT outsourcing for 2009
The economic crisis has put IT services costs, as is the case for all costs, under pressure. This may benefit
outsourcing due to increased internal cost-cutting and perceived benefits from more flexible external sourcing of
IT services. In terms of total IT budgets, forward surveys undertaken in 2008 for the 2009 year showed that many
IT executives planned to increase their IT budget in 2009 but some were already planning to cut budgets as they
had done in 2008. For example, a survey conducted by the Society for Information Management (SIM) of 230
firms in the United States revealed that “44% of IT leaders plan to increase their IT budgets in 2009, 37% plan to
leave their budgets at the same level as in 2008 and 19% of respondents admitted planning to cut their IT
budgets”. For comparison: in 2008, IT spending significantly increased in 46% of IT companies over 2007, 28%
kept their budget at 2007 levels, and 28% reduced their IT budgets (TEAM International, 2008).
Other surveys conducted in the United States showed that IT (offshore) outsourcing is seen by IT executives as a
mean to reduce costs and to improve cash-flow. Info-Tech Research, for instance, surveyed more than 150 IT
companies, and showed that more than 60% of the IT departments are “focusing on reducing costs via offshore
outsourcing". According to the survey of Robert Half Technology, 43% of 1 400 CIOs were planning to increase
offshore transactions in 2009 (TEAM International, 2008).
The European Information Technology Observatory (EITO) has also projected an increase in revenues for IT and
BP outsourcing in 2009 in Europe. In Germany, for instance, annual revenues generated by IT and BP
outsourcing are expected to increase by 7.2% in 2009 compared to 7.4% in 2008 (BITKOM, 2009).
Recent quarterly data of the outsourcing market indicates that revenue growth through IT and BP outsourcing will
probably decline in 2009, due to the current highly uncertain economic outlook. This is reflected by an increasing
number of contracts, but with a decreasing Total Contract Value (TCV). According to Technology Partners
International (TPI), the TCV of outsourcing deals fell by 22% in H1 2009 compared with H1 2008, and annual TCV
in 2009 could “easily fall below USD 80 billion” (TPI, 2009). The last time TCV was below USD 80 billion was
during the 2001 recession. However, quarter-by-quarter comparison shows signs of stabilisation. TCV in Q2 2009
increased by 5% compared to Q1 2009. In the Asia Pacific region TCV even increased by more than 150% in
H1 2009 over H1 2008, but from a low base, and Indian firms providing outsourcing services have remained
relatively optimistic as they change their service product mix to adapt to changing market demands.
Figure 14. Quarterly revenue growth (year-on-year), Top-10 “IT services”
In billion USD
-10%
-5%
0%
5%
10%
15%
20%
25%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. The quarterly revenue of SAIC for Q1 09 has
been estimated using its Q4 08 revenue.
24 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
The better overall performance of IT services firms in 2008 and the beginning of 2009 is also
reflected by improved net cash compared to 2001-2002 (Figure 15).
14
In the first quarter of 2009,
the top IT services firms had positive net cash of USD 1.5 billion, compared to a negative net cash of
USD -577 million in 2002. Accenture had almost USD 3 billion in net cash, and Cap Gemini and
Automatic Data Processing around USD 1 billion.
Figure 15. Net cash at end of year, Top-10 “IT services”
In billion USD
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
2000 / 2007 2001 / 2008 2002 / 2009 Q1
2000 - 2001 - 2002 2007 - 2008 - 2009 Q1
Note: Based on March 2008 USD exchange rates. Values do not include net cash of First Data. The net cash of SAIC has been
estimated using 2008 balance sheet values.
Software
Major software firms maintained positive growth in their quarterly revenues throughout 2008,
but with a steep fall in growth rates since the second quarter and negative overall growth in the first
quarter of 2009. Declining business confidence in the current economic downturn is likely to
continue to slow investments in long-term and high-valued software projects.
The top-10 software firms had a total annual revenue growth of 12% in 2008 compared to 6%
in 2001. During the first two quarters of 2008, they had high revenue growth rates with a peak in Q2
of 20%. However, in the second half of 2008 there was a dramatic drop in their combined revenue
growth to 12% and 3% year-on-year (e.g. Oracle: 24% in Q2, 18% in Q3, and 6% in Q4 2008; SAP:
18% in Q2, 14% in Q3, and 8% in Q4 2008). In the beginning of 2009, quarterly revenues then
started to fall (-5%), these were below the lowest growth rates of 2001-2002 (Figure 16). In the
beginning of 2009, only Intuit and Oracle were able to maintain positive growth rates (9% and 2%
respectively).
14
This does not include the net cash of First Data, as its long–term debt has increased dramatically after a buyout
by a private equity firm in 2007. In 2008, for example, First Data had net cash of USD -22 billion.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 25
©OECD 2009
Figure 16. Quarterly revenue growth (year-on-year), Top-10 “Software”
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
Q1 08 | Q1 01 Q2 08 | Q2 01 Q3 08 | Q3 01 Q4 08 | Q4 01 Q1 09 | Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates..
Top-10 software firms in the beginning of 2009 had USD 2 billion less net cash than in 2007.
This is an opposite trend that observed in 2000-2002, where total net cash increased by more than
USD 20 billion (Figure 17). In both timeframes, Microsoft alone accounts for more than 70% of the
total net cash with USD 23 billion in the first quarter of 2009 compared with USD 39 billion in 2002.
Figure 17. Net cash at end of year, Top-10 "Sotfware"
In billion USD
0
10
20
30
40
50
60
2000 | 2007 2001 | 2008 2002 | Q1 2009
2000 - 2001 - 2002 2007 - 2008 - 2009 Q1
Note: Based on March 2008 USD exchange rates.
Top-10 software firms increased their annual R&D spending in 2008 by 10% compared to 2007,
with Microsoft accounting for more than 46% of total annual R&D expenditure in 2008 (USD 8
billion) and Intuit having the highest increase in quarterly R&D spending compared to 2007 (28%).
Quarterly year-on-year comparisons, however, reveal decreasing growth rates in R&D expenditures,
falling below zero for most of the top-10 firms in the final quarter of 2008 (see non-weighted
average growth in Figure 18). In the first quarter of 2009, total R&D expenditure increased by 1%,
26 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
mainly because Microsoft increased its quarterly R&D spending to USD 2.2 billion in the first
quarter of 2009 from USD 2 billion in the first quarter of 2008.
Figure 18. Quarterly R&D spending growth, Top-10 "Software"
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
Q1 08 | Q1 01 Q2 08 | Q2 01 Q3 08 | Q3 01 Q4 08 | Q4 01 Q1 09 | Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates.
I nternet
The fate of top-10 Internet companies depends on factors different from other sectors: a mix of
developments in consumer demand as online transactions continue to grow as a share of total retail
purchases (Amazon, eBay, Expedia), advertising spending (Google, AOL, Yahoo!, IAC), financial
markets (E*Trade, TD Ameritrade), as well as growth in broadband subscriber numbers. Slower
overall growth in some of these sectors can benefit Internet companies as consumers look for better
deals online and advertisers focus on online advertising (see ZenithOptimedia, 2008). This is likely
to benefit the most successful firms and encourage further consolidation, e.g. Amazon for online
retailing, Google for online advertising, Apple for digital content. Apple’s iTunes Store, for example,
makes up over 12% of Apple’s revenues, driven by downloads of music, films and iPhone
applications.
Total top-10 quarterly revenues increased throughout 2008, but at falling growth rates
(Figure 19). Total growth dropped to just below zero in the first quarter of 2009, indicating that
Internet businesses are not crisis-proof. Whereas Amazon continued double-digit growth, Google
had a one-digit growth rate for the first time since its IPO in 2004. The remaining firms had year-on-
year quarterly revenue declines, mostly over 10% (TD Ameritrade: -24%; AOL and E*Trade: -23%;
Yahoo Inc: -13%; IAC: -11%). eBay, one of the firms with the highest growth rates in 2001 and 2002,
suffered a decline of quarterly revenues from the end of 2008 (-7% in Q4 2008 and -8% in Q1 2009).
Combined revenue growth during 2008 is considerably higher than the average growth because
revenue growth at Google and Amazon strongly influences the sector’s total performance. In 2001-
2002, on the other hand, average growth was much higher than the combined growth of revenues
because of Google’s three-digit growth.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 27
©OECD 2009
Figure 19. Quarterly revenue growth (year-on-year), Top-10 “Internet”
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. All quarterly revenues of Google and AOL for
2002 and earlier have been calculated from annual revenues.
The top-10 Internet firms are better placed financially than in 2001-2002. In the first quarter of
2009, they had an aggregated net cash of around USD 6 billion compared to USD -3 billion in 2002
(Figure 20). Those data, however, do not include Google, which was not yet public in 2002 – the
company has almost USD 18 billion in net cash, making it one of the most cash-rich ICT firms.
Figure 20. Net cash at end of year, Top-10 “Internet”
In billion USD
-12
-10
-8
-6
-4
-2
0
2
4
6
8
2000 / 2007 2001 / 2008 2002 / 2009 Q1
2000 - 2001 - 2002 2007 - 2008 - 2009 Q1
Note: Based on March 2008 USD exchange rates. Does not include the net cash of Google.
Where available, annual R&D expenditures increased in 2008 compared to 2007 (e.g. Google:
32%, eBay: 17%, and Expedia: 15%). However, quarterly R&D expenditures had falling growth rates
(Figure 21). For example, Google, the Internet firm with the highest annual R&D spending in 2008,
increased its quarterly R&D expenditures by 65% in the beginning of 2008 compared with 2007. In
the middle of 2008, Google then increased R&D expenditures by 28%, then by 16%, and in the first
quarter of 2009 R&D spending fell by 5% year-on-year. Nevertheless, most Internet firms still
28 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
increased their R&D spending in the first quarter of 2009 (e.g. Amazon 18%, eBay 14% and Expedia
8%).
Figure 21. Quarterly R&D spending growth, Top-10 "Internet"
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. All quarterly R&D spending of Google and AOL
for 2002 and earlier have been calculated from annual R&D spending.
Telecommunications
Diversification in telecommunication services has led to heterogeneous trends in the industry.
While the fixed-line usage and subscriber base continue to decline – partly due to the increasing use
of cheap or entirely free Voice over Internet Protocol (VoIP) services – the number of mobile
subscribers is increasing worldwide. Estimations suggest that global mobile subscribers were over 4
billion by the end of 2008 (an 18% increase compared to 2007) with China, India, Russia and Brazil
the fastest growing mobile markets and China also the largest market (over 600 million subscribers
in 2008) (ITU, 2008). Mobile data services rather than mobile voice telephony are expected to be the
major source of revenue growth in major EU countries (IDATE, 2009).
Another increasing segment is Internet access and services. In some cases they also include
VoIP access, which has become a widely accepted substitute for fixed-line voice telephony. In OECD
countries, broadband penetration (i.e. broadband subscribers per 100 inhabitants) increased by
13% during 2008 (OECD, 2009b). Although growth is losing momentum, Internet access and
services can be expected to profit from investments in broadband networks stimulated by economic
recovery packages in OECD countries (see Part 3).
Top-10 telecommunications firms maintained their positive quarterly revenue growth rates in
the beginning of 2009. However, revenue growth rates were lower than during the dot.com bust
(Figure 22). Companies with strong mobile segments had growing revenues throughout 2008 and
the beginning of 2009 (e.g. Vodafone: 17% in the last quarter of 2008, and 8% in the first quarter of
2009). The strong Chinese mobile market is especially favourable for China Mobile, which still had
double digit growth rates in the first quarter of 2009 (14% in the second half of 2008, and 10% in
the first quarter of 2009). Companies with a focus on broadband services also maintained positive
growth rates (e.g. Verizon: 3% in the last quarter of 2008, and 12% in the first quarter of 2009).
Companies with the strongest fall in quarterly revenues in the first quarter of 2009 are Spring Nextel
(-12%), Telecom Italia (-7%), and NTT (-5%).
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 29
©OECD 2009
Figure 22. Quarterly revenue growth (year-on-year), Top-10 “Telecommunications”
-5%
0%
5%
10%
15%
20%
Q1 08 / Q1 01 Q2 08 / Q2 01 Q3 08 / Q3 01 Q4 08 / Q4 01 Q1 09 / Q1 02 Q2 02 Q3 02 Q4 02
2008 - 2009 Total 2001 - 2002 Total
2008 - 2009 Non-weighted average growth 2001 - 2002 Non-weighted average growth
Note: Average growth refers to non-weighted average of firms’ annual growth rates. All quarterly revenues of France Telecom,
Vodafone and China Mobile are based on half-yearly data. Quarterly revenues before 2002 of Nippon Telegraph, Deutsche Telekom,
France Telecom, and Vodafone are based on annual revenues.
Top-10 telecommunications firms are deeply in debt with around USD -350 billion net cash
throughout 2008 and the first quarter of 2009 (Figure 23). All but one telecommunications firms
(China Mobile) had negative net cash in the beginning of 2009. With more than USD 18 billion China
Mobile is one of the richest firms in the ICT sector (after Microsoft with USD 23 billion). In contrast,
NTT had the lowest net cash with USD -31 billion among telecommunication firms.
Figure 23. Net cash at end of year, Top-10 "Telecommunications"
In billion USD
-400
-350
-300
-250
-200
-150
-100
-50
0
2000 / 2007 2001 / 2008 2002 / 2009 Q1
2000 - 2001 - 2002 2007 - 2008 - 2009 Q1
Note: Based on March 2008 USD exchange rates. Net cash for Q1 2009 of France Telecom, Vodafone and China Mobile are based
on 2008 balance sheet data.
Summary of sectoral performance of large I CT firms
Overall, different ICT segments are performing differently through Q1 2009, but with some
common features. Revenues are generally declining, and hardware has been hardest hit in absolute
30 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
terms, but some hardware segments (semiconductors and communications equipment) are still out-
performing compared with the slump of the early 2000s. On the other hand, although services are
slowing rather than contracting, they are generally performing worse than in the previous slump.
Furthermore, hardware firms appear to be rebounding somewhat in Q2 with positive quarter-on-
quarter growth while services firms still appear to be declining.
Net cash is higher across almost all segments than in the early 2000s, suggesting that large
ICT firms learned important lessons from the previous slump and are in a much stronger position to
survive and maintain R&D and innovation. R&D is declining but with a lag or at a considerably
slower pace than revenue declines, and some firms are increasing R&D during the slump. Finally,
employment is also holding up better than revenues but is starting to decline (see
DSTI/ICCP/IE(2009)2).
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 31
©OECD 2009
PART 3. ICT SECTOR CHALLENGES AND OPPORTUNITIES
Information and communication technologies (ICTs) have been a major source of innovation,
growth, and employment. The ICT sector itself contributes a considerable share of business sector
value-added (around 8% in 2006 for the OECD) and employment (5.5% of business sector
employment in the OECD). The ICT sector is also highly R&D-intensive and a source of innovation.
Furthermore, ICTs and the Internet are a fundamental economic infrastructure, driving productivity
and innovation.
Given the central nature of ICTs in the economy the impact of the economic crisis on ICTs is
two-fold, i.e. direct and indirect impacts on the ICT sector itself, but also on the productive and
innovative use of ICTs across the economy and society. The two impacts are mutually reinforcing. A
slowing ICT sector will generate lower productivity increases and potentially fewer ICT innovations.
Slower uptake of ICTs slows the productivity- and innovation-enhancing features of ICTs from
diffusing throughout the economy. Network effects induced by a broadly installed ICT infrastructure
do not materialise.
When assessing the economic crisis and its interactions with ICT production, diffusion and use,
the special nature of ICTs has to be considered. The next section deals with the direct and indirect
impact on the ICT sector before shifting to impacts on the side of diffusion.
Impacts on the I CT sector
Short- to medium-term impacts
The economic crisis is having a direct impact on the ICT sector itself. Table 1 shows potential
opportunities and challenges over the short and longer terms.
The first block looks at short- to medium-term impacts on the ICT sector. On the side of
opportunities, it shows the factors that may benefit the ICT sector relative to other industries. In a
period of economic contraction, the greater centrality of ICTs in business, government and society
may make it harder to radically compress IT budgets, or at least any faster than the declines in
economic activity. Moreover, ICTs are essential in times of restructuring, value chain
reconfigurations and new regulations, potentially leading to increased demand for certain types of
ICT services (e.g. software).
On the side of challenges, the ICT sector is not isolated from the economic crisis. As shown in
Parts 2 and 3, despite potential resilience ICT production and sales are falling under the twin
impacts of pressures on business IT budgets and significant falls in business and consumer
confidence and demand. The impacts are being felt most immediately by suppliers to the top ICT
firms and low-cost production locations which have seen their activity plummet, for example in
semiconductors. Although the ICT sector maintained R&D and innovation expenditures in the last
cyclical down-turn and these only showed a lagged decline, decreased revenues, faltering growth
and a lack of capital may influence longer-term capacities to invest in R&D, innovation and ICT-
related human capital in this economic downturn.
32 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
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Table 1. ICT sector challenges and opportunities
Opportunities Challenges
Short- to
medium-
term
Downturn leads to ICT sector restructuring and
greater efficiencies
Despite pressures to reduce capital investments,
ICT budgets are harder to compress with greater
reliance on ICTs and the Internet
Restructuring and cost-cutting in other sectors
leads to more use of ICTs (information
management and productivity tools, CRM)
ICT cost cutting measures could lead to more
outsourcing of services (hosting etc.), software-
as-a service, open source software, more
sustainable energy efficient ICTs
Public sector and emerging economies continue to
invest in ICTs
Stimulus coming from economic recovery
packages
Declines in R&D and innovation activities
Decreasing access to capital (including venture capital)
for the ICT sector, financial difficulties of ICT suppliers
and SMEs / falling investments in the ICT sector
Pressures on IT budgets in all sectors / regions leading
firms to operate with current ICT infrastructure
Potential reduction in outsourced services
Countries specialised in ICT manufacturing see
operations rapidly reduced (China, E.Europe) with
declines in ICT trade
Fall in consumer ICT spending as confidence drops and
unemployment rises
Fall in demand from emerging economies
Longer-
term
ICT sector continues as a leading source of value-
added, employment and innovations
New ICT R&D and innovation priorities as
growth driver (IT, nano- and bio-tech)
Growth in digital content applications
Low-carbon economy and green IT as growth
drivers: remote working, sensors, smart grid
Socio-economic challenges as driver: climate
change, energy efficiency, health & aging
Consolidation and globalisation of value chains
and back-office operations, resulting in greater
use of information management, e.g. to improve
transparency of financial markets and public
sector
Spending on ICT security up
Longer-term stimulus from economic recovery
packages
Dropping ICT R&D priorities and pre-recession
innovation opportunities lowering future growth /
weakening ICT innovation and value chain networks
Prolonged ICT sector financing problems
Slow or no development of ICT and digital content
business models and products (e.g. advanced broadband
services) to drive industry growth
Slowdown in supply of ICT professionals and ICT skills
Resistance to change and decreasing trust slows ICT-
enabled innovation (e.g. organisational change)
Continued fall in business / consumer ICT spending
Prolonged underinvestment in ICT infrastructure (supply
and demand) lowering future growth
Backlash to globalisation putting pressure on efficient
globalised ICT value chains / permanent effects on
production ability of low-cost production locations
Slower ICT uptake and diffusion through economy and
society slows growth of ICT sector
Longer–term impacts on the ICT sector
The second block looks at longer-term impacts on the ICT sector. On the side of opportunities, a
range of factors will foster the central role of ICTs in our economy and society. In the business sector,
it can be argued that enterprise models will continue to evolve around ICT-enabled networks and
the rationalisation of production. Different forms of business and social innovations will add to the
growth potential of the ICT sector. New trends such as the further dematerialisation of production,
and the shift to a low–carbon economy will provide further boosts. Finally, solutions to ever-central
socio-economic challenges in fields such as climate change, health and aging, and mobility will be
ICT-based.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 33
©OECD 2009
The economic stimulus packages of OECD countries may provide further growth and diffusion
of ICTs. Most governments plan to foster growth through smart investments which have
repercussions on the supply-side, helping to restore favourable conditions for innovation and long–
term growth. In many cases these plans will be directly relevant to the ICT sector and technology
diffusion. The way these ICT investments could feed into the economy and society also illustrates the
broader interactions between the ICT supply and the use side. Figure 24 sketches out some of these
interactions.
Potential longer-term down-side risks to the ICT sector are shown in Table 1. Some of these are
a direct prolongation or outcome of short-term challenges. Depending on the overall business cycle
and the evolution of the crisis, a continued fall in ICT spending and uptake and a prolonged period of
under–investment in the ICT infrastructure is a possibility. The inability of the ICT sector to generate
finance in the longer-term and potential under-investment in R&D and innovation might also be felt
or become more chronic. A neglect of key R&D priorities would also mean that the ICT sector will be
less able to deliver solutions to societal challenges. A slowdown in the supply of ICT professionals
and ICT skills could also have important long-term effects. Given the international nature of ICT
production and sales, a backlash to globalisation and protectionism will also have a direct impact on
ICT sector production.
Impacts on I CT diffusion and use
ICTs and the Internet are a fundamental economic infrastructure (OECD, 2008c). The benefits of
ICTs are amplified by their use throughout the economy and society, and the innovations that they
drive. ICT investments spur competitiveness and productivity at the firm and aggregate level, in
particular when combined with investment in skills, organisational change (and industry
restructuring), innovation and new firm creation (OECD, 2003; OECD Information Technology
Outlook, various years). Investment in ICT contributes to overall capital deepening helping to raise
labour productivity. Technological progress in the production of ICTs may contribute to more rapid
multifactor productivity growth in the ICT-producing sector. Finally and most importantly, greater
use of ICT outside the ICT sector throughout the economy helps firms, public and social institutions
to increase efficiency and enhance innovation, develop new products and services and raise
multifactor productivity growth. The Internet is an increasingly important platform for much of this
creativity and innovation.
15
Figure 24 provides a snapshot of the interactions between the ICT supply and demand side, by
highlighting how certain policy measures promoting the ICT infrastructure or the ICT demand side
'ripple' through the economy and foster growth, employment and innovation. Initially ICT spending
yields first order effects in terms of wages and jobs. Second- and third-order effects are however also
engendered which increase the stimulus impact.
As partly shown in Table 1 a fall in sales and shipments from the ICT sector is the mirror of
falling demand and declining ICT uptake by businesses, the public sector and households. At a
minimum new investments and upgrades of the existing ICT infrastructure are delayed. The result
could be a slowdown in ICT diffusion and uptake (potentially to firms and sectors which had been
special policy targets) and slowdowns in the development of ICT skills, potentially leading to longer-
term skill mis-matches and shortages. ICT uptake and use still have an important role to play if
countries are to return to the productivity growth path of the late 1990s and early 2000s and the
15
Chairman’s summary, Ministerial on the Future of the Internet Economy, Seoul, June 2008,
www.oecd.org/dataoecd/53/49/40989438.pdf.
34 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
crisis will probably slow this return. In this case expected productivity-enhancing impacts and ICT-
enabled innovations will be less frequent and overall ICT-induced job and growth will remain below
potential.
Figure 24. ICTs in the economy
ICT industry and supply side Non-ICT industry and demand-side
Measures
fostering
demand for
ICTs
Supporting infrastructure investment,
either in unserved or underserved areas or
fostering next-generation networks
Upgrading ICT infrastructure in schools, public
sector, healthcare, research, education, etc.
Introducing “smart” and “green” ICT-related
infrastructure (e.g. health IT, smart grid)
First-order
effects
Immediate positive revenue impact for
communication companies and equipment
vendors and others involved in the
deployment of infrastructure
Preservation and creation of jobs for
infrastructure deployment. Workers
continue to spend money in other sectors
Creates demand for ICT industry products and
services feeding into ICT sector revenues and
employment
Rise of new specialised hardware, service and
consultancy providers (smart grid, health IT, etc.)
Preservation & creation of ICT technical and related
jobs in other sectors
Second- and
third-order
effects
Increase of business and consumer
spending (including from newly connected
areas and ICT sector wages)
Preservation of revenues and jobs related
to infrastructure
Stimulus for ICT hardware demand
Multifactor productivity growth in the
ICT-producing sector
Demand for broadband content &
applications and creation/preservation of
related jobs
Investment in ICT contributes to overall capital
deepening and raises labour productivity
Re–organisation of these sectors and productivity
impacts (efficiency and MFP)
New products and services (distance education,
telework, online medicine, etc.)
Demand for more infrastructure or servicing that
infrastructure
New skills
New business opportunities and generation of new revenue flows through new products and
services (e-commerce, healthcare, online education, knowledge-intensive professional services,
digital content, entertainment)
ICTs enable other innovation at firm, sector and country level and drive productivity & growth
The use of ICTs can also contribute to better education, health care and solving societal problems.
Finally, lack of ICT infrastructure and broader ICT uptake throughout the economy in areas of
smart applications in e.g. transport, development of energy-efficient buildings, and the health sector,
will have long-term negative consequences and slow the ability to address key social challenges.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 35
©OECD 2009
PART 4. ICT POLICY AND THE ECONOMIC CRISIS
This section focuses on potential implications for ICT policy. The questions are whether and
how ICT policies may need to be adjusted or reinforced in the economic crisis and whether current
economic stimulus packages to foster short-term demand and provide foundations for long-term
sustainable growth coherently address ICT policy goals. The section first sets out OECD ICT policy
themes and approaches before the crisis and asks questions about their new directions. Then it
discusses how economic stimulus packages and associated policies are directly or indirectly related
to ICT policies.
The ‘pre-crisis’ OECD ICT policy framework
ICT policies have been increasingly integrated into overall strategies for enhancing economic
growth, employment and welfare in OECD countries (OECD Information Technology Outlook 2008,
Chapter 7). They have shifted in the last decade from dealing with sector-specific infrastructure
issues towards long-term strategies on how ICTs, the Internet and other types of networks can
achieve wider socio-economic objectives. E-government activities are a part of strategies to boost
public-sector efficiencies, and ICTs are increasingly used to address wider issues at national level
(e.g. social cohesion, aging, national security) and globally (e.g. climate change, energy efficiency,
global health issues).
ICT policies of OECD countries range from "Fostering ICT innovation" to "Promoting trust
online". Table 2 lists the top ten ICT policy priorities in OECD countries as summarised in the OECD
Information Technology Outlook 2008. At the top of the ranking are government online activities and
policies to promote broadband uptake and use. Specific policies to foster innovation in the top ten
are ICT R&D programmes and ICT innovation support. Policies to promote IT education and to
encourage industry-based/on-the-job IT training also feature prominently.
These policy areas need reviewing in the context of the economic crisis and their adjustment /
reinforcement. The recession will, for example, create pressures for government-supported build-
out of the infrastructure (due to lack of finance or hesitance of companies to invest), for ICT
innovation (e.g. R&D expenditures, venture finance, support for small firms), for the diffusion of ICTs
to businesses, etc. In times of a crisis, trust online or the security of ICT networks might decrease as
evidenced by the increase in viruses or malware and governments cannot walk away from this policy
priority. At macroeconomic level, trade and foreign direct investment are down and protectionism
may increase.
ICT policy can be affected in two ways. With pressures on government budgets attention may
shift away from current ICT policy approaches. On the other hand, expansionary fiscal policies and
the desire to craft new 'anti-crisis' stimulus packages may provide additional resources and political
will to reinforce or modify existing ICT policies.
36 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
Table 2. Top ten ICT policy priorities, 2008
1 Government online, government as model users
2 Broadband
3 ICT R&D programmes
4 Promoting IT education
5 Technology diffusion to businesses
6 Technology diffusion to individuals and households
7 Industry-based and on-the-job training
8 General digital content development
9 Public sector information and content
10 ICT innovation support
Source: OECD Information Technology Outlook 2008.
OECD governments have been updating ICT policies with the announcement of new broadband
strategies (e.g. Australian Broadband Plan, Ireland national broadband scheme, Korean broadband
plan
16
) or new ICT policies (France numérique 2012, Spain Avanza, United Kingdom Digital Britain).
Beyond broadband, themes include the improved use of wireless spectrum, new UMTS licenses,
mobile and digital TV, developing digital content services and advanced broadband uses (e.g.
telework, distance education, e-government and health applications). The United Kingdom’s Digital
Britain plan aims to modernise digital networks, create an investment climate for digital content,
applications and services, foster universal availability coupled with the skills and digital literacy, and
enable the widespread online delivery of public services. Spain’s Plan Avanza 2 is designed to
contribute to the economic recovery through the widespread and intensive use of ICTs (with a focus
on the future Internet and digital content). Korea has re-launched its New Growth Engines Initiative
focused on new ICT goods, ICT services and software.
Some OECD governments have identified ICTs as an important direct or indirect component of
economic stimulus plans. This is based on the rationale that ICTs are a fundamental economic
infrastructure and a precondition for competitiveness. The idea is that ICT infrastructure and
applications throughout the economy and society induce large benefits through their productivity-
and innovation-enhancing features (see above). Figure 24 sets out some of the direct and indirect
impacts of ICT-specific and ICT-related economic stimulus measures including adoption and use
throughout the economy.
I CTs in economic stimulus packages
Governments in OECD and major non-OECD countries are setting up economic stimulus
packages to address the economic crisis.
17
The aim of these packages is to stimulate demand in the
short term, i.e. re-financing banks, injecting cash into the economy and protecting existing jobs.
However, most governments also plan to foster growth through smart investments which have
repercussions on the supply-side, helping to restore favourable conditions for innovation and long
term growth. In most cases these plans are directly relevant to the ICT sector and technology
16
Korea has initiated plans to bring 1 GB/s broadband connections to homes by 2012.
17
See OECD, 2009c. Within “Measures relating to innovation and long term growth”, these include: (i) Improving
the infrastructure, (ii) Support for R&D and innovation, (iii) Investment in human capital, education/training,
(iv) Green technologies and innovation to foster energy-efficiency and sustainable economic growth, and (v)
Support for innovation and entrepreneurship.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 37
©OECD 2009
diffusion, and many include ICT-related elements which should prove a positive stimulus to the ICT
sector.
Measures aimed at the ICT infrastructure
Many of the stimulus packages recognise the importance of modern fixed and wireless
communication infrastructure to support innovative products and services and the need to devote
some public resources to improve or accelerate deployment (see Table 3).
These cover two key areas: extending broadband to areas without connectivity and upgrading
existing networks to support very-high speed communications. Many plans focus on closing the
broadband gap by providing universal broadband coverage. These investments will be largely
devoted to rural and remote areas. Depending on the country, plans also devote resources to
building out new, very-high-speed networks (next-generation networks). In most cases, the exact
meaning of ‘broadband’ and ‘unserved’ or ‘underserved’ are not defined in terms of geography,
speeds or technology. Some plans make explicit reference to the fostering of wireless services or
fibre deployment.
In all cases, the deployment of broadband is to ensure more widespread connectivity and lay the
foundation for broadband applications and content development (for details see OECD, 2009c, and
for principles to guide any government investment, see OECD, 2009d). Most plans do or will entail
non-budgetary, regulatory measures to sustain policy targets (e.g. facilitating fibre roll-out) largely
pursuing policy targets and regulation analysed in previous OECD work (see OECD, 2008c and OECD
Council Recommendation on Broadband Development). Governments are also planning to foster
convergence and drive demand for the ICT infrastructure and services. As part of their stimulus
packages, the United States, Korea and Japan for example, are using regulatory measures to foster
the transition to digital broadcasting.
Table 3. "Networked recovery": Investing in ICT infrastructure
Planned
investment
Goals Penetration targets Speed targets
Australia AUS 43 billion (USD
34.4 billion)
(public-private)
Combination of fibre to the premises (FTTP) and next
generation wireless and satellite technology
90% for FTTP and
10% for wireless/satellite
100 Mbit/s for
fibre
Austria EUR 25 million
(government) – EUR
100 million (public-
private)
Extending high speed broadband and usage of broadband n.a. over 25 Mbit/s
Canada CAD 225 million (USD
211 million)
Extending broadband coverage to un-served rural and
remote communities
as many households as
possible by 2012
n.a.
Finland EUR 66 million (USD 96
million) of EUR 200
million (public-private)
Extending high-speed
broadband
all permanent
residences, business,
public administration
establishments
1 Mbit/s by end
of 2010
100 Mbit/s by
end of 2015
France n.a.
EUR 750 million for
three years
(government share n.a.)
Development of broadband network in small or medium-
sized cities, extending (fixed / mobile) broadband.
Internet on TGV Est lines (EUR 15 million), and
development of networks for education and research
Funds provided by a French public bank and the private
sector to develop next-generation networks in less
connected areas
access to broadband by
2010 and mobile
broadband by 2012 for
everyone
n.a.
n.a.
n.a.
EU EUR 1 billion (USD 1.46
billion)
Extending and upgrading high-speed Internet (focus on rural
communities)
100% coverage of high
speed Internet by 2010
n.a.
Germany an estimated EUR 150
million (USD 219
million)
Accelerating the spread of broadband networks. By 2010 all
unserved areas connected. Nationwide capable broadband
access by no later than the end of 2010
by 2014, ¾ of
households should have
access to high-speed
Internet (all by 2018)
target is 50
Mbit/s
Japan Yen 185 billion
(USD1.9 billion)
Eliminating the digital divide, promoting the development of
wireless broadband and fostering digital terrestrial
broadcasting
broadband: 100% by
2010
ultra-high speed: 90% by
2010
n.a.
38 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
Planned
investment
Goals Penetration targets Speed targets
Luxembo
urg
EUR 195 million (USD
285 million)
Accelerating the build-out of Luxconnect information
highway, including through boosting public
telecommunications works
n.a. n.a.
Portugal EUR 50 million – fiscal
incentives
1
(USD 73 million)
Subsidised investments in new generation broadband
networks
optic fibre that will allow
1,5 million users to
connect
n.a.
Spain n.a. Measures for overseeing the installation of new generation
fibre and regulating broadband
n.a. up to 30 Mbit/s,
“at cost-oriented
prices”
United
Kingdom
2
GBP 200 million
(USD 328 million)
GBP 150-175 million a
year raised by levy on
fixed copper lines
Universal service commitment for broadband
Next Generation Final Third project which is aimed at
developing next generation networks
virtually every
community
90% coverage by 2017
2 Mbit/s per
second by 2012
United
States
USD 7.2 billion
(EUR 4.9 billion)
To foster broadband service to unserved / underserved
areas, promote broadband in schools, libraries, health-care
providers, and other entities.
n.a. no set minimum
data speeds
Note: n.a. stands for not available.
1
In parallel to its stimulus package, Portugal is planning to increase broadband Internet and local area network access in schools (EUR 61 million).
2
The UK also pursues the 'Digital Region' project, a GBP 100 million (USD 145.7 million) project for next-generation broadband in South Yorkshire.
Other OECD countries are developing their broadband stimulus plans in parallel to their
recovery package. Italy is aiming to foster broadband networks in unserved areas (99% coverage by
2011) and upgrading the network for an approximate EUR 1.25 billion. Ireland is planning to deliver
broadband to targeted areas in which it is not available by October 2012 (download speeds of 1.2
Mbit/s and a minimum upload speed of 200 KP/s). Korea is planning to boost broadband by USD
27 billion (KRW 34.1 billion) until 2012 to achieve speeds between 50 Mbit/s and 1 Gbit/s by 2012
(with the government paying a little more than USD 1 billion) while New Zealand has plans to spend
USD 1.7 billion (government paying half) to develop fibre optic networks covering three-quarters of
the nation at speeds of 100 Mbit/s.
Other targets involving ICTs
Besides direct investment in broadband, stimulus packages often have a more indirect but
larger impact on ICT deployment and use, for example investment in "intelligent" transport systems,
greener cars with more electronics and embedded software, smart buildings and electricity grids
(see Box 2), health, the environment, and modernising public services. Planned investments in these
areas are much bigger in monetary terms than those for broadband (e.g. in the US, USD 19 billion for
health care ICTs and USD 100 billion for modern infrastructure, compared with USD 7 billion for
broadband).
The fostering of ICT infrastructure and services in for example health care or research networks
will also provide the technological basis for ICT innovation, new infrastructure and services in other
fields, and there are for example synergies between broadband deployment and smart electricity
grids and transport systems. Most new infrastructure investments in areas such as modernising
schools, health care, and transport systems will have an impact on deployment of ICTs and fostering
ICT applications, and projects in the fields of education, R&D and green technologies also feature ICT
components.
A list of specific ICT examples includes:
Modernising research institutions and facilities (including advanced ICT research networks).
Some of the proposed public R&D expenditures will positively impact ICT research. This also applies
to R&D support aimed at green technologies.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 39
©OECD 2009
? Modernising educational and training institutions (including ICT infrastructure and
hardware, software and digital content applications).
? Modernising public services (including e-government).
? Modernising the healthcare sector.
? Modernising the transport infrastructure (intelligent transport systems).
? Modernising and developing the energy infrastructure (e.g. smart electrical grids, Box 2).
Box 2. Smart grids for a greener economic recovery
A few governments have announced programmes to develop and deploy “smart grids” as part of “green” economic
stimulus packages. This includes the United States with around USD 11 billion for the smart electricity grid and Korea
with specific measures as part of its “Green New Deal”. The central idea behind smart grids is to use two-way
communication and electricity flows, sensors and advanced ICTs to create a connected, secure and reliable power grid
to optimise energy distribution, consumption and conservation.
Smart grids can help reduce greenhouse gas emissions through technology-based efficiency gains as well as wide-
scale systemic changes. A smart electricity grid includes smart meters to optimise household energy consumption, but
it also facilitates plug-in electric and hybrid vehicles infrastructures, distributed electricity generation, improved energy
storage and peak demand management. Smart grids can also help identify locations and reasons for electricity losses
along the distribution chain. Projections of overall emissions reductions depend on the scenarios applied, but can be
as high as 2 gigatonnes of CO2e emissions reductions worldwide in 2020 (GeSI, 2008).
Widespread modernisation of electricity grids has economic implications for the ICT and energy sectors. For the ICT
sector this will be most obvious in the areas of communications equipment, electronics, software and services to
develop and implement complex grid management systems. The energy sector will increasingly rely on computer
engineers and ICT-skilled workers to develop and maintain the new infrastructures. Impacts will also be felt by
suppliers (e.g. steel) and adjacent sectors (e.g. renewable energy technologies).
Challenges persist in the deployment of a smart grid: the roll-out of smart grids requires high initial investments that the
private sector cannot always carry alone; further R&D and better technologies are needed; open international
standards for communication between the components within a smart grid and between national grids are necessary;
business models in the energy sector will need to be adapted; demand for skilled labour might not be met immediately;
privacy and security issues need to be addressed. Finally, existing grid infrastructures are different across countries
and especially so in developing economies.
Sources: OECD (2009c) and GeSI (2008), “SMART 2020: Enabling the Low Carbon Economy in the Information Age”.
For example, the United States healthcare sector has a major computerisation initiative aimed at
reducing healthcare costs (e.g, digitisation of health records of every American over the next
five years) and fostering health IT systems. Canada plans to invest CAD 500 million to develop
electronic health records and to further existing ICT health plans. Japan is drawing up a three-year IT
strategy, increasing total public- and private-sector investment by JPY 3 trillion, mainly focussed on
IT infrastructure in the medical sector, the promotion of e-government and green IT (e.g. intelligent
transport systems). France is fostering web 2.0 platforms and the video and computer game industry
(serious games).
The objective to develop energy-efficient and green infrastructure will also have major ICT
dimensions, e.g. more energy-efficient smart homes, smart transport systems and the smart grid.
Korea, for instance, has “Green IT” as a specific component of its stimulus plan. Spain will also foster
the widespread use of ICTs, in particular for projects leading to sustainability and energy-saving.
Hungary and Japan will promote the use of teleworking. Second order effects include the
developments enabled by that same infrastructure, i.e. new products, services, business
opportunities and productivity-enhancing features resulting from the availability of ICT
infrastructure.
40 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
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bulletins2009/bulletin20090701.html.
IDC (2009a), Consumer Portable PCs Limit Volume Decline, But Shipment Value Suffers, press release,
11 June, www.idc.com/getdoc.jsp?containerId=prUS21879209.
IDC (2009b), Worldwide Quarterly Mobile Phone Tracker, press release, 4 February,
www.idc.com/getdoc.jsp?containerId=prUS21659209.
iSuppli (2009), Global PC Shipments Plunge at Historic Rate in the First Quarter, press release, 19 June,
www.isuppli.com/NewsDetail.aspx?ID=20376.
ITU (2008), Worldwide mobile cellular subscribers to reach 4 billion mark late 2008, www.itu.int/ITU-
D/ict/newslog/.
OECD (2003), ICT and economic growth: Evidence from OECD countries, industries and firms, OECD,
Paris.
OECD (2008a), OECD Information Technology Outlook 2008, OECD, Paris.
OECD (2008b), “Tough year ahead for IT industry, warns OECD”, Press release, 22 December, at
www.oecd.org/sti/ito
OECD (2008c), Broadband Growth and Policies in OECD Countries, OECD, Paris.
OECD (2008d), What is the economic outlook for OECD countries? An interim assessment,
2 September; OECD Economic Outlook, Number 84, 25 November, OECD, Paris.
OECD (2009a), OECD Interim Economic Outlook, 31 March; OECD Economic Outlook, Number 85, June,
OECD Paris.
OECD (2009b), OECD Broadband Portal, www.oecd.org/sti/ict/broadband.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 41
©OECD 2009
OECD (2009c), Policy responses to the Economic crisis. Investing in Innovation for Long-Term Growth,
June 2009, OECD, Paris, at www.oecd.org/dataoecd/59/45/42983414.pdf.
OECD (2009d), The Role of Communication Infrastructure Investment in Economic Recovery,
DSTI/ICCP/CISP(2009)1/FINAL, Directorate for Science, Technology and Industry, OECD,
Paris.
TEAM International (2008), IT Offshore Outsourcing: Early Predictions for 2009, 20 November,
www.teaminternational.com/knowledge_center_outsourcing_predictions_2009.html.
The Economist (2009), “Unplugged. Japan’s electronics giants”, 7 February.
TPI (2009), The TPI Index: An Informed View of the State of the Global Commercial Outsourcing Market
Second Quarter and First Half 2009, July,
www.tpi.net/pdf/index/2Q09_TPI_Index_Presentation.pdf.
ZenithOptimedia (2008), No growth in global adspend in 2009, December 8,
www.zenithoptimedia.com/gff/pdf/Adspend%20forecasts%20December%202008.pdf.
42 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
ANNEX FIGURES
Figure 25. Worldwide semiconductor market by region, 1990–2010
USD billions, current prices
0
50
100
150
200
250
300
1
9
9
0
1
9
9
1
1
9
9
2
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
Americas Europe Japan Asia Pacif ic
Note: 2009 and 2010 are forecast.
Source: OECD based on World Semiconductor Trade Statistics, July 2009.
Figure 26. Growth in the monthly semiconductors worldwide market billings, December 1995 – May 2009
Year-on-year percentage, 3-month moving average
-60
-40
-20
0
20
40
60
D
e
c
-
9
5
A
p
r
-
9
6
A
u
g
-
9
6
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
%
Source: World Semiconductor Trade Statistics (WSTS), July 2009.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 43
©OECD 2009
Figure 27. Quarterly venture capital investments in the ICT sector in the United States, Q1 1995 - Q1 2009
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
5
10
15
20
25
1
9
9
5
-
1
1
9
9
6
-
1
1
9
9
7
-
1
1
9
9
8
-
1
1
9
9
9
-
1
2
0
0
0
-
1
2
0
0
1
-
1
2
0
0
2
-
1
2
0
0
3
-
1
2
0
0
4
-
1
2
0
0
5
-
1
2
0
0
6
-
1
2
0
0
7
-
1
2
0
0
8
-
1
2
0
0
9
-
1
Amount of ICT VC investments (billion USD) % of ICT VC Investments on Total
Source: MoneyTree survey report, PricewaterhouseCoopers, May 2009.
44 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
CANADA
Figure 28. Growth in the real output (GDP), Q1 2003 – Q1 2009
Year-on-year percentage change
-15
-10
-5
0
5
10
15
20
2
0
0
3
.
Q
1
2
0
0
3
.
Q
3
2
0
0
4
.
Q
1
2
0
0
4
.
Q
3
2
0
0
5
.
Q
1
2
0
0
5
.
Q
3
2
0
0
6
.
Q
1
2
0
0
6
.
Q
3
2
0
0
7
.
Q
1
2
0
0
7
.
Q
3
2
0
0
8
.
Q
1
2
0
0
8
.
Q
3
2
0
0
9
.
Q
1
ICT Manufacturing ICT Services Manufacturing Canada Services Canada
%
Source: Industry Canada, Quarterly Monitor of the Canadian ICT Sector, First Quarter 2009, June 2009.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 45
©OECD 2009
FRANCE
Figure 29. Growth in monthly production in ICT and selected goods sectors, December 1995 – May 2009
Year-on-year percentage change, monthly volume index, seasonally adjusted, 3-month moving average
-40
-30
-20
-10
0
10
20
30
40
50
D
e
c
-
9
5
A
p
r
-
9
6
A
u
g
-
9
6
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Computers and peripherals Electronic components
Communication equipment Measuring, testing, navigation
%
-50
-40
-30
-20
-10
0
10
20
30
D
e
c
-
9
5
A
p
r
-
9
6
A
u
g
-
9
6
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Motor vehicles Chemicals Manufacturing Computer, electronic and optical products
%
Note: ISIC REV4 sector classification.
Source: INSEE, Indice et séries statistiques, July 2009.
46 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
GERMANY
Figure 30. Growth in monthly production in ICT and selected goods sectors, December 1995 – May 2009
Year-on-year percentage change, volume index, seasonally adjusted, 3-month moving average
-60
-40
-20
0
20
40
60
80
D
e
c
-
9
5
A
p
r
-
9
6
A
u
g
-
9
6
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Computers and peripherals Communication equipment
Measurement, testing, navigation Electronic components
%
-40
-30
-20
-10
0
10
20
30
D
e
c
-
9
5
A
p
r
-
9
6
A
u
g
-
9
6
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Computer, electronic and optical products Chemicals Motor vehicles Manufacturing
%
Note: ISIC REV4 sector classification.
Source: Statistisches Bundesamt, Produktionsindex, July 2009.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 47
©OECD 2009
JAPAN
Figure 31. Growth in monthly production in ICT and selected goods sectors, December 1999 – May 2009
Year-on-year percentage change, volume index, seasonally adjusted, 3-month moving average
-60
-50
-40
-30
-20
-10
0
10
20
30
40
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Inform and Comm Electron. equip Electronics parts Motor Vehicles Chemicals
IT equipment
Electronics parts
Motor Vehicles
Chemicals
Manufacturing
%
Source: Japanese Ministry of Economy, Trade and Industry, June 2009.
Figure 32. Growth in monthly inventories in ICT selected goods sectors, December 1999 – May 2009
Year-on-year percentage change, producer inventory ratio index, seasonally adjusted, 3-month moving average
-50
-30
-10
10
30
50
70
90
110
130
150
170
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Inform and Comm Electron. equip Electronics parts Motor Vehicles Chemicals
IT equipment
Electronics parts
Motor Vehicles
Chemicals
Manufacturing
%
Source: Japanese Ministry of Economy, Trade and Industry, June 2009.
48 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
Figure 33. Growth in monthly industrial activity in IT and selected services, December 1999 – May 2009
Year-on-year percentage change, production indices, seasonally adjusted, 3-month moving average
-10
-5
0
5
10
15
20
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
IT services Telecomms Computer related activities
-10
-5
0
5
10
15
20
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
All services IT Services Finance and insurance
%
Note: The indices have been rebased 100 = 2005. No data available for Finance and insurance services prior to 2003.
See www.stat.go.jp/english/index/official/208.htm for details.
Source: Japanese Ministry of Economy, Trade and Industry, July 2009.http://www.meti.go.jp/english/statistics/tyo/sanzi/index.html
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 49
©OECD 2009
KOREA
Figure 34. Growth in monthly production in ICT and selected goods sectors, December 1996 - May 2009
Year-on-year percentage change, monthly volume index, seasonally adjusted, 3-month moving average
-50
-30
-10
10
30
50
70
90
110
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Chemicals ICT manufacturing Motor vehicles
%
Source: Korea National Statistics Office, July 2009.
Figure 35. Growth in monthly inventories in ICT and selected goods sectors, December 1996 - May 2009
Year-on-year percentage change, monthly volume index, seasonally adjusted, 3-month moving average
-50
-30
-10
10
30
50
70
90
110
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Chemicals ICT manufacturing Motor vehicles
%
Source: Korea National Statistics Office, July 2009.
50 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
Figure 36. Growth in monthly activity of ICT and selected services, December 2000 - May 2009
Year-on-year percentage change, volume index, 3-month moving average
-20
-10
0
10
20
30
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
All Services Telecommunications
Computer & related activities Financial Institutions %
Source: Korea National Statistics Office, July 2009.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 51
©OECD 2009
SWEDEN
Figure 37. Growth in monthly production in ICT and selected goods sectors, December 2001 – May 2009
Year-on-year percentage change, volume index, seasonally adjusted, 3-month moving average
-60
-50
-40
-30
-20
-10
0
10
20
30
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Computer, electronic and optical Chemicals Motor Vehicles %
Note: ISIC REV4 sector classification.
Source: Statistics Sweden, July 2009.
Figure 38. Growth in monthly trade in selected goods, December 1999 – April 2009
Year-on-year percentage change, 3-month moving average
-50
-40
-30
-20
-10
0
10
20
30
40
50
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Total Chemicals Vehicles ICT goods
%
Note: Classified by SITC commodity group.
Source: Statistics Sweden, June 2009.
52 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
UNITED KINGDOM
Figure 39. Growth in monthly production in ICT and selected goods sectors, December 1995 – May 2009
Year-on year percentage change, volume index, seasonally adjusted, 3-month moving average
-50
-40
-30
-20
-10
0
10
20
30
40
D
e
c
-
9
5
A
p
r
-
9
6
A
u
g
-
9
6
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Computers and office machinery
Radio, TV, communication equip. Chemicals
Motor vehicles and parts
%
Note: Sectors according to ISIC rev. 3.1
Source: National Statistics Office, July 2009.
Figure 40. Growth of monthly output in ICT and selected services, December 1995 – April 2009
Year-on-year percentage change, volume index, seasonally adjusted, 3-month moving average
-10
0
10
20
30
40
D
e
c
-
9
5
A
p
r
-
9
6
A
u
g
-
9
6
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Post and Telecomms Banking Computer services Total Services
%
Note: Division 64 used as proxy for 64.2 Telecommunications.
Source: National Statistics Office, June 2009.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 53
©OECD 2009
UNITED STATES
Figure 41. Growth in monthly production in ICT and selected goods sectors, December 1995 – June 2009
Year-on-year percentage change, index, seasonally adjusted, 3-month moving average
-50
-40
-30
-20
-10
0
10
20
30
40
D
e
c
-
9
5
J
u
n
-
9
6
D
e
c
-
9
6
J
u
n
-
9
7
D
e
c
-
9
7
J
u
n
-
9
8
D
e
c
-
9
8
J
u
n
-
9
9
D
e
c
-
9
9
J
u
n
-
0
0
D
e
c
-
0
0
J
u
n
-
0
1
D
e
c
-
0
1
J
u
n
-
0
2
D
e
c
-
0
2
J
u
n
-
0
3
D
e
c
-
0
3
J
u
n
-
0
4
D
e
c
-
0
4
J
u
n
-
0
5
D
e
c
-
0
5
J
u
n
-
0
6
D
e
c
-
0
6
J
u
n
-
0
7
D
e
c
-
0
7
J
u
n
-
0
8
D
e
c
-
0
8
J
u
n
-
0
9
Chemicals Motor vehicles Manufacturing Computer and electronics
%
Source: The Federal Reserve Board, July 2009.
Figure 42. Growth in monthly inventories in ICT and selected goods sectors, December 1995 – May 2009
Year-on-year percentage change, current cost or pre-LIFO, seasonally adjusted, 3-month moving average
-30
-20
-10
0
10
20
30
D
e
c
-
9
5
A
p
r
-
9
6
A
u
g
-
9
6
D
e
c
-
9
6
A
p
r
-
9
7
A
u
g
-
9
7
D
e
c
-
9
7
A
p
r
-
9
8
A
u
g
-
9
8
D
e
c
-
9
8
A
p
r
-
9
9
A
u
g
-
9
9
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Computer and electronic products Chemicals Motor vehicles and parts %
Source: OECD, based on US Bureau of the Census, Manufacturer’s Shipments, Inventories and Orders (M3) survey, July 2009.
54 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
Figure 43. Growth in quarterly ICT goods trade, Q1 2000 – Q1 2009
Year-on-year percentage change, trade values, seasonally adjusted
-40
-30
-20
-10
0
10
20
30
2
0
0
0
1
Q
2
0
0
0
2
Q
2
0
0
0
3
Q
2
0
0
0
4
Q
2
0
0
1
1
Q
2
0
0
1
2
Q
2
0
0
1
3
Q
2
0
0
1
4
Q
2
0
0
2
1
Q
2
0
0
2
2
Q
2
0
0
2
3
Q
2
0
0
2
4
Q
2
0
0
3
1
Q
2
0
0
3
2
Q
2
0
0
3
3
Q
2
0
0
3
4
Q
2
0
0
4
1
Q
2
0
0
4
2
Q
2
0
0
4
3
Q
2
0
0
4
4
Q
2
0
0
5
1
Q
2
0
0
5
2
Q
2
0
0
5
3
Q
2
0
0
5
4
Q
2
0
0
6
1
Q
2
0
0
6
2
Q
2
0
0
6
3
Q
2
0
0
6
4
Q
2
0
0
7
1
Q
2
0
0
7
2
Q
2
0
0
7
3
Q
2
0
0
7
4
Q
2
0
0
8
1
Q
2
0
0
8
2
Q
2
0
0
8
3
Q
2
0
0
8
4
Q
2
0
0
9
1
Q
US ICT goods exports US ICT goods imports
%
Source: OECD, based on Bureau of Economic Analysis and US Bureau of the Census Foreign Trade, June 2009.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 55
©OECD 2009
CHINA
Figure 44. Growth in monthly value added of ICT and selected goods sectors, April 2007 – May 2009
Year-on-year percentage change, 3-month moving average
-5
0
5
10
15
20
25
30
A
p
r
-
0
7
M
a
y
-
0
7
J
u
n
-
0
7
J
u
l
-
0
7
A
u
g
-
0
7
S
e
p
-
0
7
O
c
t
-
0
7
N
o
v
-
0
7
D
e
c
-
0
7
J
a
n
-
0
8
F
e
b
-
0
8
M
a
r
-
0
8
A
p
r
-
0
8
M
a
y
-
0
8
J
u
n
-
0
8
J
u
l
-
0
8
A
u
g
-
0
8
S
e
p
-
0
8
O
c
t
-
0
8
N
o
v
-
0
8
D
e
c
-
0
8
J
a
n
-
0
9
F
e
b
-
0
9
M
a
r
-
0
9
A
p
r
-
0
9
M
a
y
-
0
9
CommunicationEquipment, Computer andOther Electronic Equipment Measuring Instruments andMachinery for Cultural Activity andOffice Work
Chemical Raw Material andChemical Products Transport Equipment
Total
%
Source: National Bureau of Statistics of China, June 2009.
Figure 45. Growth in monthly output of telecommunication services, December 2001 – May 2009
Year-on-year percentage change, values, 3-month moving average
-30
-20
-10
0
10
20
30
40
50
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
%
Source: Ministry of Industry and Information Technology, July 2009.
56 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
Figure 46. Growth in monthly trade of selected goods, December 1999 – May 2009
Year-on-year percentage change, trade values, 3-month moving average
-60
-40
-20
0
20
40
60
80
100
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Chemicals Vehicles ICT goods
%
-30
-20
-10
0
10
20
30
40
50
60
70
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Chinese ICT goods exports
Chinese total exports
%
Note: Classified by SITC commodity group.
Source: General Administration of Customs of China, July 2009.
THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY – 57
©OECD 2009
CHINESE TAIPEI
Figure 47. Growth of monthly production in selected manufacturing industries in Chinese Taipei,
December 1999 - April 2009
Year-on-year percentage change, seasonally adjusted, 3-month moving average
-50
-40
-30
-20
-10
0
10
20
30
40
50
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Information & Electronic industry Chemicals Motor Vehicles
%
Source: Ministry of Economic Affairs of Taiwan, July 2009.
Figure 48. Growth in monthly trade of selected goods, December 1999 - June 2009
Year-on-year percentage change, values, 3-month moving average
-50
-40
-30
-20
-10
0
10
20
30
40
50
60
D
e
c
-
9
9
J
u
n
-
0
0
D
e
c
-
0
0
J
u
n
-
0
1
D
e
c
-
0
1
J
u
n
-
0
2
D
e
c
-
0
2
J
u
n
-
0
3
D
e
c
-
0
3
J
u
n
-
0
4
D
e
c
-
0
4
J
u
n
-
0
5
D
e
c
-
0
5
J
u
n
-
0
6
D
e
c
-
0
6
J
u
n
-
0
7
D
e
c
-
0
7
J
u
n
-
0
8
D
e
c
-
0
8
J
u
n
-
0
9
Total Chemicals ICT goods Vehicles
%
Source: Ministry of Finance, R.O.C., July 2009.
58 – THE IMPACT OF THE CRISIS ON ICTS AND THEIR ROLE IN THE RECOVERY
©OECD 2009
HONG KONG, CHINA
Figure 49. Growth in monthly trade of selected goods, December 1999 - May 2009
Year-on-year percentage change, values, 3-month moving average
-50
-40
-30
-20
-10
0
10
20
30
40
50
60
D
e
c
-
9
9
A
p
r
-
0
0
A
u
g
-
0
0
D
e
c
-
0
0
A
p
r
-
0
1
A
u
g
-
0
1
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Manufacturing Chemicals Vehicles ICT goods %
Source: Census & Statistic Department, July 2009.
SINGAPORE
Figure 50. Growth of monthly trade of selected goods in Singapore, December 2001 - May 2009
Year-on-year percentage change, values, 3-month moving average
-60
-40
-20
0
20
40
60
80
D
e
c
-
0
1
A
p
r
-
0
2
A
u
g
-
0
2
D
e
c
-
0
2
A
p
r
-
0
3
A
u
g
-
0
3
D
e
c
-
0
3
A
p
r
-
0
4
A
u
g
-
0
4
D
e
c
-
0
4
A
p
r
-
0
5
A
u
g
-
0
5
D
e
c
-
0
5
A
p
r
-
0
6
A
u
g
-
0
6
D
e
c
-
0
6
A
p
r
-
0
7
A
u
g
-
0
7
D
e
c
-
0
7
A
p
r
-
0
8
A
u
g
-
0
8
D
e
c
-
0
8
A
p
r
-
0
9
Total Chemicals ICT goods
%
Source: International Entreprise Singapore, July 2009.
doc_909434781.pdf