Domestic ICT & IT Market Growth Rate Downward Adjusted Due to COVID-19
Concerns over negative growth if COVID-19 persists until the third quarter
The spread of contactless culture will contribute to growth recovery in the second half of the year


IDC Korea announced on the 14th that it has lowered its forecast for the domestic ICT market growth rate to 2.4% compared to the previous year, publishing the 'Korea ICT 2020 Market Outlook Report' in response to the impact of COVID-19.

As the economic slowdown caused by COVID-19 spreads, ICT spending is also expected to be adjusted downward due to corporate emergency management systems and short-term cost-cutting measures.

The report presented two scenarios expected based on the impact of COVID-19.

The most likely scenario is that the spread of COVID-19 subsides during the second quarter. In this case, the domestic ICT market is expected to grow by only 2.4% year-on-year. This is a downward revision from the previous forecast of 3.1%.

If the COVID-19 situation persists until the third quarter and the aftermath of the economic recession is prolonged, the growth rate is expected to fall further to 0.5% year-on-year.

Looking at the IT market alone, this year's growth forecast has been lowered from 4.0% to 2.5%, and in the worst-case scenario, it is predicted to contract by as much as -1.2%.

According to the most likely scenario, when examining IT market segments based on ICT spending, the device sector, including PCs and smartphones, appears likely to face direct downward pressure.

Adjustments in the data center hardware sector are also expected due to investment delays. On the other hand, pressure for a slowdown in growth in the IT services and software sectors is expected to be relatively mild, even as the COVID-19 situation is reflected.

The device sector excluding smartphones is expected to decline by 4.3% year-on-year. While the market slowed in the first quarter due to the combined effects of the end of Windows 10 migration and the COVID-19 situation, centered on the PC market, the situation is expected to improve in the second half of the year as online channels become more active and the transition to laptops accelerates.

Although the smartphone sector is expected to show relative growth compared to other device sectors, despite a slight slowdown in operators' aggressive moves to secure a leading position in the 5G market in 2020. However, based on shipment volume, the smartphone sector is also expected to shift to a market downturn, declining by 5.9% year-on-year.

While the enterprise computing hardware sector, such as servers, storage, and network equipment, was basically affected by the COVID-19 situation on the supply side, overall enterprise computing hardware is estimated to decline by 3.5% in 2020 compared to the previous year.

On the other hand, the software sector is expected to show relative growth even amidst a downward revision to 4.3% compared to the previous year. This is because while new demand is decreasing, the demand for collaboration solutions such as video conferencing and enterprise messengers is increasing, and the adoption of cloud-based applications is expanding.

The IT services market is expected to be affected by the trend of delayed new investments in the first half of the year, but with demand for operations and support services remaining, the overall market is projected to show a limited downward adjustment of 2.2% compared to the previous year.

Han Eun-sun, Managing Director at IDC Korea, stated, “The impact of COVID-19 across industries will result in a downward adjustment of IT spending in major sectors, including manufacturing, as the combination of reduced consumer demand, the postponement of corporate technology investments, and supply chain risks.”

At the same time, stating that growth opportunities exist even in a crisis situation, they said, “The trend of spreading ‘Untact’ culture is leading to increased investment in non-face-to-face channels and work environments, and coupled with new demand in next-generation technology areas such as big data analysis, AI, IoT, and edge computing, it will contribute to the recovery of growth in the second half of the year.”