Post COVID-19, Prospects and Implications of Changes in the Growth Conditions of the IT Industry
Up until the beginning of 2020, expectations for a global economic recovery were high due to advances in the fourth industrial revolution (4IR) based on artificial intelligence (AI), data, and the Internet of Things (IoT), the commercialization of 5G worldwide, and large-scale sports events. Contrary to expectations of a recovery, however, a global pandemic caused by the novel coronavirus(COVID-19) is negatively affecting the global economy and industry.
With the spread of COVID-19, global uncertainties are growing and complex shocks are appearing in the real and financial sectors, including economic recession. Production disruptions in production and supply and demand of components are constraining global supply chains, depressing demand and leading to deteriorating corporate profitability. As a result, the IMF predicted in a June 24 announcement that the global economic growth rate would fall by 4.9 percent, 1.9 percentage points below its earlier April forecast.
The global IT industry is also negatively affected by the spread of COVID-19.
The release of new products is being delayed due to weak demand, production disruptions and distribution network constraints. On the other hand, due to the spread of non-face-to-face trends such as telecommuting, remote education and increased time spent indoors, online services are expanding, and demand for portable IT products including tablet PCs, smart home device and solid state drives (SSD) is also increasing significantly. As awareness of health and environmental issues improves, demand for IoT-based health and eco-friendly appliances is also on the rise.
On the supply side, major companies have sought to stabilize their production bases and supply chains in order to minimize risks caused by the spread of COVID-19. And the possibility of a reorganization of global value chains and competition structure is expected due to prolonged U.S.-China disputes such as the U.S. sanctions against Huawei. In this situation, internal and external uncertainties are growing as COVID-19 infections are surging worldwide.
At this point, we look at the impact of the spread of the coronavirus on the global IT industry and predict changes in the growth conditions since the start of the COVID-19 pandemic from a supply and demand perspective. In addition, by diagnosing the status and pending issues of Korea’s IT industry at this point, we are looking for ways to grow the domestic IT industry required in the post COVID-19 era.