South Korea’s information and communications technology industry could suffer as spending by companies is poised to decline due to the COVID-19 spread, according to research firm IDC Korea on Tuesday.

Spending on ICT systems is expected to decline this year due to the rise of companies’ emergency management system and short-term cost reduction, the research firm noted.

In a recently published report “Korea ICT 2020 Market Outlook,” IDC revised down its forecast for market growth to 2.4 percent on-year from the previous estimate of 3.1 percent.

The report presents two possible scenarios in the tech sector in the wake of the coronavirus pandemic.

The most likely scenario is that the spread of COVID-19 calms down during the second quarter and the ICT market grows 2.4 percent year-over-year. If the pandemic continues into the third quarter and the aftermath of the economic downturn continues for a more extended period, a pessimistic scenario will unfold and the growth rate would fall to 0.5 percent on-year.

Under the most likely scenario, device areas, including computers and smartphones, are expected to face more direct downward pressure, IDC said.

Data center hardware areas are also expected to be adjusted due to delayed investments. On the other hand, the pressure in the IT service and software sector is expected to be relatively mild, even amid the pandemic, the report said.

“The industrywide impact of COVID-19 is expected to lead to a downward revision of IT spending in the manufacturing and other major industries due to a combination of reduced consumer demand, delayed corporate investment in technologies and supply chain risks,” said Steffi Han, IDC Korea’s research director.

However, even in times of crisis, there are opportunities for growth, the report noted.

Han said the spread of “untact” culture will lead to increased investment in non-face-to-face channels and work environments, coupled with new demand in next-generation technology areas such as big data analysis and artificial intelligence, the internet of things and edge computing, which will contribute to the recovery of growth in the second half. 

By Shin Ji-hye (shinjh@heraldcorp.com)