When the dust cleared last year from the dotcom meltdown, many in the technology industry hoped for recovery by now. Later, with indicators still flagging, the talk was of a late 2002 rebound.
But here at the half-year mark, with earnings warnings from the likes of Intel Corp, Apple Computer Inc and Oracle Corp, the tech sector might soon be adopting the attitude of baseball fans whose teams drop out of the pennant race: Wait 'til next year.
Investors certainly are pessimistic. The tech-heavy Nasdaq Stock Market index fell to its lowest level of the year Friday and is down 26 percent in 2002.
The reasons are clear. Many corporations are getting by without upgrading their existing technology, especially computers and other hardware.
The businesses that are making purchases have been getting bargain prices and demanding more proof that new technologies will save them time and money in the long run.
"There's just so much resistance to spending," said Michelle Johnson, head of solutions marketing for Volera Inc, a subsidiary of Novell Inc that helps companies manage content on their networks. "If it's a new technology the CTO [chief technology officer] or CEO hasn't seen before, it's called into question."
As a result, she said, the stance many corporate technology directors take is: "We'll spend on stuff we have to do -- all that newfangled stuff I'd like to do, I'll hold off on."
The overall economy is recovering from last year's recession, but many big businesses assembled their 2002 technology budgets last summer, when doubts were higher. That means "projects for this year are locked and loaded," and many new purchases must wait, said Al Case, a senior vice president at Gartner Inc. who directs surveys about corporate technology spending. He predicts an improvement in the second half of 2003.
Last month, Gartner forecast that information-technology spending would increase a slim 1.5 percent this year. Another research firm, Giga Information Group, predicted spending would stay flat.
Oracle, a business software giant, beat analysts' forecasts with its quarterly earnings Tuesday but warned that the next set of results would be below expectations. Adobe Systems Inc, a leading maker of publishing software, also lowered sales and profit targets this month.
Continued cost-slashing in the troubled telecommunications industry is creating headaches for network equipment providers that grew fat in the 1990s Internet mania. Weak results are expected this quarter at Juniper Networks Inc, Ciena Corp and JDS Uniphase Corp.
Big companies aren't the only ones being stingy -- consumers are, too. Expectations of tepid PC sales during the upcoming back-to-school season are translating into weak sales for chip-making giants Intel and Advanced Micro Devices Inc.
AMD executives still hope PC demand will rise in the second half, and said sales of flash memory for consumer electronics devices are improving. But their earnings warning Tuesday was so severe that Wall Street analysts ripped up earlier projections that AMD would lose US$0.09 per share this quarter and now predict a loss of US$0.36 per share.
At Apple, which generates about 40 percent of its sales from the education market, school sales do not yet appear to be a "major area of weakness," said chief financial officer Fred Anderson. But Apple's traditional revenue boost from the June "Dads and Grads" season did not materialize this year, he noted.
There are varying estimates of when the industry might begin to recover. Intel, for example, could see consumer and corporate sales pick up in the fourth quarter if the economy keeps stabilizing, said analyst Ashok Kumar of US Bancorp Piper Jaffray.
But he also pointed out that AMD and Intel are both expected to release new chips in first quarter 2003, which could give customers reason to hold off.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts