ICT

The Information and Communication Technology sector (ICT), comprising a wide range of activities from electronic components to telecommunication services, is expected to register decelerating growth in 2019 in line with global trade. We expect activity for ICT products to be below the 2013-17 average in 2019, close to 3% y/y, and recover a bit in 2020 to 4% y/y (still below average).

2018 was definitely a year of excess capacity in the semi-conductor industry as the synchronization of demand in 2016 and 2017 boosted the investment cycle globally. The industry has to now rein in this excess capacity following a shock of uncertainty related to the trade war between the US and China. This reduction of excess capacity will imply downward impacts on prices and the profitability of the sector in 2019, followed by a small recovery in 2020. The Chinese stimulus will bring some support in 2019, in particular for the end-use sector (smartphones and others) as it aims at supporting Chinese consumers. However global demand is expected to suffer from 2020 onwards alongside a deceleration of the US economy.

End-use sectors are also facing lower demand with longer life cycles of products and higher precautionary savings from households in a context of high uncertainty. But over the long term, the automation and digitalization of supply chains should continue to support demand.