ICT

Long-term growth sustained by digitalization

Sector
Value

1,200bn USD

M

MEDIUM RISK for entreprises

  • Fragmentation

  • Internationalization

  • Capital Intensity

  • Profitability

  • Driver of growth and productivity of the global economy
  • Increasingly interconnected systems and objects (Internet of Things)
  • Increasing investment needed for improving the data protection systems 
  • Growing market power of the largest companies

What to Watch?

  • Increased M&A activity as the SaaS sector matures
  • US net neutrality changes impact on other countries

The information and communication technology sector (ICT), comprising a wide range of activities from electronic components to telecommunication services, will continue to enjoy dynamic growth. We expect sector revenues to increase by +4.4% in 2018 (vs +4.3% in 2017). 

In 2018, there will be three main drivers of revenue growth of ICT sector companies. First, the Internet of Things (IoT) and the development of 5G networks will drive growth for the telecommunications industry in 2018. All major telecom companies in the world are now setting targets for the 5G network deployment in 2018. Second, blockchain technology is expected to go mainstream and get a major share of IT budgets of companies working in a vast range of fields ranging from finance to healthcare. Furthermore, artificial intelligence (AI) is expected to be a part of almost every new IT product launch in 2018, even though in many cases this is a marketing exercise for a newer more sophisticated version of the current product. As always the risk in the sector lies within the cash flow statement, particularly during phases of new technology adoption, and companies’ liquidity should continue to be carefully monitored.

Network equipment: Highly competitive market with sustained expected growth. Network equipment is required to support widespread adoption of technological advancements related to big data and cloud computing 

Services: Huge demand spurred by the digitalization of the economy, yet suffering from price pressures

Key players

Country Role Sector risk
China

#1 exporter

#2 producer

B

Medium Risk

United States

#2 exporter

#1 producer

B

Medium Risk

Japan

#3 producer

#4 exporter

B

Medium Risk

Contact

Contact Euler Hermes

Economic Research Team

research@eulerhermes.com

Sector Risk Analyst

Sergey Zuev

Sergey.Zuev@eulerhermes.com

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