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FRAMINGHAM, MA – Worldwide IT spending will increase by 4.1% in constant currency this year, IDC said, down from its previous forecast of 4.6%. The good news is the worst is likely over, and pentup demand will accelerate overall IT sales through the rest of the year, the research firm said. The market grew 4.5% last year. According to the new report, IT spending has been volatile since the beginning of the year, with macroeconomic wild cards including the crisis in Ukraine and the slowdown in China adding to the general sense of uncertainty which continues to impact business confidence and investment. Pent-up demand should, however, drive a more positive capital spending cycle in the second half, IDC said. In mature economies, organizations will take advantage of a more stable business climate to replace ageing infrastructure including servers, storage and network equipment. In some emerging markets, stabilization of the economy after the slowdown that began in mid-2013 could drive a period of catch-up spending, especially in China where IT spending has cooled significantly over the past 12 months. Aside from macroeconomic wild cards, the other weak spot in the IT market since the previous quarter has been slowing growth in mobile devices (smartphones and tablets), due partly to price erosion and a more mature installed base. IDC has lowered its forecast for total IT spending growth this year from 4.6% to 4.1% in constant currency, primarily as a result of downward revisions to mobile device forecasts. Based on average exchange rates from the first quarter 2014, this will translate into US dollar growth of just 3.4% as currency volatility continues to negatively impact US-based IT vendors. In 2013, the IT market increased by 4.5% in constant currency, but just 2.5% in US dollars. Excluding mobile phones, growth in 2014 will accelerate slightly from 2.9% to 3.1% (constant currency) due to the expected pickup in infrastructure investment and the related downstream effect on IT services revenues. “As smartphone growth continues to cool from the phenomenal expansion of the past few years, tablet shipments have performed weaker than expected over the past couple of quarters,” said Stephen Minton, vice president in IDC’s Global Technology & Industry Research Organization. “This volatility, coupled with the macroeconomic uncertainty in many emerging markets, is somewhat masking a more positive underlying foundation for enterprise IT spending, with firms continuing to invest in working off that pent-up demand to replace old servers, storage and network gear. Some of that spending is also driving IT services, despite the fact that an increasing number of businesses are moving more of their traditional IT budget to the cloud.” Around 10% of software spending will have moved to the cloud by the end of 2014, while infrastructure as a service will represent 15% of all spending on servers and storage. While this is creating significant disruption for IT vendors targeting traditional IT budgets, it is also driving equally significant short-term opportunities for those vendors that successfully capture mindshare for their Cloud-based solutions. Meanwhile, both Cloud and traditional spending will be driven by the underlying pent-up demand for server and storage capacity, driven in turn by the previous, explosive growth of mobile devices that are now generating an ever-increasing volume of data. The opportunity to extract value from this data is driving strong demand for analytics tools and Big Data solutions. Many organizations will choose a gradual approach for their journey to the Cloud, with security, reliability and regulatory factors in mind, implementing hybrid and private cloud solutions. As a result, both Cloud and traditional IT spending will benefit from these drivers in the next 2-3 years. Western Europe will post growth of 2% in constant currency terms as most countries continue to shake off the debt crisis and return to a more stable business climate. Similarly, business confidence is gradually improving in the US, after the sequester and government shutdown of last year. Server and storage spending will rebound to positive growth after last year’s slowdown, while IT services growth will accelerate to more than 2%. In Canada, IT spending growth will accelerate from 3.3% last year to 5% in 2014, due to stronger spending on PCs, servers and storage. Japan is a different story; the pent-up demand was largely worked off in 2013, when the government’s deflation-busting policies boosted business confidence and when IT buyers moved to take advantage of lower prices before new taxes came into effect at the beginning of 2014. As a result, IT spending in Japan increased by 3.4% last year, but will decline by 1% in 2014. “Over the past year, most of the surprises on the upside have come from mature markets,” said Stephen. “Japan had a strong year in 2013, and a similar pattern is expected this year in North America and Western Europe. We still expect that businesses will choose to fix the roof while the sun is shining in the second half of 2014, as part of a general infrastructure investment cycle.” Emerging markets are more volatile, with macroeconomic forecasts having been lowered since January. In Central & Eastern Europe, the crisis in Ukraine has added to the sense of business uncertainty, and IDC now expects IT spending in Russia to decline by almost 1% this year after a similar decline in 2013. The slowdown in Russia will inevitably continue to have an impact on other countries in the region, although the recovery in exports to Western Europe is a positive factor. Inflation remains problematic in many emerging markets, including Latin America, India, Indonesia and Turkey. China remains a wild card. On the one hand, there is significant pent-up demand for IT spending after the slowdown of 2013. On the other hand, some economists are now forecasting that GDP growth could dip below 7% in 2014 and 2015. A hard landing in the real estate sector could yet derail the expected short-term recovery in IT spending, if businesses choose to once again delay their capital spending upgrade and expansion plans. Assuming the economy remains relatively stable, however, the pent-up demand will drive IT spending growth back to 10% in 2014, before another likely slowdown in 2015. “China still has a lot of room for growth, and the slowdown in tech spending last year means that a period of catch-up is inevitable,” said Stephen. “As long as the economy remains fairly stable in the rest of 2014, the market should perform better than last year, although growth will likely cool again after that pent-up demand has been dealt with.”

TAIPEI – Hon Hai Precision Industry has instructed its Vietnam staff to take a three-day leave of absence starting Saturday, according to reports.

Vietnam is currently experiencing vandalism, factory closings, and deaths as a result of anti-China protests that originated with a dispute in the South China Sea, say reports.

Hon Hai is the parent company of contract manufacturer Foxconn.

LOGANSPORT, IN -- A Cal-Comp EMS plant here caught fire this week but damage was minimal. No one was hurt, and production has been restarted, according to reports.

The fire was sourced to bone pile material, reports indicated.

While damage was contained and minor, production was temporarily halted to allow smoke to clear and air quality to return to appropriate levels. A sprinkler system in the loading dock area was activated, leaving some water to be cleaned uo.

Cal-Comp acquired the site from Total Electronics in 2010.

AUSTIN, TX -- Flextronics is considering investing $15 million in its operations here and adding up to 300 workers as part of a state program that would refund up to $1.25 million to the EMS company.

The company currently employs a reported 2,500 workers at the 1,000,000 sq. ft. manufacturing site here, which builds Apple Mac Pros, among other devices.

Texas' Enterprise Zone Act, which is funded by the state's sales and use tax, issues tax rebates to private companies in exchange for investments in infrastructure and workers.

Flextronics said the jobs would include factory workers and would pay an average $30,000 per year. The firm would also retain some 200 management positions that pay an average $115,000 a year.

As a condition of the state program, Austin has to nominate Flextronics for the deal and also offer its own incentive.

The company currently employs a reported 2,500 workers at the 1,000,000 sq. ft. manufacturing site here, which builds Apple Mac Pros, among other devices.

Texas' Enterprise Zone Act, which is funded by the state's sales and use tax, issues tax rebates to private companies in exchange for investments in infrastructure and workers.

Flextronics said the jobs would include factory workers and would pay an average $30,000 per year. The firm would also retain some 200 management positions that pay an average $115,000 a year.

As a condition of the state program, Austin has to nominate Flextronics for the deal and also offer its own incentive.

CONKLIN, NY – Universal Instruments’ Advanced Process Lab is now certified to help IPC identify trusted electronics manufacturing suppliers.

IPC added APL to its list of Certified Test Laboratories. In doing so, IPC has authorized APL to perform IPC validation testing of electronics manufacturing industry suppliers.

APL was evaluated in an IPC audit that examined capabilities, processes, and results. Once approved, APL was added to a list of three other IPC-certified test laboratories.

BANGKOK -- SVI Public Co. reported first-quarter consolidated revenues rose 30.4% year-over-year to 2,100 million baht ($64.8 million). Net income rose 14.3% to 256 million baht, the EMS company added.

The sales growth was due to demand for professional audio equipment and industrial controls.

Company executives said the first quarter is typically its most difficult and that visibility is improving for the remainder of 2014.

Ed.: $1= 32.4254 THB

TAIPEI -- Foxconn Electronics reported April consolidated revenues of $9.73 billion, up 0.92% year-over-year. Revenues were down 4.35% sequentially, the company said, and are up about 7% year-to-date.

The company cited seasonal effects of PCs, communication devices and consumer electronics for the revenue drop.

PHILADELPHIA -- ACI Technologies will host a two-day TechExpo next week at its training and demo center here. The event will feature several presentations and equipment demonstrations, highlighted by a talk on nanocoating stencils by Chrys Shea.

SIEVI, FINLAND – Scanfil reported first quarter profits rose 54.5% to 1.1 million euros on an 8% increase in revenue. During the March quarter, the EMS company totaled sales 47.6 million euros on higher demand from the long-lagging telecom sector.

MINNEAPOLIS -- Nortech Systems today reported net income for its first quarter of to $86,000, down 39% from last year, when the EMS firm received a tax benefit of $70,000. Without the credit, net income was up 21.1%.

SPOKANE VALLEY, WA – ACE Production Technologies will acquire the lead tinning business portfolio of GPD Global, the companies announced today. Financial details were not disclosed.