Ukraine Crisis to Have Only 'Limited’ Impact on Global Tech Spending: IDC

Russia’s invasion of Ukraine and the punitive sanctions levied against Moscow will drive a “steep decline” in information and communications tech spending in both those countries, followed by “slow recovery” in both those countries, reported IDC Monday in a “first take” analysis on how the crisis likely will weigh on the global tech sector. But it's predicting the worldwide impact on ICT spending “will be somewhat limited” for now, it said.

Russia and Ukraine combined account for only 5.5% of all ICT spending in Europe and 1% worldwide, said IDT. But the “likely impact” from the crisis on trade, supply chains, capital flows and energy prices “will affect the global economy on a broader scale with negative consequences for both the regional and worldwide ICT market,” it said.

Exports of finished products and technology components to Russia “will be significantly affected by the sanctions,” but the impact to Western companies will be “relatively small,” it said. One possible area of concern, said IDC: “greatly reduced” shipments from Russia and Ukraine of raw materials used in chip manufacturing. But chipmakers have "a diverse set of suppliers" of key materials and gases, "so we do not believe there are immediate supply disruption risks related to Russia and Ukraine,” said Semiconductor Industry Association CEO John Neuffer in a statement Feb. 24, the first day of the invasion.

The Russian-Ukraine conflict, said IDC, is expected to "further disrupt global supply chains as cargo is rerouted around the two countries and costs increase.” The sanctions against Moscow sent the Russian ruble plunging against the dollar until it was worth less than 70% of a single penny on Monday, making imports of IT equipment and services to Russian consumers and businesses “significantly more expensive” than before the invasion, said IDC.

As a result of the currency fallout, “many companies are refusing to ship orders to Russia even if payment is possible.” This also means Russia's own manufacturers of tech products “will be unable to operate,” it said. “Geopolitical tensions are also impacting other currencies throughout the region,” including the euro, which was down by nearly 4% against the dollar Monday, compared with Feb. 25, the date when sanctions began kicking in, said IDC.

The South Korea government further waded into the sanctions fight against Russia Monday, announcing additional penalties in response to the Ukraine invasion, according to an unofficial translation. The announcement built on Seoul's previous sanctions on Moscow, which include barring financial transactions with seven Russian banks. South Korea further announced restrictions on Belarus, citing its role in enabling the invasion.