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The war between Ukraine and Russia will have six major impacts on global ICT and supply chain

Andrea siviero, deputy research director of European customer insight and analysis at IDC, a market research agency, said: "the changing geopolitical scenario will undoubtedly affect global ICT demand in the coming months and years. The IDC global CIO rapid pulse survey found that more than half of the respondents are reassessing their technology spending plans in 2022, and 10% of the respondents expect their ICT investment plans to be significantly adjusted."

IDC predicts that ICT expenditure in Russia and Ukraine will decline sharply and recover slowly. However, these two countries together account for only 5.5% of all ICT expenditure in Europe and 1% of the world. Therefore, the impact of this decline on global ICT expenditure will be limited to a certain extent.

However, IDC believes that the Ukrainian Russian crisis will affect the global economy in a wider range in terms of trade, supply chain, capital flow and energy prices, and may have a negative impact on regional and global ICT markets. These consequences include:

1、 Fluctuations in technology demand: the conflict has stopped commercial operations in Ukraine, and the Russian economy is feeling the initial impact of Western sanctions. This will seriously affect the science and technology expenditure of the two countries. It is expected that the local market demand will shrink by double digits in 2022. At the same time, science and technology expenditure in Western European countries is likely to increase, partly due to the expansion of defense and security distribution.

2、 Energy prices and inflationary pressure: the tension of the conflict in Ukraine will have a wide impact on energy prices and supply security, especially for some European countries that have felt the chain effect of price index. Most countries need to quickly reassess their recent energy plans while accelerating efforts to reduce their dependence on carbon based energy.

3、 Relocation of skills and infrastructure: more than 100 global companies have established subsidiaries in Ukraine, and more companies are doing business in Russia. The conflict has displaced tens of thousands of developers in Ukraine and led to the relocation of some services in the two countries. These relationships, as well as the physical assets and personnel associated with them and any future expansion plans, need to be reassessed in the light of the conflict.

4、 Availability of cash and credit: the financial sanctions implemented so far have posed a serious challenge to Russia's foreign credit supply, and caused potential losses to the loans granted by EU countries to Russia. Without access to credit, most organizations will be forced to suspend investment in new technologies for a short period of time. The country also suffered from a severe cash shortage, which had a significant impact on consumer spending.

5、 Supply chain dynamics: the export of finished products and technical parts to Russia will be seriously affected by sanctions, but given the market size, the impact on Western companies will be relatively small. Scientific and technological materials imported from Russia and Ukraine will also be affected, especially in the semiconductor field. The supply of neon, palladium and C4F6 used in chip manufacturing will be greatly reduced. The conflict is also expected to further disrupt global supply chains, as goods are diverted around the two countries and costs increase.

6、 Exchange rate fluctuation: due to the initial sanctions, the value of the Russian Ruble plummeted, which greatly increased the import cost of IT equipment and services. Therefore, even if payment is possible, many companies refuse to ship orders to Russia. This also means that Russia's own PC, server and communication equipment manufacturers will not be able to run. Geopolitical tensions have also affected other currencies throughout the region, including the euro.