The details are still sketchy but as president-elect Barack Obama gets ready to unveil his $700 billion-plus economic incentive package attention is turning in the depressed tech sector to how the industry might benefit from what is beginning to look like the biggest spending plans in decades.
Would the benefits to high-tech be direct " such as R&D incentives, other financial incentives, corporate tax cuts or even direct investment in emerging tech sectors such as solar and other energy areas " or will the industry gains be more indirect via a trickle down method where electronic manufacturers experience increased demand for their products as different segments of the economy gets a boost, lifting job creation and consumer spending?
The president elect answered some of these questions in a speech presented Thursday, Jan. 8 at George Mason University, in which he unrolled his "American Recovery and Reinvestment Plan" that economists said could cost between $775 billion and $1 trillion but which Obama simply said was critical to pulling the U.S. economy out of a prolonged recession.
"There is no doubt that the cost of this plan will be considerable," Obama said. "It will certainly add to the budget deficit in the short-term. But equally certain are the consequences of doing too little or nothing at all, for that will lead to an even greater deficit of jobs, incomes, and confidence in our economy."
Whatever positive impacts high-tech can reap from the expected surge in government spending can't come fast enough. The sector is withering under a scorching drop in corporate and consumer demand for high-tech products as buyers cut off all but the most necessary equipment purchases in the face of the sharpest economic reversal in at least the last decade.
A review of Obama's speech indicates it could be a mixed bag for the high-tech market. Companies in the industry should not expect a direct monetary infusion similar to what the finance industry received late in 2008 but along with other economic sectors they can expect a reduction in their corporate tax rates and there are strong indications an improvement in consumer spending would be beneficial to electronics and other IT equipment suppliers.
EE Times identified the following areas that could help improve sagging sales in the high-tech market:
Clean energy and environmentally sensitive high-tech products.
The government, Obama said, will "double the production of alternative energy in the next three years." High-tech companies supplying components and equipment for energy reduction and the solar panel market, for instance, can expect increased sales.
This could also increase tech jobs in the area of clean energy, according to Obama. "We will put Americans to work in new jobs that pay well and can't be outsourced " jobs building solar panels and wind turbines; constructing fuel-efficient cars and buildings; and developing the new energy technologies that will lead to even more jobs, more savings and a cleaner, safer planet in the bargain," he said.
IT equipment for health and educational sectors.
.The president elect said the government will pump investments into computerizing American's medical records to "cut waste, eliminate red tape, and reduce the need to repeat expensive medical tests."
With PC sales falling, any hike in computer demand from governments and medical institutions would be welcomed by manufacturers especially as this set of buyers are more likely to purchase high-end products as opposed to ordinary consumers who typically go for basic systems that retail for $1,000 or less.
Obama added that the government would also increase investments in U.S. educational institutions. A portion of the additional funding would go into the purchase of high-tech equipment, including computers, laboratory products and other technology gear.
"We'll provide new computers, new technology, and new training for teachers so that students in Chicago and Boston can compete with kids in Beijing for the high-tech, high-wage jobs of the future," the president-elect said.
While the impact on high-tech of Obama's plan to jack up infrastructure spending is difficult to quantify, it is likely to serve as a booster to the general economy and perhaps trickle down to the industry.
Economists expect the greater portion of the Obama administration's American Recovery and Reinvestment Plan would be devoted to improving the country's aging infrastructure, including roads, bridges as well as federal and state buildings.
The administration is also promising to spend what could be billions of dollars on a new electrical grid, directly benefiting the high-tech sector.
"We'll do more to retrofit America for a global economy," Obama said. "That means updating the way we get our electricity by starting to build a new smart grid that will save us money, protect our power sources from blackout or attack, and deliver clean, alternative forms of energy."
It's not only in the area of electricity that high-tech might benefit from the expected increase in infrastructure spending, though.
The government, Obama said, will also improve broadband lines "across America, so that a small business in a rural town can connect and compete with their counterparts anywhere in the world."
That should be good news to everyone in the high-tech sector.