Industry watchers are split on IT spending levels for 2003, with some predicting growth and others expecting further cuts.

A survey by CIO magazine in the US predicted that spending on hardware and software will see moderate growth of 4.6 per cent this year, while a rival report predicts a spending drop.

According to Goldman Sachs, companies will spend even less on software and hardware in the next 12 months than they did last year.

Its December survey of 100 US chief information officers found that spending will drop by one per cent in 2003, compared to last year.

The CIO magazine report, conducted in partnership with Deutsche Bank Securities and Prudential Securities, surveyed senior executives on current and future IT spending.

It found that 34 per cent of companies planned to boost spending on infrastructure programmes, 47 cent would spend about the same and 18 per cent will cut budgets.

The Goldman Sachs report, which had previously predicted two or three per cent growth, found that two-thirds of the survey respondents expected budgets to tighten, with 43 per cent not expecting any acceleration in spending until 2004 or later.

A third report, by the Semiconductor Industry Association (SIA), said that global chip sales hit $12.68bn (£7.95bn) in November last year, a 1.3 per cent increase from the $12.51bn in revenues reported in October 2002.

And this was almost 20 per cent up on November 2001 sales of $10.6bn.

Chip manufacturers are gearing up for a boost in business as market analysts, for the first time in two years, predicted double-digit revenue growth in 2003 and 2004 for companies such as Intel, AMD, Texas Instruments and Micron Technologies.

The SIA said that chip sales rose 5.8 per cent in November in the European market, and 1.3 per cent in Asia Pacific, while semiconductor sales in the Americas declined slightly by 0.8 per cent and 0.6 per cent in Japan.

SIA president George Scalise explained that November sales in the global chip industry underscored the healthy recovery that built momentum throughout the year.

Findings from Gartner backed the SIA report. The analyst predicted that, after two years of negative growth, worldwide semiconductor spending and wafer fabrication equipment spending will return to double-digit growth in 2003.

Worldwide semiconductor capital spending is projected to grow 15 per cent this year to $32bn, up from $27.8bn in 2002.

"While there is an absence of a driving killer application and a catalyst to incite an end-user spending spree, the temporal expanse of depressed spending is creating pent-up demand," said Gartner analyst Klaus Rinnen.

"Spending will be more at corporations' discretion, but there are competitive elements that could exert pressure on corporations once the wave starts."