A new report from iSuppli Market Intelligence Service says the market for standard logic devices saw its worst decline in history during 2001, with revenues dropping 46% to just $1.6 billion from a high of $3 billion just last year. iSuppli is predicting a slow comeback for the devices, with revenues increasing to just over $2.3 billion by 2005.

Contract manufacturer Celestica has expanded its Japanese presence recently through the acquisition of two telecom equipment factories from No. 3 chipmaker NEC Corp. Celestica signed a five-year, $2.5 billion supply agreement with NEC and will buy two factories in Miyagi and Yamanashi, Japan, taking on 1,200 of NEC's workers.

In an effort to cut costs, IBM has outsourced production of some desktop computers to contract manufacturer Sanmina-SCI Corp. The $5 billion, three-year contract covers IBM's NetVista computers, including several different models sold primarily to large corporations. Sanmina-SCI also agreed to acquire two IBM buildings and some capital equipment in Research Triangle Park, North Carolina, site of U.S. production of the computer line, and take on 900 IBM employees there.

Cisco Systems, which became the poster child for inventory write-offs last year, has implemented a new software package to help improve its supply chain operations. The new software from MCA Solutions will support inventory planning for Cisco's global service parts logistics network. The Service Parts Optimization software uses advanced algorithms for inventory control, demand planning, and service contract management.

Eastman Kodak will create a new company focused on the wireless transmission of high quality video, photographs and data. The new firm, Appairent Technologies Inc., will build components and develop systems that, when integrated with consumer electronics devices, would allow them to communicate, such as transferring photos from a digital camera to a PC wirelessly.

Gartner Group analysts are predicting another slow year for IT in 2002. While increased IT spending in the Asia-Pacific region may bring a slight recovery for the year, the industry will continue to go through a shakeout, Gartner predicted. Economic recovery expected the latter half of the year will help boost demand for IT products and services, the report predicted, but spending will be hampered by lean corporate budgets set earlier in the year. Such financial pressure will push businesses to outsource more IT functions to outside contractors, said Gartner analyst Lisa Stone, a situation that doesn't bode well for internal IT departments.

The global personal computer industry shrank 4.6% in 2001, according to Gartner Dataquest, marking the first negative year for the market since 1985. The U.S. decline was especially sharp, with sales down 11.1% to 43.8 million computers. Gartner sees 2002 as a little brighter, with PC sales dropping another 4% in the first quarter, but rising 4% for the entire 2002.