The Bush Administration's request for $52 billion in new government information technology holds promise of a much-needed boost to the electronics industry, according to market and government contracting analysts. The Bush requests represents about an 8% increase over Uncle's IT budget for the current fiscal year. Analysts don't have hard numbers yet because the precise breakout of the IT buys and justifications are still being worked on for congressional committees.

The Department of Defense's (DOD) increasing emphasis on smart weaponry, demonstrated in the Afghanistan campaign, is expected to be the main driver to IT and electronics demand, with a relatively smaller impact coming from home security and cyber security needs.

"It's good news for chips," says Molly Tuttle, spokesperson for the Semiconductor Industry Association, of the Administration's FY2003 budget (for the year starting this Oct. 1). "We're still trying to figure how much of the IT buy is hardware and then figure what that would mean in chips," she explains.

Much of the government's IT buy is for services, not hardware. Although the Government Services Administration's (GSA) figures do not represent all government spending on IT, about 30 % of all ADP (automated data processing) buys are for hardware, while the rest are for services, according to Eleni Martin, spokesperson for the GSA. Federal Sources Inc. (FSI), a leading IT market intelligence firm tracking public sector spending, says hardware typically represents about 23% of government IT buys, according to FSI vice president for consulting services Ray Bjorklund.

To put the $52 billion figure in perspective, it represents about 12% of the $400 billion that domestic businesses and consumers spend on IT, according to Matthew Coffey, senior economist for DRI-WEFAS Cost Information Service.

FSI estimates about $1-2 billion of President Bush's request of nearly $38 billion for homeland security will be IT-related. Also, the budget asks for a whopping increase for cyber security to $4 billion, compared to $1.7 billion in the fiscal year that ends Sept. 30.