The domestic hardware manufacturing industry in Iceland is almost non-existent and has been declining over the years. In 1997, Iceland EXPORTED 28.4 Million ISK worth of computer equipment (about 32 Million USD) while IMPORTING 8,800 Mil ISK of computer equipment (about 10,120 Million USD). Computers and related equipment accounted for 6.1% of all IMPORTS in 1997, while less then .1% of EXPORTS.17 It is apparent that Iceland is not well suited for hardware production and relies heavily on other nations for computer manufacturing.

Iceland’s small population makes it difficult to successfully support manufacturing businesses. In addition, Iceland’s work force is highly skilled compared to other countries which means it is advantageous for the country to seek competencies in knowledge work as opposed to manually intensive industries the fishing industry, of course, is one major exception.
 

Niche Markets

However, a few domestic companies do exist in hardware manufacturing, but they tend to specialize in a couple of niche markets. Specialist medical equipment presently designed and produced in Iceland including diagnostic monitoring equipment. Some Icelandic producers are in partnership with leading global sales and marketing companies in these fields. Food processing equipment with high levels of automation and computerization has also been developed for all areas of the fish industry. Foreign investors have also taken stakes in new growth areas, for example refrigeration technology. Furthermore, highly specialized industrial equipment has been designed and manufactured in Iceland to serve worldwide markets, for example robots for aluminum plants, pulp molding systems and a wide range of monitoring devices. 
 

Foreign Manufacturers

There are a multitude of foreign companies with local presence in Iceland that operate freely in the country’s IT manufacturing sector. Many of the large multinationals have taken up business in the country. IBM has operated a branch in Iceland since 1967, and Hewlett Packard has been in business there since 1985. Japanese firms have also invested in Iceland’s IT manufacturing industry. Most leading computer and software brands are represented, either as subsidiaries or through authorized local service agents. Players include Microsoft, Oracle, Software AG, Informix, CA, Compaq, Digital Corporation, and Novell.