This week I attended IFS, a regular semiconductor forecast seminar run by Malcolm Penn who has spent 50 years in the chip business! We learned that this year the global market for silicon contracted by 5.5% in Q1, kicking the year off to an awful start. With 1% growth in Q2, predictions of a better quarter right now and a flat Q4, we’re looking overall at “a really bad year”, however optimistic you try to be.
Next year looks mildly better. Semiconductors will bounce back, there is absolutely no doubt, it’s just the timing that’s unclear. When they do, swings of 25% or even 30% are inevitable. So, investors, you know what to do.
Moving on from that, Malcolm had some interesting assertions, as ever, and one of them related to Google and Apple. He believes they are the companies most likely to dominate in IoT through autonomous car production. That’s because cars are all platform based these days (quite true) and all the other platforms needed i.e. engine and transmission, the tin box it lives in, the safety and security features, are all easily contracted in so “anyone can make a car”.
I think he’s half right, but there’s an important factor Malcolm missed. For those people buying their own vehicle, autonomous or otherwise, the GAFA (Google, Apple, Facebook and Amazon) brands don’t hold any allure. The car-buying public (me) has a long memory and lots of car purchases in the next 30 years will still be a statement first and a practical means of transport second. The sheer magnitude of the global car market means this inertia has to be taken in to account.
Then blow me down the next day I see rumours of Apple taking a stake in supercar and automotive technology business McClaren.
Maybe Apple is smarter than I think, and realises many of the next generation of car buyers will actually want to spend their hard earned cash with a brand they recognise for delivering cars.