The first day of the Communacopia + Technology Conference 2022 hosted by Goldman Sachs in San Francisco, USA on September 12th.
Sponsored by US financial giant Goldman SachsCommunacopia + Technology Conference 2022After the first day of ”September 12”, I spoke with one of my long-term sources at the Palace Hotel bar in San Francisco.
“It’s been a really bad year.” That’s what the longtime tech investor said as he sipped an Old Fashioned.
The stock market has continued its slump since the beginning of the year, albeit with some recovery, and tech stocks, especially the long-term growth stocks he favors to back, have taken a big hit. Initial public offerings (IPOs) have plummeted and are unlikely to recover until 2023. The mergers and acquisitions (M&A) market will also be tough.
Coincidentally, on the first day of the conference, the news that Goldman Sachs will lay off hundreds of people jumped in, and it was a real blow. Such was his complaining.
Still, the conference was packed with attendees, with one Goldman banker calling it the most successful event in history.
While most of the tech executives on stage expressed a negative outlook, they didn’t appear to be intimidated by it, and some were cautiously optimistic about 2023.
Tech companies, especially semiconductor makers and their customers, are one of the most important economic indicators to watch. Semiconductor chips are now embedded in every product, so when demand declines, the first to feel the effects will be the chip makers and the companies that need them.
Briefly, the following message was shared among conference attendees on the spot:
We have one of the most bizarre economic slowdowns in recent memory. Interest rates continue to rise, inflation remains stubbornly high, and many feel the real pain is yet to come. However, even in such a situation, the technology industry continues to move forward while demonstrating a certain level of sustainability.
But an investor in my source translated such a message into slang. He cites Tesla and Amazon.
“in short,Everyone is waiting for the day when the wheels (that keep moving forward) come off, but so far it’s still spinning.”
“Extremely sharp decline in demand”
Chuck Witten, co-COO of PC and server giant Dell Technologies, took to the stage on the afternoon of Sept. I gave a presentation that gave me a quiet sense of confidence.
The company’s Client Solutions Group (CSG), which sells laptops and peripherals for corporations and consumers, announced that in the second quarter (May-July) of the 2020 fiscal year, “Extremely sharp decline in demand” was seen.
Corporate customers have tended to hold back on hiring employees (due to the economic slowdown), reducing demand for new computer purchases. Consumer sales were also expected to suffer severe figures in the second quarter, but the slowdown progressed faster than expected.
at your feetLarger companies face a more severe downturn than SMEs”, and in that respect, it can be said that a phenomenon opposite to that of past recessions is occurring.
Witten COO said,How should I interpret this situation?I can’t say for sureBut he said the current economic climate is so different that reapplying strategies used during past recessions may not be enough to break through.
Meanwhile, Dell’s Infrastructure Solutions Group (ISG), which sells servers and storage to major cloud providers and other large enterprises, has outperformed CSG in relative terms.
The backlog of orders (before delivery) on the server is good, and the number of canceled orders has not increased. Witten is bullish that the world is currently not doing enough to meet the strong demand from customers for cloud services.
On the same day, executives from Marvell Technology, a US fabless semiconductor maker for data infrastructure, also took the stage and expressed confidence in the demand for their products from cloud companies.
‘Very hostile environment’
I’ve gone into a bit more detail on Dell’s outlook for the future, but I haven’t heard optimism from other tech companies either.
Judson Alsoff, Executive Vice President and Chief Commercial Officer (CMO, Head of Sales Strategy) at MicrosoftArguably the most uncertain economic environment in decades” was expressed.
David Geckler, CEO of Western Digital, which provides data storage solutions such as NAND flash memory and DRAM chips, said,very harsh environment” and sighed.
especially”The NAND industry is contracting at a pace not seen in a long timeIn this situation, the launch of the next production base is expected to be postponed due to falling demand and prices.
An unnamed employee at South Korea-based rival SK hynix said he wasn’t particularly surprised to hear Western Digital’s negative remarks from Geckler.
According to the same employee, the NAND market is now in more trouble than the DRAM market. Currently, there are only three major players in the DRAM industry, and they can demonstrate their bargaining power (negotiating advantage), resulting in high profit margins. On the other hand, the NAND industry has five major players, and the competitive environment is more severe.
Cristiano Amon, CEO of Qualcomm, a maker of semiconductors for mobile communications, also took the stage and touched on the slowdown in consumer demand, especially in the low-end smartphone market.
“We expect this weakness in demand to continue to spread over the next two quarters. We expect it to pick up at some point in 2023, but we still expect a bearish consumer dynamic.”
[Original: The view from inside Goldman’s biggest ever tech conference: ‘Everyone is waiting for the wheels to come off’]
(Translation and editing: Chikara Kawamura)
Source: BusinessInsider
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