The first phase of the information age began in the 1980s and really took off in the 1990s. It involved the widespread introduction of the personal computer and equipping large companies as well as public authorities and governments with software, digitising information flows and storing data. So-called ERP (Enterprise Resource Planning) systems spread quickly. Companies such as Microsoft, SAP, Cisco, Dell, HP, and IBM were instrumental in this success.
In the second phase, which began in the 2000s, the internet became more widespread among consumers. Audio and visual downloads, online shopping, streaming, information dissemination on social networks and the introduction of the smartphone, were the key developments that gave birth to the tech giants of today. They are household names. However, most of the companies from the first phase did not make the leap into this second phase, which continues to this day.
Microsoft is one of a few exceptions. Today’s so-called tech platforms are sitting on huge profits and have a stable position in the market due to their oligopolies. Facebook and Google dominate the advertising business, Amazon and Alibaba online retail, and Apple and Samsung the smartphone market. But only a few of these currently dominant players will continue to be successful in the third phase of the information age, which is just beginning.
The next decade will be the age of digitalisation of production, sustainable energy production, the use of artificial intelligence in various fields, and the electrification of transportation. Components that were once made by human beings will come out of the 3D printer in one piece, and production halls will be scarcely manned by people. Tesla’s Gigafactories in Berlin and Shanghai are leading the way. Globally, there are now more than three million industrial robots working day and night, weekdays and weekends. And the trend is growing fast. It is only in the last few years that the available computers have been able to deliver the computing power needed to install self-learning systems and automation solutions in factories.
Various industries will increasingly rely on the use of robots, whether for sports shoes or car parts, cosmetics or logistics processes. The Covid-19 pandemic and the further tightening of supply chains due to the Russia-Ukraine war are probably the strongest catalyst for this development imaginable. Companies that, due to supply shortages, are currently setting up production more locally are now facing much higher labour costs. The price of industrial robots, on the other hand, has more than halved in recent years.
Setting targets for a carbon-neutral energy supply has also become increasingly popular in recent years, particularly as a result of the EU’s Green Deal. Recently, runaway energy prices and efforts to achieve energy independence from Russia have given additional tailwind to the promotion of renewable energies. The electrification of private mobility is also part of the package of measures, particularly in the EU.
Who will be the winners of this next technological wave? It is all about commodities. Commodities that are necessary for automation, and for generating, storing and consuming green electrical energy. This means semiconductors and the tools to make semiconductors. But real commodities like nickel, copper, lithium are also inevitable in this next phase of technological growth. The production of batteries is primarily about economies of scale.
The result will be gigantic battery corporations that will emerge in the next few years. E-vehicle manufacturers that are as vertically integrated as possible and have very few inherited liabilities from the diesel/petrol past to clean up will also benefit. In addition to some automation specialists and computer chip developers, emerging cloud companies will also grow strongly. Artificial intelligence (AI) will become imperative. The companies that manage to make sense of this new technology will gain in importance. The most promising AI application fields are data security, credit analysis, robot production, medicine, genetic analysis, logistics, advertising, energy generation and autonomous driving.
The structural changes require a particularly long-term orientation in terms of capital investment. We take this into account in our funds, the MainFirst Global Equities Fund, the MainFirst Global Equities Unconstrained Fund, the MainFirst Absolute Return Multi Asset and the MainFirst Megatrends Asia, incorporating the investment themes of the car of the future, cloud computing, semiconductors, artificial intelligence and automation.
