The Persian invasion of Greece came to a definitive conclusion in 480 B.C. on the plain to the east of the tiny city of Plataea, where a combined 50,000-60,000 southern Greek hoplites, led by large contingents from Athens and Sparta, utterly routed a 360,000 man Persian force (half of whom were northern Greeks from territories under subjugation to the Persians and who were, shall we say, less than enthusiastic about being there.) The war was such a tremendous experience for the Greeks that, for a while, it united them spiritually as a people and initiated their Classical Age, producing famous historical figures such as Aeschylus, Sophocles, Aristotle, Herodotus, Xenophon and many others who generated art, literature, philosophy, science, architecture and sculpture that inspired cultures across Europe, North Africa and the Middle East for another 2400 years and counting.
"Non semper erit aestas."
It will not always be summer. - Roman proverb
Yet as Greek civilization blossomed splendidly at its zenith, the seeds of its demise were being sown. The Delian League, led by Athens, continued warring against a staggered Persian Empire, conquering territory in northern Greece and along the coast of Asia Minor, ejecting the Persians altogether from the Aegean and vaulting Athens into dominance, its maritime empire controlling roughly 1/3 of mainland Greece and the entire coastline of the Aegean Sea along with all its islands.
Athens succumbed to the vices and temptations of runaway success and began to exercise oppressive control over previously independent Greek cities and towns, even extracting tribute from former allies. Resentment, fear and envy began to build throughout the Greek world, culminating in a fateful gathering of the Peloponnesian League in 432 B.C. Egged on by Corinth and other Greek cities with their own ambitions and grievances against Athens and reinforced by recent arrogant imperial actions by the Athenians themselves, the Spartans took counsel of their fears concerning Athenian hegemony and declared the long peace to be at an end.
And so did the Golden Age of Greece come to a close to begin a long tale of woe, where first Athens and then Sparta fell, neither to ever recover their former glory, while Greek cities rapidly entered and exited alliances of convenience as Thebes, Corinth and eventually Macedonia vied for hegemony over a war-torn and desperately impoverished Hellas. Battles, massacres, genocides, revolutions, assassinations, cruelties and injustices followed one upon the other beyond counting, until the Roman consul Lucius Mummius finally put an end to it all nearly three hundred years later by razing the city of Corinth and absorbing all of Greece into the Roman sphere.
Though clearly not as sanguinary, High Tech's participating firms are entering a comparable historic period, busily consolidating into larger competing entities and engaging in ruinous, margin-crushing price wars. M&A for Technology firms in 2015 has already surpassed $100B, a higher level than the previous six years combined:
We've already reviewed or reported on some of the bigger acquisitions that have happened during the year - Broadcom and Avago, Altera and Intel, Freescale and NXP and so forth. There are quite a few others, however, which have completed, are in process or are reputedly being negotiated:
- Dell & EMC
- Global Foundries & IBM's microelectronics group
- Dialog & Atmel
- Microsemi & Vitesse
- Infineon & International Rectifier
- Avago & LSI
- KLA-Tencor & Lam Research
- Microsemi and Skyworks bidding on PMC-Sierra
- ADI and TI pursuing Maxim (rumored)
- Western Digital & Sandisk
- Infineon & Fairchild (rumored)
What we've also touched on in recent editorials is the strategic priority for Beijing in becoming self-reliant in High Tech, from the foundry level up to systems. Government-backed Chinese corporations and holding companies have bid on or executed several deals this year and further activity is virtually assured:
Converging with this trend are (1) the general decline in High Tech revenues and (2) a heavy round of layoffs across the industry. HP alone announced 30k in headcount reductions and Sprint is putting together a $2B expense cutting plan to be implemented by the end of January which will cost 'several thousand' people their jobs. To be explicit, it would not surprise me if, after the M&A surge tails off and the smoke clears, up to 100k High Tech employees will be out of work.
So little pains do the vulgar take in the investigation of truth, accepting readily the first story that comes to hand. - Thucydides
Bouyant (and supremely deluded) forecasts at the beginning of the year for 5%+ growth in semiconductors have, as predicted in previous posts, turned sour. Hype-prone IC Insights is now predicting -1% and Gartner is also projecting a 1% decline from 2014. I suspect the SIA/WSTS, late to the party as always, will follow suit before the year is out.
As one can see from the charts above, many of the industry-leading companies examined are shrinking or struggling just to stay even. Of the very few genuine growth companies, all but Lattice (and maybe Infineon) are quite obviously at risk and sailing into rising headwinds spawned from the end of the spectacular growth of mobile computing.
All of this data stands in stark contrast to articles filed by the MSM during this quarter's financial reporting season. The published stories by and large reflect the posturing and positive spin of company executives. The fact that their verbal dreck is accepted passively or even occasionally reinforced by members of the financial press suggests either willing and active participation in the deception or profound vapidity on the part of the reporters.
"Historia est vitae magistra."
History is the tutor of life. - Roman proverb
And what of the global economic environment? Some would say that the height of the Dow Jones is all the indication one needs to assess the relative health of the economy. We all know better at this point, as the reason why the S&P and Nasdaq have done so spectacularly well has been covered in previous "State of the Union" reports, along with the deceptions in BLS employment statistics.
Let's return to the favorite measures we've used in the past - the CRB (both classic and Reuters-Jefferies) and the BDI.
First, the classic CRB going back to 1947:
As we can see, the index has been in near continual freefall since early 2014.
Now the Reuters - Jefferies CRB, from May 2008 to today:
The commodities mix is somewhat different and the scale is logarithmic, but the story is still nearly identical - a 'dead cat bounce' from the 2008-2009 recession to early 2011, then a steady decline until early 2014 with a steepening drop afterwards.
Finally, two versions of the BDI - a 3 year chart:
And the BDI from May 2008 until today:
