May 19, 2020

Were Reports of the Apple Watch Edition’s Gold Consumption Greatly Exaggerated?

Wall Street Journal
Apple Watch
Apple Watch Edition
Tomas H. Lucero
3 min
 Were Reports of the Apple Watch Edition’s Gold Consumption Greatly Exaggerated?

   It turns out the Apple Watch Edition is going to consume less gold rather than more.

   If you’ve read this and this you may think I am off my rocker since the venerable, stately Wall Street Journal recently reported:

   “Orders for Apple Watch Edition – the high-end model featuring 18-karat gold casing – are relatively small in the first quarter but Apple plans to start producing more than one million units per month in the second quarter, the [source] said.” (my italics)

   If in our brave new world in which we are obsessed with everything bigger, faster and better, the word “million” doesn’t make you look twice anymore, this detail might have escaped your radar.

   Thankfully, there are still a lot of people for whom “one million” inspires a second glance. These people, and those in their sphere of influence, set the blogosphere—not to mention the entire gold industry—on fire when they began asking just how much gold one million 18-karat gold watches meant per month.

   Josh Centers of TidBITS—referenced above—did the math and came to some jaw-dropping conclusions.

   “If Apple makes 1 million Apple Watch Edition units every month, that equals 24 million troy ounces of gold used per year, or roughly 746 metric tons,” he wrote. “That’s enough gold to make even a Bond villain blush, but just how much is it? About 2,500 metric tons of gold are mined per year. If Apple uses 746 metric tons every year, we’re talking about 30 percent of the world’s annual gold production.”

   This much gold consumption would shift the entire gold market in one fell swoop. That shift would, consequently, affect the entire world’s economy.

   Coincidentally, according to Centers’ math, “Apple’s annual gold supply alone would be worth $28.8 billion—luxury watchmaker Rolex sells “only” $4.7 billion of product every year, from an estimated 600,000 watches.”

   Is Apple really set to take over the world or could the Wall Street Journal have made a typo? Centers surmises the latter (as does this writer).

   “The alternative is that the esteemed Wall Street Journal is off on its Apple Watch Edition sales by an order of magnitude (or more). That would put the number at 100,000 per month, which seems more plausible,” Centers said.

   In the midst of this tempest in a teapot, it was discovered that Apple had lodged a patent request for a method that “allows them to make 18-karat gold that has, on a volume basis, less gold than regular 18-karat gold,” according to the blog “And now it’s all this.”

   And this is why, as I started out saying: It turns out the Apple Watch Edition is going to consume less gold rather than more.

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May 15, 2021

M&A activity key lever for future tech sector growth

Kate Birch
2 min
With M&A activity in the technology sector soaring, dealmaking is likely to be the key lever for growth as businesses look to recover post-pandemic

Despite the continuing uncertainty of the pandemic, the tech sector has witnessed soaring dealmaking activity over the past year, rocketing in the second half of 2020, with the last quarter of 2020 a record one for M&A activity, and momentum continuing into 2021.

Dealmaking in tech sector soars in past year

And the latest figures bear this out with the number of technology M&A deals totalling US$208.44bn globally in Q1 2021, according to GlobalData. While the US holds top spot both in volume of deals (1034) and total value (US$140.61bn), Europe ranked next with 649 deals (US$44.49bn) with the UK continuing its reign as Europe’s biggest M&A market with 204 deals.

In particular, megadeals – those valued at US$5bn or more – soared in 2020 representing 59% of all global technology sector deal value in 2020, up from 47% in 2019, according to the latest edition of the EY Technology Global Capital Confidence Barometer.

This tech sector trend towards megadeals is backed up by EY’s CCB data, with 16% of tech sector respondents planning to pursue transformative deals valued at US$5bn or more in the near-term.

While technology deal activity “all but stopped at the beginning of 2020 after fluctuating between historic highs and lows, companies pivoted quickly and tech M&A exploded in the second half of the year”, says Barak Ravid, EY Global TMT Leader for Strategy and Transactions. 

M&A activity level for tech sector growth

Looking ahead to the future, technology executives are optimistic, with nearly half (47%) expecting profitability to fully rebound this year, according to CCB data, compared to 23% across all sectors, and with more than half (51%) planning to pursue M&A in the next year in order to sustain growth.

According to Ravid, M&A activity is increasingly becoming a key lever for growth as businesses look to recover.

“To position themselves for future revenue growth, tech companies are now adjusting their M&A strategy to focus more on a target’s business resilience, digital technology alignment and to gain market share through consolidation,” says Ravid.

However, with an increasingly competitive deal market and ongoing geopolitical tensions, the majority of tech execs expect to see more competition in the bidding process for assets over the next year, primarily from private capital.

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