The valuation of all the tech companies is based on future growth. Meaning ever increasing sales.
Well, what happens when next year's smartphone really isn't any better or cheaper than last year's smartphone? Sure, there will always be some business because people drop their phones all the time, but sales won't be as high without upgrades driving it.
Lots of people (investors) will be unhappy with the tech sector at that point.
Next year's tech will still be cheaper. If they don't have to retool for the next gen because they literally can't, then we can enjoy the economies of scale in producing the same tech over a longer period of time.
I also dispute the scope you assign to this "upgrade" cycle. It's a huge overstatement to claim that the whole tech sector would "collapse". The tech sector is far larger than phones and personal computers.
> Next year's tech will still be cheaper. If they don't have to retool for the next gen because they literally can't, then we can enjoy the economies of scale in producing the same tech over a longer period of time.
Slightly cheaper, maybe, as the fab equipment depreciates.
> I also dispute the scope you assign to this "upgrade" cycle. It's a huge overstatement to claim that the whole tech sector would "collapse". The tech sector is far larger than phones and personal computers.
It used to be that new hardware would drive new software sales, and vice versa. You'd buy a new PC, because Windows XP ran too slow on your old one. And a couple years later, some awesome game comes out, and you'd need to buy a new PC to play it.
Expansion, not replacement (of broken systems) is what drove the PC segment. It was the foundation of the growth that affected everything that used or could benefit from PCs. And we've seen that with the mobile segment.
And we may yet see that with the VR/AR segment, but that's going to be a tough hill to climb if we can't count on continuing IC improvements.
> Slightly cheaper, maybe, as the fab equipment depreciates.
Sure, but the same equipment would also be cheaper to replace than the capital required for the next generation fab, for the same reasons.
> Expansion, not replacement (of broken systems) is what drove the PC segment. It was the foundation of the growth that affected everything that used or could benefit from PCs. And we've seen that with the mobile segment.
Expansion into new sectors, not expansion into the same sectors. The same will still happen. Solutions will become more customized rather than remain general purpose. There remain considerable gains in parallel computation for instance (GPU), and ASICs will become the new hotness (again).
Furthermore, if clients cease to expand, then more computation will happen on server infrastructure. Your fat clients will become more thin clients again, repeating the same cycle that has happened multiple times so far.
You're also neglecting the investment in infrastructure (data centers, networks) that will continue to grow, if not accelerate. Current hardware is more than sufficient for most of this.
Well, what happens when next year's smartphone really isn't any better or cheaper than last year's smartphone? Sure, there will always be some business because people drop their phones all the time, but sales won't be as high without upgrades driving it.
Lots of people (investors) will be unhappy with the tech sector at that point.