Tech sector looks forward to “normalised” 2021 after rollercoaster 2020 that ended with record spending

2020 was certainly a year of shifting attitudes and behaviours when it came to technology - even anecdotally, most of us can point to an increase in the use of tech during the pandemic and its associated lockdowns. Companies such as Zoom (user-friendly video conferencing software), Wix (website software), Slack (communication) and Afterpay (buy-now-pay-later) saw their value skyrocket as people across the globe were stuck at home. And analysis by S&P Global has revealed that, despite a certain novel coronavirus, M&A activity in the tech sector exceeded US$600 billion in 2020. That sort of figure hasn’t been since the dot-com collapse of the late 90s, when every person and their dogs were angling to get a slice of the internet-driven technology pie. Tech leads recovery S&P Global technology M&A expert Brenon Daly said there was an argument to be made that the tech sector came out of the year that shall not be named with its reputation well and truly enhanced. “The against-the-odds recovery in tech M&A even outpaced the stunning bull market rebound on Wall Street,” he said. “Tech acquirers and investors enjoyed one of the few true 'V-shaped' recoveries in last year's otherwise ruinous pandemic. S&P and 451 Research’s latest survey of those in the know are predicting an even better 2021. “Even as the number of COVID-19 cases spiked late last year, many dealmakers were already putting the pandemic behind them,” Daly said. “That certainly came through in the consensus forecast from a special mid-December survey, which collected views from some of the industry's busiest bankers. “Nearly two-thirds of our survey respondents expect little to no impact from the outbreak on deal-making this year.” In Australia At home, the ASX’s tech stocks enjoyed a good run throughout 2020 as well. Our so-called WAAAX stocks - Wisetech, Afterpay, Appen, Altium and Xero - have delivered impressive returns for investors, not dissimilar to the NASDAQ’s famed FAANG stocks, Facebook, Amazon, Apple, Netflix and Google. S&P Global said the shift towards technology would only continue in 2021, as the pandemic created longer-term implications for the industry, including sustained working-from-home patterns, increased use of cloud, lower expenditure on physical property and an accelerated shift to emerging security. A report by S&P and 451 Research into information security found that cybersecurity was an increased focus in 2020, and predicted secure access, an overhaul in security operations and cooperation between cloud pros and security experts would characterize security in 2021 and beyond. Data security That bodes well for archTIS Ltd (ASX:AR9), which provides innovative software solutions for the secure collaboration of sensitive information. The company gained a swathe of new customers over the past 12 months, validating archTIS’ data-centric security approach and annual recurring revenue licensing model. Its flagship product is the Kojensi platform, which addresses the critical need to manage and share sensitive information securely across national security and law enforcement communities. Harvesting moisture from air Meanwhile, Strategic Elements Ltd (ASX:SOR) is capitalising on the ever-growing demand for greener, cleaner technologies, as it develops a self-charging battery that can harvest moisture from the air. The company’s battery ink technology differs significantly from current battery technologies that generally use a small number of alkaline or lithium battery cells to power electronics. Battery ink is being designed to be printed into a battery pack of a larger number of connected battery cells. The ability to potentially scale battery ink cells is a significant advantage as more batteries can be assembled in the same space, leading to increased density of power output. A similar development pathway occurred in computer chips, where greater performance has been achieved by scaling smaller memory cells. Then there is also the company’s automated robotic vehicle technology in which great strides are being made. Quantum computing focus And small computer chips are exactly what Archer Materials Ltd (ASX:AXE) (OTCMKTS:ARRXF) are trying to create. The company is developing innovative deep technology for commercialisation in the quantum computing, human health and reliable energy fields. It is the quantum computing sector that Archer is particularly focused on right now, a market estimated to be worth up to US$1.8 billion by 2025. Archer is working on its flagship quantum computing chip, called 12CQ, which is a world-first qubit processor chip technology that Archer aims to build for quantum computing operation at room temperature and put in modern electronic devices. - Daniel Paproth