What was 2016 really like for engineering?

You know, last year did have its good bits.

Right now, the global political landscape – President-elect Donald Trump, Brexit, South Korea’s latest corruption scandal – is dominating commercial ‘sentiment’. There is no setting that aside, particularly with the potential for further international upheaval in 2017, as elections loom in Germany, France and the Netherlands.

Then, there were several significantly awkward moments for major US technology players. Yahoo finally found a buyer in Verizon but almost immediately afterwards had to acknowledge a massive hack of user data. Facebook was drawn into the ‘fake news’ controversy and, although it is now seeking to address the problem, lost some of its luster. And the general consensus is that Apple, still the world’s biggest technology company, is stuck in an innovative rut notwithstanding the success of the iPhone 7.

But, not to sound too Pollyanna-ish, things did look a lot healthier on the design side.

In another huge year for M&A, two deals stood out as showing that there are companies willing to make huge bets on emerging markets.

In the UK, ARM was acquired by Japan’s Softbank for £24bn in August regardless of the earlier Brexit vote. Softbank CEO Masayoshi Son was clear that he thinks the deal will pay off as ARM expands from its base in mobile to dominate the Internet of Things (IoT).

In the US, the most eye-catching deal was Qualcomm’s still-to-complete $39bn (£31bn) acquisition of NXP Semiconductors, which also today includes the Freescale Semiconductor operation spun out of Motorola. Not only will this be the biggest-ever silicon acquisition, it again shows a muscular mobile player looking to add expertise in both the IoT and automotive sectors (NXP is already the automotive semiconductor market leader).

Apart from these, it’s clear that the high-end electronics market is continuing to consolidate generally and, interestingly, also attracting outside players to dip into it (for example here, ‘Big 3’ EDA vendor Mentor Graphics is the subject of another agreed but not yet completed bid from Siemens, worth $4.5bn).

Then, what about the start-up end of the business, often seen as the lifeblood of engineering innovation? This does remain much quieter than a decade ago and some only recently hot markets are now considered closed. A good example of that is augmented and virtual reality: 2016 saw these reach the consumer thanks to such innovations as the HTC Vive and Pokemon Go and are now dominated by giants (notably Sony, Microsoft and the Facebook-owned Oculus).

But machine learning and good old mil/aero reputedly remain very healthy. The former is arguably more of a software play, but the latter is taking some interesting twists.

Concerned that mainstream Silicon Valley innovation today has more of an eye on the consumer than the military as a driver of cutting-edge, highly specified products, the big defence contractors are looking to bring more silicon design work back in-house or at least closer to them.

A case in point is Lockheed Martin. Earlier this year it established a $100m corporate venturing fund and has just closed its first investment, IQ-Analog, a San Diego company working on products that could be used for high performance sensors.

Chris Moran, GM of Lockheed Martin Ventures, told the Wall Street Journal the goal of his fund is to either seed the growth of future suppliers or perhaps ultimately acquire them. The strategy is in line with one being promoted by the US Department of Defence.

And, showing that it’s an ill wind and all that, cybersecurity also continues to attract serious funding for obvious reasons.

It’s not all doom. But mention of the US government does bring us back to Donald Trump.

Even those deals announced since the US election were undoubtedly being negotiated well before it. The nigh-on universal assumption was that Hillary Clinton would win and that the business landscape would remain much the same as under the Obama administration.

All that is now up in the air.

Is the US heading for a trade war with China? What will be the impact of the repudiation or renegotiation of existing and ongoing trade agreements? What punitive measures might Trump enact against an uncooperative technology sector? Those are just three of the many important unanswered questions hovering over the Donald.

There is the strong possibility that an already heavily globalised engineering industry could quickly workaround many aspects of its Trumpian ‘worst possible scenario’. But excessive export tariffs and pseudo windfall taxes will not help.

Which brings us to the main takeaway. 2016 probably won’t go down as a vintage year for technology, but it won’t necessarily prove to have been that bad either. The problem we're all gnawing at is 2017.

The main issue is visibility. Just one calendar month before he is due to take the oath of office, Trump’s detailed policy proposals remain as opaque as the Beijing smog. That is rendering many aspects of near-term corporate planning – not just in engineering – into ciggy-packet guesswork.

And engineering has never been much of a business for looking back anyway. But it does need to be able to look forward with some confidence.

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