As the world accelerates into the digital, the physical is making a comeback

Here is a little secret.

As the world continues to accelerate into the digital, the physical is making a comeback.

Take Nintendo for example. As a game company, it has conquered the digital realm with games such as the ubiquitous Super Mario. But yet, its next big move is physical -- a US$580 million theme park in Universal Studios Japan, called Super Nintendo World. A day before it opened in March 2021, fans queued to participate in the pre-opening technical rehearsal. On the first day it opened, fans started queueing at 6:30am.

This move into physical goes beyond fun and games. We see it in the stock market too. Traders and investors are already rotating out of digital into the physical such as industrials and commodities. Leading financial publication, Barron’s, points out in a recent article that “[t]his is the year to bet on atoms over bits”.

Moreover, with the expected economic re-opening boom in hotels, airlines, and cruises, the return of the physical can only accelerate. Look no further than the 120,000 people in Singapore who went on cruises to nowhere since a pilot scheme for safe sailings was started in November last year. These 120,000 accounted for one third of the world’s cruises. Now wait for the rest of the world to catch up.

These trends and developments remind us just how much of our world — economic, societal, and social — remains physical. They also remind us just how much more potential the physical has. There is now so much attention on how digitalization has accelerated, that we risk overlooking how the world has also accelerated towards the physical.

In fact, this was already happening before the pandemic.

E-commerce platforms, for example, were setting up their own retail stores and using pop-up stores. Online communities often met up with each other in their locales. Social media encouraged people to buy and travel more. And dating and matching platforms meant more dates and hookups.

It is thus likely that in thinking about where the world is going in the digital era, our sights have been too narrow. We have been excited about the digital, and forgot that the physical can be pretty exciting too.

Those who did not forget have benefitted tremendously, such as the semiconductor companies. In recent years, the semiconductor industry has seen astounding advances and growth. As the world’s demand for data, artificial intelligence, high resolution graphics, and digital devices ramped up, so did the demand for semiconductor chips and equipment from companies such as

Nvidia, TSMC, and ASML. Their value has skyrocketed and their role in the entire digital ecosystem has become essential — so essential that what they do has even become geopolitical. Countries large and small now vie to secure supplies, sufficiency, and supremacy in semiconductors. They will continue to do so for years and decades to come. The semiconductor also gives us a peek into the underlying reasons why the physical can be pretty exciting too. It is because the physical and the digital are intertwined. Each pushes the other forward, but can also hold each other back.

Digital might be fast and scalable, but they are ultimately limited by the physical. Digital numbers crunching and graphics rendering for example can only be as fast and powerful as the fastest semiconductor chips. And how fast these chips are depends on how many micro electrical components can be squeezed into them.

The current count is around fifty billion of such components on one semiconductor chip. A significant number of scientists believe there is a physical limit on how many more we can squeeze into the chip. Except that past predictions of these limits have always been upended by creative chip designs. These creative designs in turn were made possible by digital design tools that when coupled with human ingenuity, have made it possible to push more and more components onto less and less space on the physical chip.

At the scale of e-commerce and shipping, you can buy anything online within seconds. But if the ship carrying your purchase is jammed up in the Suez Canal, there is only so much digital can do. In fact, even after the blockage was cleared within the week, the ramifications on deliveries and delivery times lasted weeks.

At the scale of the social, we can connect digitally to anyone and everyone in the world, but the number of stable social relationships our brains can retain appears to be one hundred and fifty. Known as Dunbar’s number, recent research suggests that this number remains unchanged even as we have exponentially expanded our digital social networks.

What do all these mean for what we do in the future?

It means that in the digital age, we must tend to the physical as well. We are familiar with how the digital can transcend the physical. We are however less familiar with how the physical and the digital are intertwined, and how they each nurture and negate what each can do.

It means it is time to get physical about the digital.