Semiconductor world - CPU/GPU Wars

Stock Opportunities
4

Market Segments

Why does it make such a good discussion? Because there is window of change opening right now. Thanks to intel’s misses and growing cloud needs.

With it, come companies that can gain market share and grow. Right in the mix are two companies – NVDA and AMD. We are in the early stages. The stock prices are reflecting this change. How much is priced in? – Needs a analysis of the current + future market + company balance sheet

PLAYERS

NVDA

Predominantly manufactures GPU. Has been trying its hands on CPU for quiet some time (https://en.wikipedia.org/wiki/Project_Denver) but has had a difficult time. Recently announced it is acquiring ARM. ARM licenses its design/ISA to companies. 95% of smartphones in the world have arm designed CPUs. I will talk about ARM later when I discuss datacenter. Also, NVDA is at the forefront on Artificial Intelligence technology.

They have been able to beat the middleman OEM ecosystem by

  • Great Leadership - Jensen Huang - Founder + CEO
  • Better marketing
  • Providing a software stack that makes customer want to come to them – This has the customers telling the OEM to get them NVDA GPUs, so OEMs cannot play the game of reducing price between NVDA and AMD.
  • The open source community tends to be unhappy with them – They make you pay for everything (And their code change to open source is along similar lines) - https://www.youtube.com/watch?v=IVpOyKCNZYw
  • They acquired ARM recently – gives them a humongous market that arm caters to. Arm has 95% mobile and 90% embedded market share. You will hardly hear about it because ARM does not manufacture processors – it designs them and sells IP. This gives a huge market to NVDA edge compute plans. It could tag along with arm processors – How they do it is to be seen
  • Acquisition of ARM gives them options to ship entire package to datacenter. When it comes to datacenter - compute is the real deal and GPU does it. CPU is mostly shifting data in and out of GPU.
  • Thinks very far ahead – in ~2009 they wanted compute in edge devices/cellphones – They now acquired ARM.

AMD

Ever since they acquired ATI (GPU makers), AMD has become the sole company that actually makes solid GPU and CPU. Nope, not intel. Not nvidia (not until it acquired ARM 2 weeks back). AMD makes them both that competes with both intel and nvda from low end to high end.

  1. Historically, has been competing with big brother Intel
    a. Beaten black and blue by intel - Own execution mistakes
    b. Bad biz practices (of intel) and Intel had to pay a penalty - https://arstechnica.com/information-technology/2009/11/intel-and-amd-bury-the-hatchet-under-125-billion-in-cash/
    c. Couple of major bugs in its processors + Very difficult to compete with intel. Intel will sell you out of the game – Cannot find the link now. Old one – 2008-2009 timeframe.
  2. A huge turnaround from nowhere in 2016 – they are now at 20% market share in desktop and 20% in notebooks
    https://www.pcworld.com/article/3569437/amds-notebook-pc-share-climbs-to-an-all-time-high-of-nearly-20-percent.html
  3. Came back under Lisa Hsu’s leadership – And thoroughly beat intel in 2020 - https://www.youtube.com/watch?v=-5-k5l8aaKY - MIT PhD
  4. The foundation for its latest tech was laid down somewhere in ~2013-2014 (Arround the time Jim Keller was there) – Due to which they have been able to scale up the number of cores in a CPU. Ground up architecture change about how their design looks like
  5. Usually the one with the best price/performance
  6. ‘Not so great software’ reputation – Could be also because usually used in budget laptops with cheap peripherals
  7. They already have CPU + GPU for server racks - what are they doing? Will NVDA beat them to it?

INTEL

You know about intel, so no intro. I will mention points relevant to our discussion

  1. Intel had been milking the desktop space for 5 years till 2019 as a monopoly. Because AMD was doing nothing to dent its leadership – They would literally tell what perf one can get in a given year.
  2. 98% market share in datacenter – This is Cash cow for intel. Stability is paid premium. Intel grew the ecosystem, they dominate it. AMD was getting something here and there. But intel is the boss.
  3. Historically – Their fabs have had the best yield
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