Semiconductor world - CPU/GPU Wars

Stock Opportunities
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Personal banter

My bet is on intel losing more and more market + the market itself outgrowing intel (secular growth possibility). Why? Because intel, historically, had great fab (Do read up about fab yield) and managed to be ahead by unfair business practices time and time that went unnoticed earlier https://www.youtube.com/watch?v=VL1RjwVAnzY)

In tech space, if you make your competitor miss the bus by one year, they will lag for years. That is what intel did. When intel filed a patent targeting nvda chipset business, nvda just left the biz. https://www.cnet.com/news/intel-takes-chipset-dispute-with-nvidia-to-court/

But now, we have very big players against it

  • Amazon backed Annapurna labs
  • NVDA is not small anymore
  • Regulatory is much ‘better’ now (From the Mike Bruzzone interview)
  • A ballooning cloud market.
  • Leadership
    • NVDA and AMD have stellar leaders from semiconductor industry.
    • NVDA -Jensen is the founder with electrical engineering degree from Stanford. These guys changed compute landscape. Brought super computer to desktop.
    • AMD - Lisa Hsu - MIT Ph.D (Electrical Engineering all the way)
    • Intel’s Bob Swan - MBA . Not belittling MBAs, but he will need some trustworthy highly capable lieutenant’s with less ego to make technical calls. In high tech industry like semiconductors, this is a problem. Some good discussion about such leadership in this video https://www.youtube.com/watch?v=O4DgXtxkZNg

Intel has money though. Truckloads of them. They are currently doing a price war to match AMD perf advantage. This is playing defense. And they are in 7nm (they call it 10 ++ or something) only now. If they do not come up with 5nm equivalent in 2022, then no offense till 2024. They may have to skip a node to come back to compete? Until then, use the existing entrenched ecosystem and survive. Lack of leadership and huge org is not helping either.

https://www.ft.com/content/bb1069c6-a273-4d43-9cf6-0340ca88f711

Amazon is trying out ARM based CPUs. It acquired Annapurna labs for this purpose. Amazon has money and it runs its own datacenters. This is a combination not seen before in datacenters (of running datacenter + designing CPUs). So, if ampere can deliver, then it is win for NVDA (Ampere licenses ARM design) and lesser market for Intel.

Interesting times ahead with few players.
A few questions that one can dig in regarding investment

  1. What is the market share + growth potential
  2. How healthy are balance sheets of AMD & NVDA
  3. Should one instead just buy AMD + Intel + NVDA in proportion of bet - Two big guys (CPU & GPU) in data center and the underdog(AMD)?
  4. Datacenter change will take years because of its inherent nature - 5-10 years to topple intel out (if that happens i.e.). So any datacenter based stock bet has to have a long horizon. May be allocate more every year as the story pans out?
  5. Another proxy play is TSMC
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