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Let Me Repeat: Chips Are Strategic – The Six Five Webcast
by Daniel Newman | August 9, 2021

On this episode of The Six Five Webcast hosts Patrick Moorhead and Daniel Newman discuss the tech news stories that made headlines this week. The six handpicked topics for this week are:

  1. Alphabet Wants to Make Its Own Smartphone Chips
  2. Marvell buys Innovium
  3. NVIDIA Advances Instant AI
  4. Plus Completes Driverless Semi Truck Highway Demonstration
  5. Qualcomm announced it has submitted an offer to acquire Veoneer
  6. Intel Provides Its Multi-Year Roadmap

For a deeper diver into each topic, please click on the links above. Be sure to subscribe to The Six Five Webcast so you never miss an episode.

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Disclaimer: The Six Five Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.

Transcript:

Daniel Newman: Hey everybody. I’m Daniel Newman, principal analyst, and founding partner in Futurum Research. And we are back for another episode of the Six Five Podcast. Flipping around the introduction, just a little bit, trying something new and different, but not a new crew. It’s me and Mr. Patrick Moorhead talking all things tech. Pat, how you doing today?

Patrick Moorhead: I’m doing great. Coming up on the weekend here. And we are here on a Thursday afternoon versus a Friday morning, doing the pod. I know you’ve got some travel coming up. We had some conflicts. Travel’s definitely coming back, Daniel, and you’re off. I was supposed to be in Seattle early next week, but that got canceled due to the dreaded Delta variant.

Daniel Newman: Yeah. You know, some things are still happening. Some things are moving around. Smaller meetings, lots of restrictions. Lots of testing. Heard about an event today where you are going to have to have a vaccination card. You’re going to have to have a 72 hour test before the event. You’re going to get tested every day and you’re still going to need to wear a mask and people want to go. And I mean, okay, clearly travel is coming back. Hopefully, what we’re learning and seeing with the Delta variant is that the breakthrough cases are not very bad, but the fact is there are some breakthrough cases. I think you and I would both agree, no matter what side of the aisle you sit in, what story and what politics you have, getting vaccinated is the fastest way to get back to normal. So like I said, we are not a political show. We are not a necessarily a healthcare and science show. So we won’t go any further than that.

But hey, it feels good, Pat, to at least put out that positive message. You and I want to get back to traveling and getting back to traveling will happen way better, way faster, and more safely if, and when, everyone or most people at least are vaccinated. We’ve got a great show this week. So much news going on in tech. We’re going to be talking about Google. We’re going to be talking about Marvell and Video Plus. In the trucking and autonomous space, we’re talking about Qualcomm and a big story that broke today. And then we’re going to go back in time a little bit and talk about the big update that Intel had that unfortunately earnings palooza did not allow us to get to last week.

And in just a minute, I will kick off the first topic to you, but I can’t kick off this topic to you just yet, because I have to do the disclaimer thing. So let me clear my throat and do this. Just in case everybody out there has not heard this before, this show is for information and entertainment purposes only. And while we will be talking about publicly traded companies, please do not take anything that Patrick or I say as investment advice. Okay. We’ve cleared that slate. Do not buy stock because of anything we say. We are giving you our perspective because at the 65, that’s what we’re all about. We’re all about a little bit of news, a lot of analysis, what has happened, but more importantly, what does it mean?

And the first story is one that I know you and I are chomping at the bit to talk about, but because we try to share the puck in this show, I’m going to let you talk first. Alphabet Google broke some news, new Pixel 6 coming out, and they are going to go on the route of following Apple and making their own chips. What’s going on, Pat?

Patrick Moorhead: So I think a little bit of background before we dive into it. So from a market share perspective in the US, Google Pixel has between 1% and 2% market share, depending on what service you look at. So they really are a very small player out there. When you look at Apple at around 50%, Samsung. There is a chance though with LG exiting the market at around three to 4% market share that they could get a jump on this, but what Google is doing jives with what we’re seeing a lot of companies do, that they want to have their own special sauce.

And in this case, tensor stands for essentially the AI capabilities, the inference capability. And you might be thinking, well, the company has absolutely no experience in chips that they actually do. And Daniel, you wrote a really good article up on MarketWatch kind of going through it. But we really have to ask the question, hey, one or 2% market share, and maybe it’s a half percent or lower globally.

Does it really warrant some type of custom processor, even if the only custom part is the tensor piece? I do believe that Samsung did the integration on this. And if there’s likely an [inaudible] CPU and likely… I mean, I’d be surprised that they picked anybody else, but Qualcomm for the modem, but we’ll see because Samsung hasn’t actually shipped a millimeter wave capability. But you know, I can’t necessarily fault just out of default. Ooh, wow. Fall out of default, Google for doing something like this, because whether it’s Microsoft, whether it’s Sony, whether it’s AWS or Apple, but we have seen companies that don’t necessarily want to invest a whole lot. Even [inaudible] said it was going to be doing all these custom types of things. And that fizzled out. LG said they wanted to go custom and they ended up just abandoning me the entire space.

Right now, this looks to me as a serious Hail Mary. Hey, it’s what Apple is doing. Let’s throw the long ball. I could see if they bring this processor to their smart home products, that would make sense, right? A really giant tensor processor on the edge. But aside from that, it first strikes me as a money pit.

Daniel Newman: Yeah. Great analysis, Pat. look, I was super skeptical and bearish on this. First of all, when you have less than 2% of US market share in less than 1% of global market share. It seems like it’s either a massive risk or like you suggested, just a pure Hail Mary. A lot of the commentary read in a Wired piece about this. The commentary was the executive at Google was more or less that they didn’t feel that off the shelf enabled them to do the things that they wanted to do.

And I kind of said to myself, okay, great concept, but for who? Because who’s using these devices, I’ve never met anyone using a Pixel. That’s actually a true story. And so Google of course is a company that wants to win in any and every category that it competes. And maybe like I said, at this point, working off the shelf, typically by the way being a little bit of a laggard with its processors and its flagship devices has not been able to grab the market share, has not been very successful.

I do think there is a bit of a leapfrogging attempt with Apple in the sense that with Bionic and Google wants to say, “They can do it, we can do it.” I would say it to the positive for Alphabet and Google is I do believe their AI cores are very capable. And in fact, what most people don’t realize, like you said, is they’ve been doing this in the data center, and they’ve actually been using cores in their phones up to this point, but nothing has actually been better than what has been available off the shelf, certainly available off the shelf from Qualcomm and Snapdragon.

Last point I’ll make here, really feel like the big mistake that is speculatively out there because we don’t know for sure, but there are rumors on the street that they’re going to abandon the Qualcomm 5G RF modem system, which with millimeter wave is an incredibly complex technology, both to develop and also to certify with carriers around the globe. Again, if no one’s using your phone, I guess that doesn’t actually matter that much. But if you want people to buy and use your phone, you want it to be certified on all the majors.

So whether that’s T-Mobile, Verizon, AT&T, or Orange, whatever you’re using and wherever you’re using, it has to work. Going away there, it’s kind of like, why would you do it all at once? Like I kind of understood using cores, like you have great image sensing, maybe you have great training for AI, natural language processing. Start implementing your cores. Apple did this really well, but I’ll leave it at this. Even Apple knew its limitations. And it said, you know what? We’ll stick with Qualcomm a little bit longer. We know they’ve got that part of it right. We’ll build around Bionic. We’ll use Qualcomm and it’s not like it’s a permanent arrangement, but they didn’t do it until they were ready. And so even with M1 and all the work they did, Apple has done a pretty good job of making sure they’ve been ready. And that period of time where people can really crap on their product was very short and they made the fixes very quickly.

All right. We got to keep moving here. That’s a great topic. Could have talked about it for at least another minute. So Pat, the other day, you and I did a quick 65 insider edition, had some executives join us from Marvell to share a breaking piece of news that happened early… Was it Wednesday morning? I’m just checking my timeline. So Marvell made the announcement for a net some of about $955 million that it was going to be acquiring Innovium.

Now this by no means, Pat, is a name that everybody knows, but when it comes to switching for cloud-scale fast switching, there’s a couple of different types of switching, but this is an area that Marvell hasn’t historically been able to play in that Broadcom in its Tomahawk series chip has been by far, I believe, it’s north of 50% of market share that you know they’ve had. And so, this is in this 50G series. Innovium has a nice and growing percentage of the market. They’re saying in the next year, this could be about $150 million in revenue. And now I do want to clarify this, people that read the release and asked me some questions about this thought there was $150 million. The way Marvell is looking at this is through synergy and through growth momentum. You’ve got a company that’s fast growing with Marvell could reach $150 million in revenue in the next year. There’s feature-rich switch and then there’s this cloud-scale switch space, and this is going to make Marvell. It’s going to enhance this INFI, the $10 billion INFI investment, with what they’re doing with optics and light. Again, check out the podcast. It’s in the show notes because we had two of the most senior executives, including Chris Koopmans, president of Marvell, join us to talk all about this.

But really interesting, Pat, what they’re doing. Getting in with Tier 1 cloud customers, taking advantage of the data center market scale, and Marvell has just been on fire. I don’t know what else to say. I’ve quietly watched their stock price roar up. A lot of very good moves. Matt Murphy joined us at that Six Five Summit. Had a great chance to talk to him about his vision. Company’s being very strategic, both inorganically and organically, to grow, diversify, making great partnerships.

This was a really good move in a very specific area that was clearly needed. It was something that the market asked about after the INFI acquisition, and without waiting very long, they bought the number two. And I’m sure Broadcom is nervous that with this acquisition, Innovium is going to be a much bigger threat to them because they’re going to have all of the resources of Marvell at their disposal.

Patrick Moorhead: Yeah. Listen, whenever a market doesn’t have three serious players, then there’s an issue, and Innovium does. It’s really split between, not evenly, but about 30% Innovium, the rest Broadcom. I talk to a lot of customers and they respect Broadcom but they don’t like Broadcom and they want more, they want more competition.

Just to do a top view of what the architecture looks like, let me nerd out just a little bit. So as we see here, we’ve got the full array of, I’ll call it classic Marvell, Innovium and INFI, with the ability to play in the core switch, spine switch and the TOR, the top of rack switch. And you’ve got this cool little chip here, coherent ESP, in this fiber connector which basically connects everything at light speed. Marvell has been very successful in lower speed copper. Now they have high speed copper and high speed photonics, really winding out or rounding out the offering.

And I looked up their stock five years ago. They’re up 435%. And by the way, five years ago, they were really known as a mixed kind of consumer-play, hard drive controller, right? It was Marvell, right? We all knew Marvell. They jettisoned their consumer stuff with the exception, of course, for hard drive controllers that would go into a PC, and then they made a bunch of acquisitions and this is yet another. I would call this more of a tuck-in acquisition than anything else, but hats off and congratulations to everybody there.

By the way, some of the investors in Innovium look really smart. Strategic investors were Qualcomm ventures and Xilinx, right? That makes a ton of sense so congrats to them, and also Capricorn was in there as well. Dipender Saluja, and he was an early investor in Innovium, so Dipender, congratulations. Two outs in, I guess, six months.

Daniel Newman: That’s when you’re doing it right, Pat. And the people that get behind these companies early and have the vision, the gall and the resources to play in this space will certainly be rewarded handsomely in this era we are in of cloud scale. The scale of money is outrageous but, wow, very exciting, very solid for Marvell. The story keeps getting better. Pat.

Patrick Moorhead: Well, we have some fans. We’ve had Patrick Pico Moorhead. We had Dana Reeves, and now we have Katelyn. Hello, Katelyn. How are you?

Daniel Newman: Yeah, and for everyone out there, we do our show live so if you’re listening to us on Spotify right now and you’re like, “Why are they talking to people?” Well, we like to do the kind of open thing where people can jump in and occasionally we answer questions. Sometimes we just ignore them because if we decide your question is too confrontational, but I just tell you to tweet it @Patrickmoorhead.

All right, so I got to keep moving though. Let’s talk about NVIDIA, Pat, so give the latest one over to you but their Base Command goes GA.

Patrick Moorhead: Think of Base Command as a way to get into a DGX SuperPOD without you having to roll it in to your own premises and not having to wait for, let’s say, one of the Tier 1 CSPs who likely won’t take the exact architecture of the DGX SuperPOD. So essentially it is a managed offering right now through Equinix and this sucker went GA. They have partners here. They have NetApp as a partner. I already talked about Equinix, and also Weights & Biases who, I guarantee you, you’ve probably never heard of, but they’re a leading provider of machine learning development tools out there for ML ops.

Because it’s one thing just to stick a GPU in a server and put it out there and call it a day, but with Base Command you have a full end-to-end develop an environment. And whether that’s for NLP autonomous vehicles, you can swipe a credit card… Actually, I don’t know if you can actually swipe a credit card, but you can go and get this service. And it is, to me, and NVIDIA is not going to say this, is this is an offering to keep multiple people in check.

On the OEM side who aren’t doing DGX SuperPODS, and on the cloud side, the AWS, the Azure and the GCP, this is a time to market play, but DGX is a real business. And I like that they’re doing as-a-service and, as you know, Daniel, a lot of the traditional on-prem folks like Dell are also partnering with Equinix for their as-a-service capabilities.

Daniel Newman: Yeah, I believe GreenLake also is doing a service through HPE so, yeah, Equinix is finding its footing in terms of taking advantage of co-location to offer private cloud at scale. Very interesting, of course. The whole announcement, Pat, you hit it. This isn’t one that probably takes a ton more effort. They did have some really good early customer wins. Adobe, for instance, is using it to accelerate their data science.

And look, all kinds of these advanced computing capabilities being put in the cloud just makes a lot of sense. We’re seeing the way AWS and Azure have taken Quantum and put it in the cloud. Simulation, you’re going to see this with HVC. How do you democratize advanced compute capabilities and make them available to people on a subscription basis and a consumption platform and manner? Makes a lot of sense. It’s going to bring a lot more enterprises into the fray. Once these enterprises understand the power, the capabilities, they either scale up and spend a lot of money on these services through consumption, or they become customers and they buy these machines and they actually take the whole service on and bring the whole thing in-house. Either way-

Patrick Moorhead: Well, they want a discount, too. I mean, it starts at $90,000 for a three-month commitment. That’s a deal for a DGX SuperPOD.

Daniel Newman: Yeah, we’ll go in and split it. We’ll figure out how to grow my hair back. All right, so let’s keep moving, buddy. Good chat, good topic here. Plus, it used to be Plus AV or Plus AVI, sorry, Plus Autonomous Vehicles, Plus AI, now just Plus. And by the way, NASDAQ traded under HCIC, Hennessy Capital Investment Corp. They’re a SPAC. I know that was a thing and now it wasn’t, but this is and this is still in the process of doing the reverse merger, going public. Very interesting company focused in on the driverless semi-truck space. Had some news this week. By the way, user of NVIDIA DRIVE, part of their stack.

So the company basically came out with a Level 4 driverless truck demonstration. The news itself was basically, “Hey, we’re doing this. We’re going to show you we’re doing it. We’re doing it safely.” They’re able to come out and start to talk with suppliers, their fleet, being able to show that this is something that is ready for prime time. And, you know, Pat, I think what really caught my attention about this news, which by the way, I believe this was in China, right?

Patrick Moorhead: Exactly right.

Daniel Newman: This took place in China where, unlike in America where they’re doing a lot more retrofitting of existing trucks, I believe the technology has to be built into new. That’s the only way it’s going to be allowed in the Chinese market. I’m not saying that for a hard fact so we’ll have to validate that, but I believe they’re not doing the retro. But Level 4 is a big deal. We’ve heard about Ubers, we’ve heard about the issues. We’ve heard about Tesla, people that have decided to not drive and the amount of risks that are being created.

Plus is really moving quickly in a big industry that provides a really large opportunity here, and they’re doing it with some success and they’ve been able to actually go on video, publish something. This isn’t Nikola rolling a truck down a hill. This is on a real road with a real demonstration of a successful semi on a traffic-driven road. No special conditions, successfully doing its thing, Pat. Like I said, not a ton of news here. Really interesting showing just how far this is coming and, by the way, new entrants like Plus that are paving the way, that are in this space, like I said, with partners like NVIDIA.

Patrick Moorhead: Can you look at L1 to L5. Right? There’s two different ways that companies are approaching this: Some companies are going the L1, and then building up; and others are going straight up to L4, L5, and then trying to build back. And I think this is particularly important to Plus, because a lot of Plus’s detractors are saying, “Oh, you guys are successful on ADAS. That’s because you can’t do L4.” Well here we are. We have Plus showing a driverless, no tele operator, and no human intervention, on a highway in China, and I do think this is a huge milestone for the company.

So I talked to the folks there and they still stand behind an advantage that they have, in that it’s going to be hard to get to a safe truck, autonomous truck, without eight billion miles of road experience. And this is an area that … You know? It’s an advantage that Plus has on their competitors, but I do honestly believe that this is important. And this is a reason, just one reason, Daniel, you and I had covered this before, Amazon has the option to buy 25% of the company through a warrant structure, and committed to buy 1,000 units of Plus Drive that isn’t the L4, but it’s an L2-plus, or L2-advanced type of scenario. I feel good that they’re leveraging. From a hardware and platform perspective, they’re leveraging Nvidia. That gives me a good feeling because I feel like NVIDIA’s in this for the absolute long haul, and are all in on this. But just rounding out, they haven’t done the SPAC merger yet with Hennessy, but it is coming and they’re very soon to making this happen.

Congrats to the folks at Plus. It’s pretty awesome.

Daniel Newman: Yeah. It’s a positive for Plus, Pat. Good partnerships; technology, we mentioned a couple of times in video; good strategic partnerships. Amazon’s a great partner to have on your side. Clearly a thousand trucks is just the beginning of what Amazon could do so, yeah, let’s give some props where props are due.

And speaking of autonomous, and ADAS, and what is going on here, let’s talk about Qualcomm today, Pat.

Patrick Moorhead: Yeah.

Daniel Newman: So Qualcomm, they came out and made an unsolicited bid, 4.6 billion, 4.1 net, of debt for Veoneer. This was a kind of out-of-the-blue surprise to the market this morning, a letter that came out at, I believe it was about 8:00 AM Central Time, I think 6:00 AM Pacific, a $37 a share, all-cash transaction. But the fact is, is making an acquisition attempt isn’t in itself what was interesting. What’s most interesting about this was there’s a Canadian-based tier 1 automotive supplier named Magna, publicly trading under the ticker “MGA,” that had successfully made an offer. I think it was at $31 a share, I believe was the number, but don’t hold me to that, and we’re supposed to be acquiring Veoneer. So Qualcomm came right in, right underneath this Magna acquisition and said, “Hold up. We would like you to consider allowing us to acquire your company.”

And so what it really comes down to is this, is Qualcomm at this point has a very comprehensive set of automotive capabilities. The business is around a quarter of a billion a quarter right now, in its most recent quarter, but it just recently had seen 83%, I believe, growth in the last quarter. And you’ve heard a multi-billion dollar pipeline that has been talked about from Cristiano Amon, now CEO, but he’s been very passionate about this for a long time. If you know the Qualcomm portfolio, it’s been more historically infotainment, telematics, and instrument cluster. What they haven’t been able to really bring to market has been that full autonomous driver assistance system, or ADAS, that is really taking the market by storm.

This is what Tesla’s doing. They’re building their whole stack of Infotainment to ADAS. That’s made them very competitive. And this is what the market, the more general automotive manufacturers and suppliers, want to be able to offer. They want to be able to compete.

Well, Qualcomm believes it is in a better position than a traditional tier 1 supplier to build, scale, work in the design pipeline, and deliver this full set of systems. So they came in at an 18% premium over Magna, made an offer. We don’t know yet for sure if this deal is going to be accepted; it’s looking very promising that it could go Qualcomm’s way. And if it does, it’s instantaneously put Qualcomm on the map in a much more expansive condition to compete, like I said, with Tesla and, of course, with Mobileye, with what is being done at Intel, and makes them more competitive with Nvidia because Nvidia tends to be more focused on the instrument cluster and infotainment side of the business.

It’s going to be a very important acquisition that scales their TAM. It makes Qualcomm much more relevant. Pat, I’m sure you’ve got a lot to add here. But very impressive, very aggressive move. Going to be very interesting. I haven’t heard what Magna has to say about this. They must be very unhappy with this. But for Cristiano, bold move. I think I said, what a showing of your ambition in the automotive space to come in, make a move like this, take a company that has interesting technology, not necessarily a household name, put it under your name, where you already have a multi-billion dollar design pipeline, and say, “We’re going to expand the TAM, we’re going to expand what we can do, and we’re going to make it available to all the automotive providers. Pat, nothing left for you. Sorry. Let’s keep going.

Patrick Moorhead: I don’t know. No. I don’t think Magna is very happy. And it’s so funny, I always want to call them “Magnum,” but I don’t. And yeah, Magna can’t be too happy. And Daniel, Qualcomm has quietly been rolling out their ADAS offerings. In fact, they’ve got a deal, a commitment, with General Motors, one of the largest automakers on the planet. And what they were doing from a software perspective is they were partnering with Veoneer. And what they were using is they were using a Veoneer offshoot called Arriver. So there’s already a strategic alignment between Qualcomm and Veoneer already. And let me put up a slide real quick of how, Veoneer, how many cars they’re in. And as you can see, it’s crossed US, Europe, Japan, and China, but they have a very big backlog. They are a public company as well, and out of Sweden, I believe. I had never … Well, I had heard of them. I’d written about them up until now, but very few people actually talk about the company.

But this is a better deal, like you said. The strategic alignment makes a whole lot of sense. And I don’t have the backstory on exactly what was going on here, and why Qualcomm didn’t make the first move, but they are certainly making the second move with a very sweet deal that’s going to be hard for Veoneer shareholders to say anything but, “Yes.”

Daniel Newman: Yeah, I think they have some great color patent. And I think you made a great point about the existing partnership. Essentially what has been offered in-market or discussed as ADAS from Qualcomm has really been Veoneer.

Patrick Moorhead: Yeah.

Daniel Newman: And you know why this could be so strategic, because this was a work in progress before this ever happened. So we’ll have to come back to this but, just a pure guess, does the deal happen?

Patrick Moorhead: The deal happens. It’s less strings. The only thing that isn’t getting a lot of talk, and I don’t know the emotional makeup of the Veoneer board that well, but Qualcomm was very clear in a statement that they were going to take the pieces that they needed for ADAS and sell the rest. So sometimes you have founders who get a little cranky about stuff like that. I’m just throwing it out there. I know nothing. I don’t know the principles there. But I’m sure they’re going to have to contemplate exactly what that means.

Daniel Newman: Yeah. Absolutely, Pat. Great point. So let’s do a retro finish. We haven’t done that in a while. But let’s go back in time a little bit, just over a week ago. About a week and a half ago, Pat Gelsinger came out with a really big set of announcements. Unfortunately it fell right in the middle of this massive wave of earnings, but it was what we call an IDM 2.0 Plus. It was where Pat basically came back. Pat, this has really been sort of a calling of Pat Gelsinger. Since he’s joined as CEO, he’s been very active. The past few CEOs haven’t been talking about the future, and so this talk about the future of process technology by him really went beyond what any company has done in terms of talking about what we are going to be seeing over the next few years.

Patrick Moorhead: Yeah. So there were two main things that were announced here. First of all, new and then some transistor and packaging technology updates. So this is a dirty little secret in the industry is basically that this whole notion of talking about nanometers is a bunch of BS. And listen, I’m guilty. Okay? I’m one of them who was lazy. When TSMC said they were doing five nanometer, I said, “Okay, we’re going to call it five nanometer,” even though there was the actual double click and you’ve got N5 as the TSMC naming, but then you had Samsung who had a six nanometer process that once they realized what the characteristics were and they saw what TSMC was calling theirs, they called it five nanometers. So pretty much everybody in the know knows that transistor gate length as a nanometer likely died seven to eight years ago. The ability to look under a microscope and actually measure… And by the way, if you’re talking about multiple billions of transistors, what percentage of those transistors were actually in nanometers? So NET, Intel, and I wish they had done this years ago and I may have had some executive conversations years ago with Intel trying to get them to do that. But what they essentially did is they realigned all of their nodes with what I consider more of an industry normal.

So if you’ve got an N7 or an N3, you have Intel seven and Intel three. So it makes sense to me. And if I look at the performance, the density of those, they pass my smell test and then like others, when I first saw that the Intel 20A, A is for Angstrom, I was like, “Oh my gosh, we’re going back to nanometer.” Then I thought, “Well, what would be better, like Intel 1.8?” And that didn’t make any sense. So I understand why Intel got here. I’m glad where they arrived, and now I don’t have to explain to anybody anymore that, “Hey, Intel 10 nanometer is kind of like TSMC seven nanometers, which they call N7. I am for this day forward, or I guess two weeks forward, I will no longer refer to TSMC or Samsung as nanometers.

And if I do it’ll have air quotes around them because it just isn’t reality. And then again, I was part of the problem. Okay. I was lazy, even though I had to explain it differently. So the second part of this, or I think some pretty big breakthroughs in regards to process technology and transistor innovation. So RibbonFET… The rest of the industry refers to Gate-All-Around. IBM refers to it as ribbon something. My apologies. Then you’ve got PowerVia which essentially… By the way, what it allows you to do is jam more power down the pipe and have better connectivity, PowerVia puts power on both sides of the gate to, again, to be able to have better power management, higher drive current at all voltages and hence a higher performance of pulse power from the backside, as opposed to all coming from the top side. And then Foveros.

So Foveros is 3D packaging, it’s logic and logic. And essentially what that means is its memory on top of CPU. It is CPU’s on top of GPU’s. GPU’s sleeping with CPU’s and not being in a monolithic dye. And what Intel did is they brought a higher performance and a lower cost version out, which I was completely expecting was a response to what AMD showed, maybe, but I knew this was coming, wasn’t expected. They’re definitely not following AMD in regards to 3D packaging. I believe Intel was actually leading the industry in this space, TSMC and AMD, if you want to educate me on this and tell me why that’s not the case, you know where to find me out there. So big picture, I felt more confidence in what Intel was doing not only for their own products, but also for IFS and the Foundry, because if you have customers like Qualcomm and like AWS who are both announced on here with very little details, you don’t as a customer want to be explaining to your end users that, “Okay, I’m using Intel 10 nanometer, which is actually like TSMC seven nanometer.

Daniel Newman: And that’s a wrap. No, I’m just kidding. I’ll really quickly interject there Pat, because you really did give a lot of color. Did you admit to being part of the problem publicly?

Patrick Moorhead: Yes. Yes, I did.

Daniel Newman: Yeah. I mean, I think-

Patrick Moorhead: I never called him on it, to be honest with you. I thought when I saw the quote from TSMC’s Godfrey Chang, from TSMC, who I’ve known for 20 years. TSMC would just stop calling it nanometer or they didn’t. They kept using nanometer.

Daniel Newman: So Intel enters, afraid, does it their way. And now you’ve got seven and four and three, and it’s Intel seven, Intel four, Intel three. And everybody’s going to skip off of the traditional nanometer approach and they’re going to now just focus on what kind of packaging, what kind of power consumption. I guess I look at it as a whole plan and I just think to myself, “Probably shouldn’t have done this a long time ago.” The market is better for it. The average person that’s still pining about it, doesn’t actually know what it means. The people that do know what it means, can’t actually communicate in a way that the market would understand anyway, because they’re talking at way too high of a level. This stuff is complex. The engineering that goes behind it is incredible.

Intel is doing things and Pat is showing their route to leadership. The fact of the matter is that when TSMC talks about five, everybody assumed nanometer, that’s already been accepted. There’s no going back from that at this point.

Patrick Moorhead: I don’t know, man. I don’t know. I think-

Daniel Newman: Hold on. You got yours done. Give me a second here. But no, I’m being sincere though. Pat, I think you could be an influencer as could I, but I’m just saying that sometimes when the ship is adrift, because I can’t tell you how many times I’ve gone on TV, whether it’s been on CNBC, whether it’s been on Bloomberg, whether it’s been articles you and I write on our different plastforms. And I have made the very comment that, “Hey, Intel’s 10 nanometer plus and TSMC seven are similar.” But the fact of the matter is that the people that are buying it are thinking the lower, the better. It’s ahead of Intel.

And that just really wasn’t the case. Now, was it, they were some months apart. Yeah, but they made it seem like years. They made months seem like years through the nomenclature, through that numbering scheme. And I just don’t know if we can reverse course there, but I do like the fact that Intel is going to play the game, they’ve got a long-term roadmap. Pat’s very positive. And by the way, if they don’t win the leading edge, they’re going to be manufacturing the chips for everybody because there definitely are figuring out how to play that game with the Foundry Services.

Patrick Moorhead: Yeah. And sorry to jump on it there.

Daniel Newman: No, it’s good.

Patrick Moorhead: But I’ve actually reached out to some of the leading tech editors in Americas, in Western Europe and kind of having this discussion, “Hey, are you going to keep using this?” And I’m going to put some scrutiny out there. I think we need to change this. It’s the truth, and I do think it’ll stick in Asia for various reasons. But TSM has a thing called N5, right? But the problem is on their website, it says it’s five nanometer, which is not. TSMC, if you want to prove me wrong, you can. But it’s just not. So I’m going to shake the tree for a while on this. Daniel, why? I don’t actually know why, because I just feel like it. And it’s the truth.

Daniel Newman: Absolutely. Absolutely. Well, listen, it’s good to talk about. It’s going to be something that we’re going to continue to talk about, but we’re not going to talk about anymore because our six five just went eight five, because that’s what we do. But this episode, great chatting. Google, Marvell and Video Plus, Qualcomm, Intel, and so much more. You like what you hear, hit that subscribe button. You can always check us out on Spotify, on Apple, on YouTube and on so many more channels. If you don’t like what you hear, remember it’s @patrickmoorhead. If you got compliments though, @danielnewmanuv is the place to let those be heard. We appreciate you sharing with friends. Stick with our community. Come on back for more episodes of the Six Five Podcast. We love all of you.

Patrick Moorhead: Take care, everybody.

Daniel Newman: See you later.

About the Author

Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio