The Six Five team discusses the world’s first 2 Nanometer Chip technology release from IBM.
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Daniel Newman: IBM, we’ve got a couple pieces of news on IBM this week. Quietly, IBM is a very big influencer in the semiconductor space. People don’t always notice that, because it isn’t one of the common names, the Intel, AMD, Nvidia, Qualcomm’s that tend to get called out a lot. But from a research standpoint, the company’s been doing some really interesting things, they had a pretty big breakthrough this week. Pat, I’ll let you start that one out.
Patrick Moorhead: Yeah, so IBM is a huge player in semiconductors, they license their IP to both Intel and Samsung and likely some other unnamed people who want that to be confidential. When I was at AMD, we were licensing a ton of IP from IBM when we had our own Fab’s. This big announcement was the first two nanometer, nano sheet device that was announced. So first of all, for those who aren’t chiplicious people, and don’t love chippery. Essentially the smaller the geometry, or the nanometer, the lower the power, or the higher the performance, you pick one or the other, or a combination both is what you get. So you want your smartphone to last longer? Go to two nanometer. You want to have higher performance at the same wattage? You go a lower nanometer that goes on there, it’s been tested down to one nanometer so far. But these devices are two nanometers. So two big impacts here, first is that IBM will be able to license this technology to both Samsung and Intel, and others who wish to be not named. Secondly, they can use them in their own products, their Power, and also Z. But it’s very cool, IBM is talking about 45% higher performance, as I said. Or 75% lower energy use, than compared to the current seven nanometer mode. So pretty awesome stuff.
Daniel Newman: This is a really interesting one for me Pat. We’ve been watching this industry very close. Just a few weeks ago, Intel made some announcements at their Idea of Two event. One of their four big announcements was about the partnership the company has with IBM Research. Which by the way kind of was quiet, because when you talk about building new foundry service, new fabs, major investments. Sometimes those parts of the announcements can go under the radar. Let’s not forget to share with the market, IBM had some very leading edge type of breakthroughs with seven and five. Was very early to the game there, people like I said don’t remember that, because we think about TSM at the leading edge mostly. Already talking about three nanometer, we think about what Intel is doing.
The other thing Pat that is really interesting. And I think warrants some discussion, I’d love to get your take on this because we haven’t actually talked about it yet. How IBM monetizes and commercializes these breakthroughs. Up to this point, of course IBM has their Z mainframes, it has power, some of their compute that they run on their Linux kernel that they use their chips for. But largely, IBM has not really been front and center in terms of taking this technology and scaling it to market, putting it in foundries, having it used in a lot of different designs or having at least notoriety for its use in a lot of different designs. Do you think this two nanometer breakthrough is an opportunity? Whether it’s on the mobile side, or with someone like a Samsung. A partnership, whether it’s with Intel, to commercialize and further help the market see a growth opportunity for IBM, for its semiconductor success research, and it’s ability to get to market early in terms of the research and development side?
Patrick Moorhead: Yeah, Daniel they’ve been doing this for 25 years, it’s just been under the radar. It made a lot more sense when they had their own fabs. They actually technically do have a test fab still for some of the photonic stuff. They’ve been doing this forever. It’s super high margin, I don’t think it’s revenue that would essentially swing anybody around the room. But I’m continually amazed at how ahead of the curve they are. Really the Intel announcement was breakthrough Daniel, because Intel for 25 years did it alone. It’s nice to see them working with IBM, and I think what we saw in terms of overall Intel IBM 2.0, Intel realizes it can’t go at it alone. It needs more fab partners, it needs more tech partners to make that happen. I don’t see that as a weakness, I see that as a pragmatic, good decision.
Daniel Newman: Yeah, I feel completely the same way. I think it’s just an opportunity. IBM breaks through on a lot of technologies, it doesn’t always commercialize them as well as they could. You could think about Quantum, you can think about Watson, and think about now all of the leading leadership that it’s had in chips over the years. Is there a different go to market approach? Especially now that they’re spinning off Kindrell, their IT Managed Services, and focusing more of course on the hybrid cloud business. But this is a huge business opportunity, and to be at the leading edge, and to be early with these technologies, there’s a possible bigger monetization opportunity that probably warrants some thought. I’m sure IBM is doing it, it’s a massive company, I’m sure they’re looking at this and thinking about it. It would be remiss of us as analysts to not at least look at the opportunity and say, “Hey, could IBM take this to market in a way where they A, get more credit, and B, drive more revenue beyond what they’re doing in their current business today.” But we’re not going to answer that today.
Patrick Moorhead: Sounds like a great analyst project, Daniel.
Daniel Newman: Yes, it sounds like an opportunity. Anybody that might want to talk more about this, and happens to listen to this cast, maybe they should reach out to us. Maybe we should have one of the execs on the show, on our insider edition.