New Year’s Foreboding

By Michael Feldman

January 7, 2009

As is usual for the supercomputing world in early January, news is hard to come by. With so many academics in the community, a lot of HPC practitioners are still on their extended winter breaks. As for commercial HPC companies, they may not be so eager to return to work to confront the new economic realities they’ll be facing in 2009.

With the recession in full swing, the most likely news for HPC vendors may be bad news. Layoffs, mergers and other forms of retrenchment may end up being standard operating procedure for these organizations in 2009. Even though HPC-related businesses are expected to be spared the worst of the recession, that doesn’t mean there won’t be consequences. In fact, some of the effects of the downturn are already in evidence.

At the end of 2008, Cray executed a Goodwill write-down of about $55.4 million because the company’s stock price fell below its net assets. Even though Cray was able to book $100 million in Q4 as a result of the official acceptance of the new Jaguar petaflop system by Oak Ridge National Lab, the non-cash write-down meant that the company still suffered a net loss for 2008.

Cray’s stock was not the only one tanking. Practically every public IT company with (or without) an HPC stake rode the steep market decline that began in September last year. By the end of 2008, stocks of IBM, HP, Sun Microsystems, SGI Dell, Microsoft, Mellanox, Voltaire and ANSYS reflected the general market sell-off that occurred in the fourth quarter; most losing one-third of their value or more.

Stocks of chipmakers Intel, AMD, NVIDIA and Xilinx followed a similar pattern. The semiconductor industry, in general, is in for a rough ride this year. According to BusinessWeek, the global semiconductor industry is going to be hit hard by reduced demand for chips worldwide, just as production capacity is peaking.

The extent of the recession’s effect on the HPC market is going to be the big question in 2009. A lot depends on how governments around the world react to the financial turmoil. Pumping up R&D and industrial users of HPC would help maintain demand, but with so many sectors in trouble, even all the government stimulus packages being considered in the big industrialized nations will be unable to cover everyone.

In particular, the financial services sector is likely to consolidate, regardless of bailouts or stimulus spending, although this may not translate into reduced HPC spending. According to a recent survey of IT professionals at tier-one banks, HPC investments will grow in 2009. This probably reflects the view that IT spending, in general, makes sense in practically all economic climates, since it helps increase worker productivity. In good times this translates into larger revenues; in bad times it means workers can be replaced with technology.

Other major HPC sectors should be able to weather the economic downturn fairly well, too. Flush with cash, oil and gas companies are not in any immediate trouble, although the lower demand (and prices) for hydrocarbon fuels will inhibit some seismic exploration ventures, at least in the near term. Likewise, biotech companies that have plenty of cash on hand should also be able navigate through the recession, although startups may starve for funds because of the lack of investor capital and the tight credit market.

Where governments can help most is getting the overall economy back on track and making some key investments. In the U.S., President-Elect’s Obama’s plans for a government stimulus package are still being drawn up this month. More than half of the nearly $800 billion proposed will go towards tax relief, which will do little to spur computing demand. But the remainder is to be spent on programs, including infrastructure build-out and energy research and development — both of which could entail new HPC activity, albeit not immediately.

Obama and the Democratic Congress are also likely to fulfill their commitment to double federal funding of basic research over 10 years and make the R&D tax credit for corporations permanent. Since this entails only a few billion dollars per year, there probably won’t be a lot of opposition to this type of spending, especially when seen against a backdrop of trillion dollar per year deficit spending.

The real problem is at the state level, where, according to the Center on Policy and Budget Priorities, the cumulative budget shortfall will be $89 billion in 2009, ballooning to $145 billion in 2010 and $180 billion in 2011. If the stimulus package doesn’t cover shortfalls at the state level and the feds don’t step in with extra money, university and other state-sponsored R&D funding could face severe cutbacks. The governor of Wyoming has already made up a $1 billion wish list for Obama to rescue his state’s projects, including $50 million for a supercomputer at the University of Wyoming. Other states are sure to start lining up for federal funds.

HPC users are understandably wary. In a poll taken by Douglas Eadline at Linux Magazine in December, 40 percent of the 42 respondents said the economic downturn would not effect their HPC budget plans for 2009. Eadline suggests those are pretty good numbers, considering the rest of the IT industry appears to be headed for a more severe downturn. John West, at insideHPC, adds his two cents on the topic, noting that HPC use is precariously balanced on the backs of the HPC providers:

HPC vendors are experiencing economic disruptions because razor thin margins and little access to working capital mean they are hypersensitive to even small changes in the market. But they could stabilize where they are now and slowly return back to the “critical, but stable” state they’ve declined into over the past decade. However, if the disruption pushes into the HPC provider community — the labs and departments that provide HPC cycles and expertise to users — and we see a large scale reduction in employment and acquisition, then I think we’ll be in for a wholesale restructuring of the HPC market.

The open question is whether the downturn will be resolved in the next four quarters. Because of the long intervals between budget planning, procurement and deployment, it’s quite possible that any trouble exposed in 2009 will only be a prelude to deeper problems in 2010 and beyond. But if the recession is basically over by the end of this year, the hangover should be relatively mild. Otherwise, HPC growth is likely to take a much lower trajectory for the foreseeable future.

Subscribe to HPCwire's Weekly Update!

Be the most informed person in the room! Stay ahead of the tech trends with industry updates delivered to you every week!

MLPerf Inference 4.0 Results Showcase GenAI; Nvidia Still Dominates

March 28, 2024

There were no startling surprises in the latest MLPerf Inference benchmark (4.0) results released yesterday. Two new workloads — Llama 2 and Stable Diffusion XL — were added to the benchmark suite as MLPerf continues Read more…

Q&A with Nvidia’s Chief of DGX Systems on the DGX-GB200 Rack-scale System

March 27, 2024

Pictures of Nvidia's new flagship mega-server, the DGX GB200, on the GTC show floor got favorable reactions on social media for the sheer amount of computing power it brings to artificial intelligence.  Nvidia's DGX Read more…

Call for Participation in Workshop on Potential NSF CISE Quantum Initiative

March 26, 2024

Editor’s Note: Next month there will be a workshop to discuss what a quantum initiative led by NSF’s Computer, Information Science and Engineering (CISE) directorate could entail. The details are posted below in a Ca Read more…

Waseda U. Researchers Reports New Quantum Algorithm for Speeding Optimization

March 25, 2024

Optimization problems cover a wide range of applications and are often cited as good candidates for quantum computing. However, the execution time for constrained combinatorial optimization applications on quantum device Read more…

NVLink: Faster Interconnects and Switches to Help Relieve Data Bottlenecks

March 25, 2024

Nvidia’s new Blackwell architecture may have stolen the show this week at the GPU Technology Conference in San Jose, California. But an emerging bottleneck at the network layer threatens to make bigger and brawnier pro Read more…

Who is David Blackwell?

March 22, 2024

During GTC24, co-founder and president of NVIDIA Jensen Huang unveiled the Blackwell GPU. This GPU itself is heavily optimized for AI work, boasting 192GB of HBM3E memory as well as the the ability to train 1 trillion pa Read more…

MLPerf Inference 4.0 Results Showcase GenAI; Nvidia Still Dominates

March 28, 2024

There were no startling surprises in the latest MLPerf Inference benchmark (4.0) results released yesterday. Two new workloads — Llama 2 and Stable Diffusion Read more…

Q&A with Nvidia’s Chief of DGX Systems on the DGX-GB200 Rack-scale System

March 27, 2024

Pictures of Nvidia's new flagship mega-server, the DGX GB200, on the GTC show floor got favorable reactions on social media for the sheer amount of computing po Read more…

NVLink: Faster Interconnects and Switches to Help Relieve Data Bottlenecks

March 25, 2024

Nvidia’s new Blackwell architecture may have stolen the show this week at the GPU Technology Conference in San Jose, California. But an emerging bottleneck at Read more…

Who is David Blackwell?

March 22, 2024

During GTC24, co-founder and president of NVIDIA Jensen Huang unveiled the Blackwell GPU. This GPU itself is heavily optimized for AI work, boasting 192GB of HB Read more…

Nvidia Looks to Accelerate GenAI Adoption with NIM

March 19, 2024

Today at the GPU Technology Conference, Nvidia launched a new offering aimed at helping customers quickly deploy their generative AI applications in a secure, s Read more…

The Generative AI Future Is Now, Nvidia’s Huang Says

March 19, 2024

We are in the early days of a transformative shift in how business gets done thanks to the advent of generative AI, according to Nvidia CEO and cofounder Jensen Read more…

Nvidia’s New Blackwell GPU Can Train AI Models with Trillions of Parameters

March 18, 2024

Nvidia's latest and fastest GPU, codenamed Blackwell, is here and will underpin the company's AI plans this year. The chip offers performance improvements from Read more…

Nvidia Showcases Quantum Cloud, Expanding Quantum Portfolio at GTC24

March 18, 2024

Nvidia’s barrage of quantum news at GTC24 this week includes new products, signature collaborations, and a new Nvidia Quantum Cloud for quantum developers. Wh Read more…

Alibaba Shuts Down its Quantum Computing Effort

November 30, 2023

In case you missed it, China’s e-commerce giant Alibaba has shut down its quantum computing research effort. It’s not entirely clear what drove the change. Read more…

Nvidia H100: Are 550,000 GPUs Enough for This Year?

August 17, 2023

The GPU Squeeze continues to place a premium on Nvidia H100 GPUs. In a recent Financial Times article, Nvidia reports that it expects to ship 550,000 of its lat Read more…

Shutterstock 1285747942

AMD’s Horsepower-packed MI300X GPU Beats Nvidia’s Upcoming H200

December 7, 2023

AMD and Nvidia are locked in an AI performance battle – much like the gaming GPU performance clash the companies have waged for decades. AMD has claimed it Read more…

DoD Takes a Long View of Quantum Computing

December 19, 2023

Given the large sums tied to expensive weapon systems – think $100-million-plus per F-35 fighter – it’s easy to forget the U.S. Department of Defense is a Read more…

Synopsys Eats Ansys: Does HPC Get Indigestion?

February 8, 2024

Recently, it was announced that Synopsys is buying HPC tool developer Ansys. Started in Pittsburgh, Pa., in 1970 as Swanson Analysis Systems, Inc. (SASI) by John Swanson (and eventually renamed), Ansys serves the CAE (Computer Aided Engineering)/multiphysics engineering simulation market. Read more…

Choosing the Right GPU for LLM Inference and Training

December 11, 2023

Accelerating the training and inference processes of deep learning models is crucial for unleashing their true potential and NVIDIA GPUs have emerged as a game- Read more…

Intel’s Server and PC Chip Development Will Blur After 2025

January 15, 2024

Intel's dealing with much more than chip rivals breathing down its neck; it is simultaneously integrating a bevy of new technologies such as chiplets, artificia Read more…

Baidu Exits Quantum, Closely Following Alibaba’s Earlier Move

January 5, 2024

Reuters reported this week that Baidu, China’s giant e-commerce and services provider, is exiting the quantum computing development arena. Reuters reported � Read more…

Leading Solution Providers

Contributors

Comparing NVIDIA A100 and NVIDIA L40S: Which GPU is Ideal for AI and Graphics-Intensive Workloads?

October 30, 2023

With long lead times for the NVIDIA H100 and A100 GPUs, many organizations are looking at the new NVIDIA L40S GPU, which it’s a new GPU optimized for AI and g Read more…

Shutterstock 1179408610

Google Addresses the Mysteries of Its Hypercomputer 

December 28, 2023

When Google launched its Hypercomputer earlier this month (December 2023), the first reaction was, "Say what?" It turns out that the Hypercomputer is Google's t Read more…

AMD MI3000A

How AMD May Get Across the CUDA Moat

October 5, 2023

When discussing GenAI, the term "GPU" almost always enters the conversation and the topic often moves toward performance and access. Interestingly, the word "GPU" is assumed to mean "Nvidia" products. (As an aside, the popular Nvidia hardware used in GenAI are not technically... Read more…

Shutterstock 1606064203

Meta’s Zuckerberg Puts Its AI Future in the Hands of 600,000 GPUs

January 25, 2024

In under two minutes, Meta's CEO, Mark Zuckerberg, laid out the company's AI plans, which included a plan to build an artificial intelligence system with the eq Read more…

Google Introduces ‘Hypercomputer’ to Its AI Infrastructure

December 11, 2023

Google ran out of monikers to describe its new AI system released on December 7. Supercomputer perhaps wasn't an apt description, so it settled on Hypercomputer Read more…

China Is All In on a RISC-V Future

January 8, 2024

The state of RISC-V in China was discussed in a recent report released by the Jamestown Foundation, a Washington, D.C.-based think tank. The report, entitled "E Read more…

Intel Won’t Have a Xeon Max Chip with New Emerald Rapids CPU

December 14, 2023

As expected, Intel officially announced its 5th generation Xeon server chips codenamed Emerald Rapids at an event in New York City, where the focus was really o Read more…

IBM Quantum Summit: Two New QPUs, Upgraded Qiskit, 10-year Roadmap and More

December 4, 2023

IBM kicks off its annual Quantum Summit today and will announce a broad range of advances including its much-anticipated 1121-qubit Condor QPU, a smaller 133-qu Read more…

  • arrow
  • Click Here for More Headlines
  • arrow
HPCwire