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 industy updates delivered to you every week!

Tribute: Dr. Bob Borchers, 1936-2018

June 21, 2018

Dr. Bob Borchers, a leader in the high performance computing community for decades, passed away peacefully in Maui, Hawaii, on June 7th. His memorial service will be held on June 22nd in Reston, Virginia. Dr. Borchers Read more…

By Ann Redelfs

ISC 2018 Preview from @hpcnotes

June 21, 2018

Prepare for your social media feed to be saturated with #HPC, #ISC18, #Top500, etc. Prepare for your mainstream media to talk about supercomputers (in between the hourly commentary on Brexit, the FIFA World Cup, or US pr Read more…

By Andrew Jones

AMD’s EPYC Road to Redemption in Six Slides

June 21, 2018

A year ago AMD returned to the server market with its EPYC processor line. The earth didn’t tremble but folks took notice. People remember the Opteron fondly but later versions of the Bulldozer line not so much. Fast f Read more…

By John Russell

HPE Extreme Performance Solutions

HPC and AI Convergence is Accelerating New Levels of Intelligence

Data analytics is the most valuable tool in the digital marketplace – so much so that organizations are employing high performance computing (HPC) capabilities to rapidly collect, share, and analyze endless streams of data. Read more…

IBM Accelerated Insights

Preview the World’s Smartest Supercomputer at ISC 2018

Introducing an accelerated IT infrastructure for HPC & AI workloads Read more…

Why Student Cluster Competitions are Better than World Cup

June 21, 2018

My last article about the ISC18 Student Cluster Competition, titled “World Cup is Lame Compared to This Competition”, may have implied that I believe Student Cluster Competitions are better than World Cup soccer in s Read more…

By Dan Olds

ISC 2018 Preview from @hpcnotes

June 21, 2018

Prepare for your social media feed to be saturated with #HPC, #ISC18, #Top500, etc. Prepare for your mainstream media to talk about supercomputers (in between t Read more…

By Andrew Jones

AMD’s EPYC Road to Redemption in Six Slides

June 21, 2018

A year ago AMD returned to the server market with its EPYC processor line. The earth didn’t tremble but folks took notice. People remember the Opteron fondly Read more…

By John Russell

European HPC Summit Week and PRACEdays 2018: Slaying Dragons and SHAPEing Futures One SME at a Time

June 20, 2018

The University of Ljubljana in Slovenia hosted the third annual EHPCSW18 and fifth annual PRACEdays18 events which opened May 29, 2018. The conference was chair Read more…

By Elizabeth Leake (STEM-Trek for HPCwire)

Cray Introduces All Flash Lustre Storage Solution Targeting HPC

June 19, 2018

Citing the rise of IOPS-intensive workflows and more affordable flash technology, Cray today introduced the L300F, a scalable all-flash storage solution whose p Read more…

By John Russell

Sandia to Take Delivery of World’s Largest Arm System

June 18, 2018

While the enterprise remains circumspect on prospects for Arm servers in the datacenter, the leadership HPC community is taking a bolder, brighter view of the x86 server CPU alternative. Amongst current and planned Arm HPC installations – i.e., the innovative Mont-Blanc project, led by Bull/Atos, the 'Isambard’ Cray XC50 going into the University of Bristol, and commitments from both Japan and France among others -- HPE is announcing that it will be supply the United States National Nuclear Security Administration (NNSA) with a 2.3 petaflops peak Arm-based system, named Astra. Read more…

By Tiffany Trader

The Machine Learning Hype Cycle and HPC

June 14, 2018

Like many other HPC professionals I’m following the hype cycle around machine learning/deep learning with interest. I subscribe to the view that we’re probably approaching the ‘peak of inflated expectation’ but not quite yet starting the descent into the ‘trough of disillusionment. This still raises the probability that... Read more…

By Dairsie Latimer

Xiaoxiang Zhu Receives the 2018 PRACE Ada Lovelace Award for HPC

June 13, 2018

Xiaoxiang Zhu, who works for the German Aerospace Center (DLR) and Technical University of Munich (TUM), was awarded the 2018 PRACE Ada Lovelace Award for HPC for her outstanding contributions in the field of high performance computing (HPC) in Europe. Read more…

By Elizabeth Leake

U.S Considering Launch of National Quantum Initiative

June 11, 2018

Sometime this month the U.S. House Science Committee will introduce legislation to launch a 10-year National Quantum Initiative, according to a recent report by Read more…

By John Russell

MLPerf – Will New Machine Learning Benchmark Help Propel AI Forward?

May 2, 2018

Let the AI benchmarking wars begin. Today, a diverse group from academia and industry – Google, Baidu, Intel, AMD, Harvard, and Stanford among them – releas Read more…

By John Russell

How the Cloud Is Falling Short for HPC

March 15, 2018

The last couple of years have seen cloud computing gradually build some legitimacy within the HPC world, but still the HPC industry lies far behind enterprise I Read more…

By Chris Downing

US Plans $1.8 Billion Spend on DOE Exascale Supercomputing

April 11, 2018

On Monday, the United States Department of Energy announced its intention to procure up to three exascale supercomputers at a cost of up to $1.8 billion with th Read more…

By Tiffany Trader

Deep Learning at 15 PFlops Enables Training for Extreme Weather Identification at Scale

March 19, 2018

Petaflop per second deep learning training performance on the NERSC (National Energy Research Scientific Computing Center) Cori supercomputer has given climate Read more…

By Rob Farber

Lenovo Unveils Warm Water Cooled ThinkSystem SD650 in Rampup to LRZ Install

February 22, 2018

This week Lenovo took the wraps off the ThinkSystem SD650 high-density server with third-generation direct water cooling technology developed in tandem with par Read more…

By Tiffany Trader

ORNL Summit Supercomputer Is Officially Here

June 8, 2018

Oak Ridge National Laboratory (ORNL) together with IBM and Nvidia celebrated the official unveiling of the Department of Energy (DOE) Summit supercomputer toda Read more…

By Tiffany Trader

Nvidia Responds to Google TPU Benchmarking

April 10, 2017

Nvidia highlights strengths of its newest GPU silicon in response to Google's report on the performance and energy advantages of its custom tensor processor. Read more…

By Tiffany Trader

Hennessy & Patterson: A New Golden Age for Computer Architecture

April 17, 2018

On Monday June 4, 2018, 2017 A.M. Turing Award Winners John L. Hennessy and David A. Patterson will deliver the Turing Lecture at the 45th International Sympo Read more…

By Staff

Leading Solution Providers

SC17 Booth Video Tours Playlist

Altair @ SC17


AMD @ SC17


ASRock Rack @ SC17

ASRock Rack



DDN Storage @ SC17

DDN Storage

Huawei @ SC17


IBM @ SC17


IBM Power Systems @ SC17

IBM Power Systems

Intel @ SC17


Lenovo @ SC17


Mellanox Technologies @ SC17

Mellanox Technologies

Microsoft @ SC17


Penguin Computing @ SC17

Penguin Computing

Pure Storage @ SC17

Pure Storage

Supericro @ SC17


Tyan @ SC17


Univa @ SC17


Google Chases Quantum Supremacy with 72-Qubit Processor

March 7, 2018

Google pulled ahead of the pack this week in the race toward "quantum supremacy," with the introduction of a new 72-qubit quantum processor called Bristlecone. Read more…

By Tiffany Trader

Google I/O 2018: AI Everywhere; TPU 3.0 Delivers 100+ Petaflops but Requires Liquid Cooling

May 9, 2018

All things AI dominated discussion at yesterday’s opening of Google’s I/O 2018 developers meeting covering much of Google's near-term product roadmap. The e Read more…

By John Russell

Nvidia Ups Hardware Game with 16-GPU DGX-2 Server and 18-Port NVSwitch

March 27, 2018

Nvidia unveiled a raft of new products from its annual technology conference in San Jose today, and despite not offering up a new chip architecture, there were still a few surprises in store for HPC hardware aficionados. Read more…

By Tiffany Trader

Pattern Computer – Startup Claims Breakthrough in ‘Pattern Discovery’ Technology

May 23, 2018

If it weren’t for the heavy-hitter technology team behind start-up Pattern Computer, which emerged from stealth today in a live-streamed event from San Franci Read more…

By John Russell

Part One: Deep Dive into 2018 Trends in Life Sciences HPC

March 1, 2018

Life sciences is an interesting lens through which to see HPC. It is perhaps not an obvious choice, given life sciences’ relative newness as a heavy user of H Read more…

By John Russell

Intel Pledges First Commercial Nervana Product ‘Spring Crest’ in 2019

May 24, 2018

At its AI developer conference in San Francisco yesterday, Intel embraced a holistic approach to AI and showed off a broad AI portfolio that includes Xeon processors, Movidius technologies, FPGAs and Intel’s Nervana Neural Network Processors (NNPs), based on the technology it acquired in 2016. Read more…

By Tiffany Trader

Google Charts Two-Dimensional Quantum Course

April 26, 2018

Quantum error correction, essential for achieving universal fault-tolerant quantum computation, is one of the main challenges of the quantum computing field and it’s top of mind for Google’s John Martinis. At a presentation last week at the HPC User Forum in Tucson, Martinis, one of the world's foremost experts in quantum computing, emphasized... Read more…

By Tiffany Trader

Cray Rolls Out AMD-Based CS500; More to Follow?

April 18, 2018

Cray was the latest OEM to bring AMD back into the fold with introduction today of a CS500 option based on AMD’s Epyc processor line. The move follows Cray’ Read more…

By John Russell

  • arrow
  • Click Here for More Headlines
  • arrow
Do NOT follow this link or you will be banned from the site!
Share This