The High Stakes Semiconductor Game that Drives HPC Diversity

By Dairsie Latimer

December 19, 2017

The semiconductor market is worth $300-billion-plus revenue per annum and Intel accounts for almost $60 billion of this total. In fact the top three companies (Intel, Samsung and TSMC) account for almost $130 billion or more than 40 percent of the total market and the next seven companies account for another $90 billion. Why is this relevant to a discussion about technological diversity in the HPC space you ask yourself?

It’s a rich man’s world

It’s a truism that no supplier has ever gotten rich from HPC — apart that is from the component suppliers such as Intel and their shareholders. For any tier 1 vendor, HPC is considered, if not quite a vanity project, certainly one that generates a halo effect rather than significant profits.

The arrival of commodity clusters in the 1990s dramatically changed the HPC market dynamics but it also inadvertently placed almost all of the real profits and control of the technical direction into the hands of a small number of commodity component manufacturers.

Now I’m not going to argue that this has been a bad thing. Intel and the cohort of top semiconductor suppliers (those who invested most heavily in process technology and foundry capacity) have ensured that Moore’s law carried on trucking. As has been oft pointed out, it became less of an observation and more of a self-sustaining marketing prophecy. The periodic restatements of the ‘law’ necessary to ensure that it remained a viable marketing tool were viewed as justified by just about everyone who was riding the wave.

One of the consequences of a move away from custom core components (such as vector processors) for HPC was that opportunities for innovation and differentiation between vendors were reduced. However a positive effect of the commoditization of HPC was that HPC was brought to the masses in a way that probably wouldn’t have happened otherwise.

If you discount IBM as an outlier in technological terms (in that they actually had four competing HPC platforms at one point as well as a foundry capability), if everyone is using the same CPUs (or at the very least the same ISA), memory, storage and to a certain extent network (InfiniBand and Ethernet) it only takes a change in one of those to potentially disrupt the market.

When the chips are down

Consider the cautionary tale of Cray, one of, if not the preeminent exponent of HPC systems engineering and integration in the market today. Excellent though the XC series and the Aries fabric clearly are, they are not a passport to huge financial reward in the HPC market. Simply put, success in supplying tier 1 capability machines of the sort that Cray excels at building, does not translate into sales into the extremely price sensitive tier 2/3 arena. Even in the good years, Cray can still struggle to deliver profit margins that would make investors heads turn.

What does this say about the HPC market as a whole? It shows that excellent engineering isn’t in itself enough. Cray themselves attempted to move down the food chain with their acquisition of Appro (2012) and in doing so started to compete more directly with the likes of HPE and Dell for cluster based HPC sales. Their more recent acquisition of the ClusterStor line from Seagate and the launch of HPC as a service under the Azure umbrella are all attempts to diversify and increase their total addressable market. The problem is that when your competitor’s revenues are literally an order of magnitude greater, simple economies of scale start to become even more relevant.

Cash flow now becomes even more critical, with purchasing power a function of how far out you can place orders and in what volumes (and probably what hedge positions you can take). Ironically, it also means that some of the systems that you are technologically well placed to build are actually too big a stretch financially without finding a deep pocketed sugar daddy (think Intel and Cray’s exascale partnership).

As an industry we now have the slightly perverse situation that, as we are entering a new era of technological innovation and diversity, as well as building things bigger and hopefully rather better, there will inevitably be a renewed phase of market consolidation.

Money makes the world go round

Now there are lots of reasons for a merger and acquisition and I’m actually willing to believe that some are definitely a meeting of minds as well as accountants. What’s also true is that in the semiconductor and computer business first mover advantage often applies. So when one of the big players at the semiconductor poker table bets big, it inevitably triggers a flurry of further M&A activity as the other players decide to follow their money or fold.

We’ve seen this recently with the ARMing of the datacentre. Softbank’s purchase of ARM in 2016 and the uptick in sentiment that ARM had finally found a rich foster parent who would invest in pushing into territory hitherto dominated by Intel encouraged a number of other moves by Intel’s semiconductor rivals.

The interplay, first between Broadcom (Avago) and Cavium (taking on the orphaned Vulcan product), then Broadcom making an opportunistic and hostile bid for Qualcomm (of course this was about way more than just the Centriq processor line) and most recently with Marvell’s bid for Cavium (again not just for ThunderX II) was interesting and instructive to watch.

From an HPC perspective it was hard to tell how much it would affect the likelihood that one or more of the ARM vendors would mount a credible challenge to Intel in the datacentre. Certainly my feeling was that Broadcom were likely to be the least sympathetic winner of the hand, but when you consider that they are playing for a share of a $60 billion pot you start to see the sort of stakes being wagered.

Which brings us to how we as an industry maintain a healthy technological diversity in the HPC market, when the reality is that only a handful of semiconductor companies have any realistic hope of challenging the current Intel hegemony.


If we look at the common denominator between the top semiconductor companies, we see that Intel and Samsung are both vertically integrated. In other words they own their own fabs and they make profits by taking their core IP (in Intel’s case the x86 architecture) into the primary consumer market and then an even more lucrative variant into the datacenter and HPC segments. Even with the eye watering capital expenditure necessary to build and equip modern fabs they are at a relative competitive advantage to those companies who have to source their devices from foundries such as TSMC, GlobalFoundries and UMC.

Qualcomm and Broadcom round out the top five semiconductor companies (both fab at TSMC) and it’s no surprise that both have been linked with ARM-derived datacenter class CPUs. Perhaps the only surprise is that Samsung appears to have sat out the hand and concentrated purely on the development of consumer space SoCs.

Of course they are far from the only companies who are looking at challenging Intel’s dominance in the datacenter but in terms of relative size, financial stability and ability to stay in the game they hold cards that none of the other players at the table do.

Spread betting

Even the mighty Intel is looking to grow market share via diversification (not something they have managed in the mobile space). With dominance in the datacentre (and consumer) space that they could never have expected even ten years ago, they are well aware that the next big technology wave can come along and swamp you if you’re not paying attention. Intel have made recent bets on storage (3D XPoint and NAND), the internet of things, edge and autonomous computing (Altera, Movidius and Mobileye to name but three acquisitions) and also machine and deep learning (Nervana). All of these markets are forecast to be fast growing and ultimately at least as large as the combined consumer and datacentre CPU markets.

Of course Intel will never abandon the CPU market, but recent missteps with Phi and the challenges transitioning to lower process geometries have had knock on effects in its core markets. At least some of the problems surrounding Aurora are likely to have been caused by the change in cadence for Moore’s law (assuming it’s still in ICU and not on the way to the mortuary).

There is a real diversity starting to appear, at least in the processor space, with IBM’s Power 9 and Nvidia’s Volta being stood up for the CORAL pre-exascale systems. Add to that competitive debuts for AMD’s EPYC, Cavium’s ThunderX II, Qualcomm’s Centriq, along with a range of other processors (many ARM derived), accelerators (including the reappearance of classical vector co-processors) and some real innovation in the ML/DL space and there are real competitive threats on the horizon.

Unless Intel takes a good look at some of their recent product segmentation and pricing decisions I expect that we will see a slow erosion of their numbers in 2018. With the first hyperscaler to jump ship, that trickle may become a steady stream, but until then Intel are still firmly in pole position. They market is theirs to lose but if there is a readjustment then how long can the HPC space continue to rely on what has amounted to a commodity subsidy for HPC research and development?

About the Author

Dairsie has a somewhat eclectic background, having worked in a variety of roles on supplier side and client side across the commercial and public sectors as a consultant and software engineer. Following an early career in computer graphics, micro-architecture design and full stack software development; he has over twelve years’ specialist experience in the HPC sector, ranging from developing low-level libraries and software for novel computing architectures to porting complex HPC applications to a range of accelerators. He also advises clients on strategy, technology futures, HPC procurements and managing challenging technical projects.

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!

AI-Focused ‘Genius’ Supercomputer Installed at KU Leuven

April 24, 2018

Hewlett Packard Enterprise has deployed a new approximately half-petaflops supercomputer, named Genius, at Flemish research university KU Leuven. The system is built to run artificial intelligence (AI) workloads and, as Read more…

By Tiffany Trader

New Exascale System for Earth Simulation Introduced

April 23, 2018

After four years of development, the Energy Exascale Earth System Model (E3SM) will be unveiled today and released to the broader scientific community this month. The E3SM project is supported by the Department of Energy Read more…

By Staff

RSC Reports 500Tflops, Hot Water Cooled System Deployed at JINR

April 18, 2018

RSC, developer of supercomputers and advanced HPC systems based in Russia, today reported deployment of “the world's first 100% ‘hot water’ liquid cooled supercomputer” at Joint Institute for Nuclear Research (JI Read more…

By Staff

HPE Extreme Performance Solutions

Hybrid HPC is Speeding Time to Insight and Revolutionizing Medicine

High performance computing (HPC) is a key driver of success in many verticals today, and health and life science industries are extensively leveraging these capabilities. Read more…

New Device Spots Quantum Particle ‘Fingerprint’

April 18, 2018

Majorana particles have been observed by university researchers employing a device consisting of layers of magnetic insulators on a superconducting material. The advance opens the door to controlling the elusive particle Read more…

By George Leopold

AI-Focused ‘Genius’ Supercomputer Installed at KU Leuven

April 24, 2018

Hewlett Packard Enterprise has deployed a new approximately half-petaflops supercomputer, named Genius, at Flemish research university KU Leuven. The system is 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

IBM: Software Ecosystem for OpenPOWER is Ready for Prime Time

April 16, 2018

With key pieces of the IBM/OpenPOWER versus Intel/x86 gambit settling into place – e.g., the arrival of Power9 chips and Power9-based systems, hyperscaler sup Read more…

By John Russell

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

Cloud-Readiness and Looking Beyond Application Scaling

April 11, 2018

There are two aspects to consider when determining if an application is suitable for running in the cloud. The first, which we will discuss here under the title Read more…

By Chris Downing

Transitioning from Big Data to Discovery: Data Management as a Keystone Analytics Strategy

April 9, 2018

The past 10-15 years has seen a stark rise in the density, size, and diversity of scientific data being generated in every scientific discipline in the world. Key among the sciences has been the explosion of laboratory technologies that generate large amounts of data in life-sciences and healthcare research. Large amounts of data are now being stored in very large storage name spaces, with little to no organization and a general unease about how to approach analyzing it. Read more…

By Ari Berman, BioTeam, Inc.

IBM Expands Quantum Computing Network

April 5, 2018

IBM is positioning itself as a first mover in establishing the era of commercial quantum computing. The company believes in order for quantum to work, taming qu Read more…

By Tiffany Trader

FY18 Budget & CORAL-2 – Exascale USA Continues to Move Ahead

April 2, 2018

It was not pretty. However, despite some twists and turns, the federal government’s Fiscal Year 2018 (FY18) budget is complete and ended with some very positi Read more…

By Alex R. Larzelere

Inventor Claims to Have Solved Floating Point Error Problem

January 17, 2018

"The decades-old floating point error problem has been solved," proclaims a press release from inventor Alan Jorgensen. The computer scientist has filed for and Read more…

By Tiffany Trader

Researchers Measure Impact of ‘Meltdown’ and ‘Spectre’ Patches on HPC Workloads

January 17, 2018

Computer scientists from the Center for Computational Research, State University of New York (SUNY), University at Buffalo have examined the effect of Meltdown Read more…

By Tiffany Trader

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

Russian Nuclear Engineers Caught Cryptomining on Lab Supercomputer

February 12, 2018

Nuclear scientists working at the All-Russian Research Institute of Experimental Physics (RFNC-VNIIEF) have been arrested for using lab supercomputing resources to mine crypto-currency, according to a report in Russia’s Interfax News Agency. Read more…

By Tiffany Trader

Chip Flaws ‘Meltdown’ and ‘Spectre’ Loom Large

January 4, 2018

The HPC and wider tech community have been abuzz this week over the discovery of critical design flaws that impact virtually all contemporary microprocessors. T Read more…

By Tiffany Trader

How Meltdown and Spectre Patches Will Affect HPC Workloads

January 10, 2018

There have been claims that the fixes for the Meltdown and Spectre security vulnerabilities, named the KPTI (aka KAISER) patches, are going to affect applicatio Read more…

By Rosemary Francis

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

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

Leading Solution Providers

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

Fast Forward: Five HPC Predictions for 2018

December 21, 2017

What’s on your list of high (and low) lights for 2017? Volta 100’s arrival on the heels of the P100? Appearance, albeit late in the year, of IBM’s Power9? Read more…

By John Russell

AI Cloud Competition Heats Up: Google’s TPUs, Amazon Building AI Chip

February 12, 2018

Competition in the white hot AI (and public cloud) market pits Google against Amazon this week, with Google offering AI hardware on its cloud platform intended Read more…

By Doug Black

HPC and AI – Two Communities Same Future

January 25, 2018

According to Al Gara (Intel Fellow, Data Center Group), high performance computing and artificial intelligence will increasingly intertwine as we transition to Read more…

By Rob Farber

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

New Blueprint for Converging HPC, Big Data

January 18, 2018

After five annual workshops on Big Data and Extreme-Scale Computing (BDEC), a group of international HPC heavyweights including Jack Dongarra (University of Te Read more…

By John Russell

Momentum Builds for US Exascale

January 9, 2018

2018 looks to be a great year for the U.S. exascale program. The last several months of 2017 revealed a number of important developments that help put the U.S. Read more…

By Alex R. Larzelere

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

  • arrow
  • Click Here for More Headlines
  • arrow
Share This