Nvidia, Intel and AMD take steps to counter slowdown in sales of
PCs and smartphones
By Ted Greenwald
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (November 10, 2017).
Chip makers are racing to develop artificial-intelligence
products to fuel growth as sales of smartphones and personal
computers cool.
Nvidia Corp., Intel Corp., Advanced Micro Devices Inc. and a
raft of startups are crafting new processors to tap into a broader
market for AI hardware and software that is growing 50% a year,
according to International Data Corp.
Growth has been elusive in some areas of the semiconductor
industry, contributing to a wave of consolidation capped this week
when networking specialist Broadcom Ltd. bid $105 billion for
smartphone-chip leader Qualcomm Inc. in what would be the sector's
biggest deal to date.
Global spending on AI-related hardware and software could expand
to $57.6 billion in 2021 from $12 billion this year, IDC estimates.
Of that, a sizable portion will go into data centers, which by 2020
are expected to devote a quarter of capacity to AI-related
computations, IDC projects.
In recent years, certain AI techniques have become central to
the ability of, say, Amazon.com Inc.'s Echo smart-speaker to
understand spoken commands. They enable the Nest security camera
from Google parent Alphabet Inc. to distinguish familiar people
from strangers so it can send an alert. They also allow Facebook
Inc. to match social-media posts with ads most likely to interest
the person doing the posting.
The biggest internet companies -- Google and Facebook as well as
Amazon, International Business Machines Corp., Microsoft Corp. and
their Chinese counterparts -- are packing their data centers with
specialized hardware to accelerate the training of AI software to,
for instance, translate documents.
The online giants all are exploiting an AI approach known as
deep learning that allows software to find patterns in digital
files such as imagery, recordings and documents. It can take time
for such programs to discover meaningful patterns in training data.
Internet giants want to improve their algorithms without waiting
weeks to find out whether the training panned out.
The chip makers are vying to help them do it faster.
Much of Nvidia's 24-year history was spent making high-end
graphics chips for personal computers. Lately, its wares have
proven faster than conventional processors in training AI
software.
Nvidia, which reported third-quarter earnings Thursday that
exceeded Wall Street's forecasts for revenue and profit, has nearly
tripled its sales to data centers in the past 12 months to roughly
$1.6 billion, largely driving a nearly sevenfold increase in the
stock price to $205.32 as of Thursday's close.
The recent optimism around Nvidia "is what everyone in the space
has been experiencing," said Mike Henry, chief executive of AI-chip
startup Mythic Inc. Mr. Henry said an "explosion of interest" has
yielded $15 million in investments in Mythic from venture outfits
including Silicon Valley firm DFJ.
Private investors have nearly doubled their total stake in AI
hardware to $252 million this year, according to PitchBook Data
Inc.
Nvidia's chief rivals aren't standing still. Last year, Intel
bought Nervana Systems for an undisclosed sum. The chip giant is
working with Facebook and others to deliver Nervana-based chips,
intended to outdo Nvidia for AI calculations, by the end of the
year.
Beyond Nervana, Intel is prioritizing AI performance throughout
its data-center product line. Revenue in the divisions responsible
for server processors and programmable chips were up 7% and 10%,
respectively, from the prior year, Intel said in its third-quarter
earnings report last month.
"We don't disclose our total investments in these things, but
it's a large effort" on par with its work to lead the way in
conventional processing, said Naveen Rao, who leads Intel's AI
group.
Advanced Micro Devices, which competes with Nvidia for graphics
in game systems, recently shipped its own AI-focused graphics
processor line called Radeon Instinct. Baidu Inc. is a customer,
and AMD said in its most-recent earnings call that other cloud
providers are as well.
Some companies aren't waiting for the big chip vendors. Google
has designed its own AI accelerators, seeking an advantage by
tailoring silicon specifically for its software.
"This field is only getting started," said Ian Buck, Nvidia's
head of accelerated computing, "and it's being invented and
reinvented, it feels like, every quarter."
Write to Ted Greenwald at Ted.Greenwald@wsj.com
(END) Dow Jones Newswires
November 10, 2017 02:47 ET (07:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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