AI is appearing everywhere, but at heart it is just a highly efficient solution to a specific set of computer science problems – this is sparking a new class of opportunity for chip companies and IP providers to tap into the opportunity.
The semis cycle is peaking. Unlike past downturns, it looks like the foundries and the semicap companies may be able to weather the downturn fairly well, but that means the fabless companies are likely to bear the brunt.
TSMC has world leading semi manufacturing skills, but Morris Chang’s claim of “50% cost advantage” has more to do with currency than hazy notions about the US workforce’s capabilities. Nonetheless, bringing fabs back to the US will be challenging.
There is a real chance that AWS’s purchase of semis may decline year-on-year in the second half as they, like everyone else, moderates pandemic spending. Not a cause for panic, but worth remembering that we tend to take data center growth for granted.
Software company Red Panda did an in-depth analysis of Graviton’s Arm-based server CPU, and demonstrates that Arm is starting to look very strong in the data center.
The cloud service providers – AWS, GCP and Azure – have to support the software of all their customers, this complicates the case for them building their own chips.
Meta’s struggles with designing their own silicon for their AR glasses shows that rolling your own silicon does not make sense for all companies.
The semis shortage appears to be almost over for the big customers, but there are still shortages for WFE companies sitting far out on the forecasting tail, and “small” chip customers like the auto makers. Periodic reminder: the semis industry is cyclical
Despite conventional wisdom, building a software company can be just as capital intensive a building a semis company. With the huge disparity in valuations at every venture round, it is clear that there can be a massive opportunity in semis investing.
The risk profile for venture investing in hardware and software are of course very different, but the market is shifting, making hardware investing much more appealing.
Digits to Dollars 