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Does It Matter If TSMC Dethrones Intel and Takes the Semiconductor Lead?

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If you’d advised me 5 years in the past that Intel was about to stumble into arguably the worst manufacturing issues of its existence, I might have been stunned. Our 2012 story on why Intel leads (led) the world in semiconductor manufacturing now appears extra like a historic retrospective than a assured projection of future tendencies. The corporate’s slip — and the potential penalties of that slip — have pushed a variety of evaluation over the previous few years, a few of it written by yours really.

However there’s one other query underlying the 10nm issues that deserves consideration. How a lot does it truly matter to the silicon business as an entire, that Intel slipped on the 10nm node? Clearly, there have been actual repercussions so far as the firm’s means to satisfy demand, and Intel would undoubtedly choose to retain its popularity for being the most-advanced silicon producer in the enterprise. However the long-term impacts are surprisingly tough to type out. I used to be reminded of this by a current Bloomberg story, titled “A Company Few Americans Know Is About to Dethrone Intel.” It’s about TSMC and its general course of node management, and it makes a number of good factors. Intel’s 10nm is predicted to be roughly equal to TSMC’s 7nm, however TSMC has 7nm in-market already in cellular hardware and AMD will virtually definitely ship 7nm CPUs earlier than Intel begins shifting 10nm in quantity. It’s been almost 20 years since AMD and Intel transitioned to the similar node at the similar time. From the unique Athlon to the current day, AMD has by no means crushed Intel to a node. Add up the complete R&D spending by all of TSMC’s clients (a few of which is unquestionably being spent at TSMC itself) and the sum is bigger than what Intel itself spends on R&D.

Equally, we nonetheless anticipate the shift to 10nm to have an effect on silicon efficiency as nicely. There’s a cause why AMD selected to restrict its 14nm chips to 32 cores however will push as much as 64 cores on 7nm. The agency tasks a 25 % efficiency enchancment in the similar energy envelope or a 50 % energy consumption enchancment at the similar frequency. Even permitting for producer fudging, that’s nonetheless a considerable increase. Equally, we’ve seen bigger GPU generational efficiency enhancements when corporations shift to new nodes versus once they launch new merchandise on the similar node. The leap from Maxwell to Pascal was bigger than the enchancment from Kepler to Maxwell, for instance. So on the one hand, sure — semiconductor efficiency enhancements matter, and provided that 10nm will present a few of them, it issues to some extent. The actual query is — how a lot?

All the Intervening Variables

On the different hand, Intel’s 10nm node is already years late. At IDF 2013, Intel talked about having chips in-market by 2015. Regardless of this, Intel’s enterprise is positively booming. Knowledge middle progress is large. The corporate might have famously missed cellular, nevertheless it has a 5G modem apparently properly positioned for the creation of that communication normal, a rising IoT enterprise, surging knowledge middle shipments, and plans for brand spanking new 48-core Cascade Lake CPUs to ship subsequent yr with a brand new MCM design. In the Bloomberg article, Intel’s server division head, Navin Shenoy, argues that what clients care about isn’t course of node, as such. “I’m confident that we’re going to deliver what our customers care about, which is system performance,” he stated. This can be a actual — and essential — level.

Efforts to push ARM into knowledge facilities have, thus far, not loved large success. Amazon’s determination to construct its personal ARM cores is completely a warning signal that Intel might face long-term intensified competitors from various CPU architectures, however the firm has executed an excellent job keeping off these challenges to date. Rory Learn’s 2012 prediction that ARM would represent 15 % of the server market by now isn’t even inside an order of magnitude of being true. The one vendor chopping into Intel’s knowledge middle share is AMD, and solely by single digits. That’s nonetheless a robust end result for AMD, however the near-term menace to Intel merely isn’t very giant. Chipzilla has made it clear that cloud and knowledge middle is a serious pillar of its enterprise going ahead, and these clients are typically extra conservative than the typical shopper market. Additionally they are typically much less worth delicate.

Intel’s IoT income is rising pretty nicely.

It’s arduous to say how all of this performs out in burgeoning markets like AI, machine studying, and self-driving automobiles. I feel you can also make a very reasonable argument that Moore’s regulation and Dennard scaling collectively functioned like a kind of straitjacket. With an assumed 50-100 % efficiency enchancment arriving each few years, there was valuable little room for various architectures or new approaches to computing issues. If you began in 1980 with a customized structure that was 15x extra environment friendly than CPUs of the day, however it took you till 1988 – 1990 to deliver your product to market, possibilities have been good that typical processors had both minimize your profit to nothing or eaten into it to such a level that your chip might by no means compete on worth after economies of scale have been taken under consideration. CPU clocks have solely improved modestly since 2004, whereas Intel’s general CPU efficiency has scaled modestly (outdoors of sure AVX-friendly workloads) since 2011. These two developments opened the door and the funding streams for alternate approaches to computing. However Intel has positioned itself to play in these areas as nicely, with acquisitions like Movidius. It might have canceled its Knights Hill product, however the firm’s GPU efforts will possible goal the similar area with a greater, extra aggressive structure.

Estimating the influence of a 10nm delay on Intel’s general place in the semiconductor enterprise because it strikes into these markets is troublesome as a result of course of node is only one issue impacting general product adoption. Intel’s behavior of providing greater performing CPU cores however fewer cores at the similar worth level in contrast with AMD will not be a unfavourable in the event you purchase software program that’s licensed per-core versus per-socket. There are particular purposes that favor Intel to a enough diploma to offset a few of the value considerations. Corporations additionally are likely to signal long-term license or provide agreements that buffer the influence of efficiency shifts that favor one vendor over one other. Intel is working exhausting to scale its Optane enterprise and 5G modem know-how with the said objective of providing complete options to its companions, not “just” a CPU core. It’s straightforward to see how discrete GPUsSEEAMAZON_ET_135 See Amazon ET commerce might match into that stack as properly. By 2020, Intel will have the ability to make a play to offer a system’s Wi-Fi and mobile connectivity, GPU, CPU, and reminiscence. That’s a a lot wider stack than the firm has beforehand fielded and it’s troublesome to foretell how clients will reply.

Bloomberg’s statement that including up the R&D budgets of all of TSMC’s clients leads to extra complete spend than Intel appears fairly banal to me and I’m unsure it has any predictive energy in any respect. First, a few of that R&D spending goes to be duplicative, reflecting issues like masks and software prices. Second, not each product TSMC builds even has an Intel counterpart. Third, the query of complete R&D spending is much less necessary than what an organization is spending R&D dollars on. Fourth, R&D spend as a uncooked determine is probably not an excellent predictor of ultimate product efficiency it doesn’t matter what. Loads of individuals checked out AMD’s anemic R&D spend from 2012 – 2016 and concluded there was no probability of Ryzen being any type of aggressive product.

Intel has made course of node management crucial to its enterprise reporting for a few years, however at the Credit score Suisse 22nd Annual TMT Convention, the firm acknowledged that its personal steerage is shifting. Right here’s Intel appearing CEO Bob Swan:

I feel there’s a couple of dynamics about the firm that we created and we requested you to guage us by them. And over time, in the event you stick to these, I feel you get shortsighted. And we’ve talked a few couple. Moore’s Regulation management is all that issues. That’s not true. Product management is what issues. However we advised your eternally that Moore’s Regulation management issues. And now we’re making an attempt to inform you, hey, we receives a commission on product. So, that’s a elementary shift that I feel it’s essential – it’s essential for us when it comes to how we run the enterprise and I consider more and more essential for you about the way you make your selections.

It is perhaps tempting to dismiss this as Intel pivoting away from a metric just because it isn’t profitable in that class any longer, however the finish of typical Moore’s regulation scaling isn’t distinctive to Intel. It’s one thing the complete semiconductor business is grappling with. However we’re additionally in a actuality the place nobody is certain which AI/ML merchandise will succeed, or how shortly various architectures will ramp, or how lengthy will probably be earlier than autonomous automobiles are widespread. The trail ahead for typical silicon scaling under 5nm is deeply unsure.

It’s straightforward to say that positive, not being in a management place goes to value Intel one thing. It’s a lot more durable to foretell precisely what that value goes to be. If I personally needed to guess, I’d guess on much less disruption relatively than extra. With the good points from every new node smaller than the node earlier than, the possibilities that lacking a node will show a serious drawback are decrease as nicely. The elements that matter to future success are more likely to be rooted in the kinds of merchandise an organization brings to market and how nicely these merchandise are positioned to satisfy the wants of the new workloads we see rising by the day. Course of node positioning/management is necessary to that query, however not the sole determinant.

Now Learn: Intel Is at a Crossroads, Intel CPU Scarcity Might Ease in Q1 2019, and The Myths of Moore’s Regulation

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