September 8, 2020
If Nvidia acquires Arm Ltd. in the next few weeks, which many experts predict will happen, the company may be in the position to dominate the next computing ecosystem. Jefferies semiconductor analyst Mark Lipacis notes that, the computer industry goes through a “strategic inflection point” every 15 years, with research showing that dominant players in each era account for 80 percent of the profits. Different ecosystems are the result of “multi-pronged” strategy by those companies that come out on top.
VentureBeat reports that in the 1970s, the computer industry shifted from mainframes, which IBM dominated, to minicomputers, which DEC (Digital Equipment Corporation) dominated. In the mid-1980s, the shift was to PCs, with Intel and Microsoft in control and, as 2000 rolled around, “the industry shifted again to a cell phone and cloud computing model,” with Apple, Samsung, TSMC and Arm dominating the phone side and Intel controlling cloud data centers.
Now, that model is under attack for several reasons. One, “the vast amounts of data these phones generate requires a more parallel computational approach, and Intel’s CPUs are designed for single-threaded applications.” Nvidia’s GPU architecture has become “a more general-purpose parallel processing engine.” The company also launched its CUDA software platform, now in its 11th generation, that “lets developers leverage the parallel architecture of Nvidia’s GPUs for a wide range of tasks.”
Intel is also ceding ground to TSMC, which has pulled ahead of its rival in chip manufacturing, shipping over a billion chips produced by its 7nm process.
With Nvidia’s GPUs and CUDA in many university computer science departments, it’s become “the leading platform for parallel computing at scale … [causing] a tectonic shift in the AI industry” from a “knowledge-based” to “data-based” discipline. VB adds that, “demand for dedicated accelerators is very strong and being dominated by Nvidia,” whose sales revenues are “now driven by data centers.”
“The company has created a hardware-software ecosystem comparable to Wintel, but in accelerators,” it says.
Nvidia’s sole competitive obstacle is that, “it has to interoperate within the Wintel ecosystem because the CPU architecture in data centers is still x86, whether from Intel or AMD.” Although Arm’s “server chips market share is still minute … with TSMC as a manufacturing partner, it is rapidly overtaking Intel in raw performance in market segments outside of mobile phones.”
In June, Nvidia and Arm said they would collaborate to “make Arm CPUs work with Nvidia accelerators.” That, says VB, “puts Nvidia in a strong position to create a hardware-software ecosystem around Arm that would be a serious threat to Intel.” “If historical trends continue, a merged Nvidia/Arm would result in a market at least 10 times larger than today’s mobile phone or cloud computing market,” it says.
Driving that possibility is the “emergence of faster 5G networks that are designed to support a far larger number of devices,” including the “key feature” of edge computing for a range of new technologies, from autonomous vehicles to holographic communications and smart sensors. Nvidia is already collaborating with Microsoft on the Intelligent Edge, and “ownership of Arm would give Nvidia greater control over every aspect of its ecosystem with far greater control of its destiny.”