Intel Says Goodbye to Moore’s Law
As I reported after my early-November Israel trip, the small and embattled country has become the world leader in the crucial new technologies of the era. Ranging from autonomous cars to artificial intelligence, blockchain to oncology, and weather prediction to molecular chemistry.
If you are an American technology investor, you have to be interested in Israel. It is the source of many of America’s leading innovations. For example, Microsoft’s Kinect, IBM’s Watson, Google’s Waze, and Johnson & Johnson’s cardio ablation surgeries.
But no American company is as deeply dependent on Israel as our leading microchip and wafer-fab company, Intel.
However, recent trends have not been kind to this Santa Clara colossus.
Looking at the Future of Chips
While US trade warriors — trumpeting US leadership in chips — order Intel to stop its $11 billion in sales to Huawei and other Chinese customers, Intel has been preening increasingly as a systems company.
The problem is that the leading new systems tend to be in artificial intelligence (AI). The massively parallel graphics architectures of Nvidia, and even AMD, turn out to be better adapted to AI roles than Intel Xeons are.
At the same time, Intel publicly gave up on Moore’s Law. It said it would no longer follow the roadmap of ever-smaller semiconductor geometries ordained by founder Gordon Moore’s Law of doubling transistor densities every two years. Intel declared that the law didn’t work below 10-nanometer features.
Coming from the venerable expert on wafer fab, Intel’s view prompted many articles on the “End of Moore’s Law.”
Thus, it was embarrassing to watch its perennial also-ran rival AMD under CEO Lisa Su move on to seven-nanometer chips, while Taiwan Semiconductor Manufacturing Company (TSMC) made key seven-nanometer chips for Apple and other US companies. The company went further and then announced plans for 3 and 5-nanometer chips.
Therefore, the big news in technology last week was the announcement that Intel had returned to the wellspring of its greatness and purchased AI chip company Habana of Caesarea in Israel for $2 billion.
From Intel’s first decade, it has been largely an Israeli company. The company garnered global acclaim for inventing the microprocessor — the “computer on a chip” — but the company gained all its early profit from the EPROM, the electrically programmable read-only memory that crucially enabled the personal computer revolution.
Invented by Israeli Dov Frohman, the EPROM provided non-volatile storage that dept its contents when the power was off. This feature was essential for retaining the boot-up sequences for dispersed PCs.
Frohman returned to Israel and created Intel’s research center at Haifa that developed the 8088, 386, and other key Intel micros. Then he persuaded the legendary Intel CEO Andrew Grove to establish a wafer fab in the desert at Kiryat Gat. This facility later produced the bulk of the company’s leading-edge microprocessors that gave Intel dominance in the industry.
In 2017, faced with the prospect of losing markets for the enabling computer systems in self-driving cars, Intel again resorted to its Israel connection, purchasing Amnon Shashua’s Mobileye for $15 billion. Now a leading Intel executive, Shashua is said to have referred the company to Habana.
Founded in 2016 by David Dahan and Ran Halutz, Habana has raised some $120 million to date. It is an AI chip company that uses AI to design chips. As well as selling inference engines and developing a device for machine learning training functions, it uses AI to improve the processing performance and lower chip costs and power consumption.
Paying $2 billion last week for the inventive chip design house, Intel estimates that the AI silicon market will surge to some $25 billion by 2024. Under Intel, Habana will enter competition with Nvidia, AMD, Google, Huawei, and most recently the Chinese giant Alibaba. Alibaba just announced the most powerful chip of all, the HanGuang 800 inference engine, which is said to outperform the Habana Goya by a factor of three on industry-standard tests.
Visiting China last week, I discovered that there are many Israelis in the country collaborating with Chinese entrepreneurs. Israel has incorporated Huawei gear in its networks and the Chinese express high admiration of Israeli creativity.
Though when President Netanyahu reached out to Xi Jinping, President Trump reached in and blocked a new agreement between the two countries. I think this is a mistake. Under the gun in the Middle East, Israelis have a more realistic view of who our real enemies are than the Pentagon does. Peking’s drive to become a global trading empire is not a threat to the United States but an opportunity.
Intel’s tapping of Israeli talent also provides an example for American investors. During my recent trip, I found that Israel has reached an all-time high in innovation, covering such feats as mass spectrometry (previously a $2 million function) reduced to a chip, orders-of-magnitude-better weather reports based on millions of sensors in an internet of things (IoT), and cures for Parkinson’s disease and various cancers. Getting my readers onto this fertile crescent of innovation is a major goal of my reports.
Intel knows what it is doing.
Editor, Gilder’s Daily Prophecy