Romance of the Three Kingdoms
Intel's recent announcement of exiting 5G smartphone modem business attracted a lot of attention lately. However, most people seem to have ignored the second part of the announcement, which is their continued focus on 5G network infrastructure and related datacenter opportunities.
The datacenter is actually one of the most important battlegrounds of 5G. As 5G ecosystem develops, the amount of data generated will grow exponentially and requires an increasing amount of process, storage and network ability to handle all the data.
Our chart below summarizes the positions of major semiconductor companies in three of the most important parts in datacenter semiconductors: compute, storage and network. Interestingly, we see 3 camps emerging, with a few other companies on the side fighting their own battle.
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Intel has assembled a broad portfolio of datacenter products over the past few years, mostly through acquisition, and has the most complete product offering among all competitors. The company has repositioned itself over the past few years to focus more on datacenter instead of their traditional PC business.
Nvidia successfully found a second life for their GPU in the datacenter as machine learning took off since 2016. The company has collaborated closely with Mellanox multiple times. Apparently, the collaboration went so well that Nvidia decided to buy Mellanox for $6.9B earlier this year.
AMD struggled in the datacenter market for most of the past decade but is now making a strong comeback under Lisa Su's leadership, becoming a legitimate threat to Intel's CPU business for the first time in the past 10 years. It is not fighting Intel alone though, the company is also collaborating with Xilinx, leveraging the FPGA designer's expertise in high-performance computing accelerator to attack Intel's core market. We wouldn’t be too surprised to see the two company deepen their collaboration or even merge at some point, but that's topic for another day.
Other important players in the market including ARM, Broadcom and Marvell are more or less fighting their own battle in some part of the datacenter market, without a close partnership with other players in the market.
It is an exciting time for Datacenter Semiconductor providers. Competition is clearly heating up, and competitive dynamic changes rapidly. It reminds us of the classic Chinese historical novel Romance of the Three Kingdoms (no, it's not a love story), and we will keep a close eye on any new development.
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