Upcoming IFS “Direct Connect” Event Preview

By Patrick Moorhead - February 20, 2024

The Six Five team discusses Upcoming IFS “Direct Connect” event preview.

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Transcript:

Daniel Newman: So there’s a big Direct Connect event. This is like the mega Foundry preview. I had a chance to do a little bit of, have an upfront conversation with Intel CEO, Pat Gelsinger, processing all that right now. But I’ll share some things that I can on the record, and of course share some of my own speculation, because that’s always fun. But first and foremost, I think this is going to be a victory lap moment with the five and four, and talking about kind of the whole IDM strategy. But the pivot really quickly is going to be this is what the world is going to be interested in. Okay? The world is going to be interested in, besides the fact that you’re trying to address supply chain resiliency, trusted supply chain, and all these other items.

And we’re also, we’re going to want to see the world address the Sam Altman five to $7 trillion supposed needed investment. And we’re going to want to understand who are going to be the partners and who are going to be the companies that are going to be capable of bringing bleeding-edge process manufacturing to the West at scale. And so everything we’re doing, you got to do the math, Pat, to figure out how do you get from where we’re at, with a $52 billion investment, even with the matching for innovation and R&D, that takes it up to about 4x that in spend, up and ramp that up to what Sam Altman’s talking, about with five to seven trillion.

The reason I keep mentioning Sam, by the way, Sam is going to be on stage at this event. So this is a really big moment. Sam’s going to be there. Satya Nadella is going to be there. Gina Raimondo is going to be there. You’ve got leaders from companies, like I believe, Pat, and you shared this, like Cadence, Synopsis, a lot of IP companies are showing up. And what’s really, really interesting is to get to five to seven trillion, you’re really looking at three parts. Everyone’s kind of wondering, “Where did Sam get that number?” And it’s Foundry, it’s data center build-outs, and of course it’s power. It’s actual global infrastructure that is required to support the scale. We’re already seeing the amount of power consumption because of AI. It’s doubled, I believe is the number, in about a year’s time since we’ve rolled out. But these are very power-hungry designs. So the world wants to understand, “What’s the relationship?” I think I saw Ed Ludlow on Bloomberg shared something this morning that Sam is ready to go get US government backing to go after his chip venture.

And why am I sharing this? It’s really interesting, though, Pat. He’s showing up on stage with Intel. Intel’s got this massive Foundry project. You’ve got the commerce sector, the person that’s driving global commerce or the spend of the chips set, and they’re all sitting on stage together right around this timing, when this potential five to seven trillion spend is being… So I’m all in for the speculation here, but my take is there’s a really interesting opportunity where someone like Sam could see Intel as the right left to right partner that has everything that he needs, and obviously is also a company, what I call kind of a willing partner right now. Because, can you imagine Sam Altman validating Intel as the AI partner in terms of building his ASIC blocks? I talked to a reporter yesterday and they asked me a question, “Could there be an open AI ASIC, or like a ChatGPT?”

It’s like, “Yeah, of course.” And this is kind of where this really interesting sort of competitive stake, I saw a $1,200 price target come out for NVIDIA this morning, but does Satya, does Sam, does all these companies really want to let Intel, or sorry, NVIDIA become any more powerful in terms of how much they control the AI chips that are going to be going into market, into data centers? There’s a lot of these different powers coming together right now, these forces coming together. And I think a lot of very interesting speculation is going to come off stage. I’ll say one more thing, I seriously doubt anything of this nature is going to be announced. This is just me kind of putting together parts and pieces and saying, “Wow, Intel has been kind of accused of not hitting the AI opportunity. You’ve got the most prolific personality in the world on AI going on stage,” far enough.

I mean, do you see that thing they launched yesterday? Dude, we don’t even need to go to events anymore. Just have Dan and Pat talking about Intel IFS Day, and it’s going to create a one-minute video. Sorry, sizzle reel makers, game over. In fact, this has all been done in a year. So I’m super excited about what the implications of this are. And what I’ll say is Pat was very humble, Pat Gelsinger, big Pat was very humble. He was very excited to talk about roadmap, talk about execution, talk about packaging versus kind of way for opportunities and stuff like that. But you couldn’t help but notice just an optimism, which, given the fact that 99% of the AI chip market’s going to NVIDIA right now, what’s that optimism all about? So that’s me doing a little speculation.

Patrick Moorhead: Yeah. At this point, all we can do is speculate. I think if there’s going to be something big that’s going to be announced, it’s being kept really, really tight here. And by the way, if I look at the folks that are going to be on stage and what they represent, it’s freaking huge. You’ve got Rene Haas from ARM. You’ve got the person in charge of… I think he works for Charlie, he works Yuan Xing Lee, Central Engineering at Broadcom. We’ve got Eric Fisher from MediaTek, Jason Wang, the president of UMC, Aart de Geus, the founder and chair of Synopsys. It’s interesting they sent him and not the new CEO. The CEO of Cadence. Maybe that was the reason, because Synopsys and Cadence are big rivals. Oh, and then Synopsys, sorry, Ansys who’s being acquired by Synopsys-

Daniel Newman: Packing, design, IP. It’s crazy, Pat.

Patrick Moorhead: Yeah, and by the way, I had a couple people on X hit me up that, “What about NVIDIA?” By the way, NVIDIA is already working with IFS on RAMP-C. That’s defense contract for the United States. While I don’t know this for a fact, I believe the big packaging customer that they’re talking about is for AWS with Graviton, Trainium, and Inferentia. Again, I don’t know that, I’m going to speculate. Qualcomm, I do believe, is taking a slow role on IFS, but I do believe if AT&A works, and the White House shifts critical infrastructure, and they roll in smartphones in there, Qualcomm’s going to have to do that.

And by the way, Qualcomm is the most diversified design company out there in terms of its supply chain. They’re everywhere, and they work with every one. And I find it hard to imagine that they wouldn’t work with Intel. But the way these big deals go, the Big Kahuna deals, Dan, is you get something strategic in exchange for this. And Qualcomm is very strategic company, they know how to play this game. I mean, I’m dying to know… I mean, if Sam gets up there and Satya gets up there and just talks about milquetoast, it’s going to be seriously disappointing, particularly when Altman is out pounding the pavement on whatever the heck he’s doing between ships, and data centers, and foundries.

Daniel Newman: Yeah, like I said, did you hear what I said about Ed Ludlow? He tweeted out that Sam’s ready to go ask for funding.

Patrick Moorhead: Yeah, I saw that this morning. No source, no name, no nothing, but…

Daniel Newman: Oh, you know, I like to speculate on speculators.

Patrick Moorhead: Oh, that’s good. That’s an interesting thing to do, I guess.

Daniel Newman: Bloomberg does tend to get a scoop from time to time, but it is very interesting, and just how fast this stuff is moving. It’s just wild.

Patrick Moorhead

Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.