Robot Revolution (7/16)

chatbot can now fight your parking tickets and Foxconn, the biggest manufacturer of Apple products, just reduced human jobs in one factory by 55% (110k to 50k). Even automated pizza production and delivery are no longer science fiction.

Nvidia (NVDA) is an early leader in hardware for artificial intelligence and the trailing five-year annualized stock return is well over 25%.

ETF PM has long positions in Nvidia (NVDA).

Intel Outside as Other Companies Prosper from AI Chips

Peter Burrows, 6/21/16

The world’s leading chip maker missed a huge opportunity in mobile devices. Now the rise of artificial intelligence gives the company another chance to prove itself.

Back in 1997, Andy Grove, then chief executive officer of Intel, became one of the first corporate titans to embrace the teachings of Harvard Business School professor Clayton Christensen. Sensing that Intel might be undercut by PC chip rivals with cheaper wares, Grove invited Christensen to speak to his team about industrial leaders of the past who had waited too long to address emerging threats. Within a few quarters, Intel had brought out a line of lower-end Celeron chips for PCs, which pretty much smashed the dreams of Intel wannabes such as Advanced Micro Devices. “Innovator’s dilemma” averted.

Intel is no longer a case study in adaptability. On the contrary, it has whiffed in the market for mobile chips used in smartphones and tablets, by far the largest new opportunity for chip makers in the past 10 years. On April 19, the same day it said it would cut 12,000 jobs, Intel scrapped development of some of its mobile Atom chips despite years of heavy investment. And for the past few years, the world’s largest chip maker has seemed indifferent to another potentially vast market: the one in chips designed for the artificial–intelligence technique known as deep learning.

This once-obscure corner of AI research has blossomed into one of tech’s hottest trends (see “10 Breakthrough Technologies,” May/June 2013). Large Internet companies are using it to roll out online services that understand images and speech, and deep-learning chips are being designed into drones, driverless cars, and other products in the much-ballyhooed “Internet of things.” That’s especially dangerous for Intel, because CEO Brian Krzanich has said that the company’s future depends on its performance in big data centers and the Internet of things.

Intel is only now introducing its first chip designed specifically for deep learning. It’s a new version of the Xeon Phi coprocessor, which works in tandem with Intel’s flagship x86 microprocessors. But even though the chip is well suited for many deep-learning jobs, the company that essentially monopolized the PC market with its “Intel Inside” strategy remains far behind in developing the programming tools that customers need with such chips. Smaller rival Nvidia has established early dominance by offering such tools, says Bryan Catanzaro, a senior researcher with Baidu, a big user of deep-learning hardware. When it builds these systems, Baidu packs in four times more chips from Nvidia than from Intel. “Intel can be a major player, but it’s a question of focus,” Catanzaro says. “They’re in the process of cutting back in a lot of areas, so you have to wonder if they have the institutional will.”

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