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1) "You want to cheat the laws of physics, you don't want to confront them." - Jensen Huang

Great interview for anyone interested in semiconductors and datacenter architecture.

nextplatform.com/2020/04/27/nvi…
2) Vastly more venture $ have gone into AI accelerators vs. SmartNICs which will help "cheat the laws of physics" by putting more processing and intelligence in the network.

Suspect SmartNICs will end up being a much better investment.
3) History of semiconductors suggests it is really hard to dethrone a dominant incumbent.

CPUs: ARM couldn't displace x86 in PC/Server, x86 couldn't displace ARM in handsets, AMD has never displaced Intel in x86.

Similar story in GPUs & basebands - same #1, same architecture.
4) ARM may finally begin to impact x86 in 2021 with the Macbook processors and Gravitron et al. But it took *way* longer than I ever would have expected.
5) Rather than trying to dethrone a dominant processor incumbent with a variety of AI accelerators, better to create and define a new category - SmartNICs - that could be a $5 billion plus TAM.

There will be a few winners - Cerebras, Habana among them - but only a few.
6) Suspect the best AI accelerator startups that don't hit escape velocity will be acquired by large hyperscale companies as the savings from eliminating all costs other than design/manufacturing really help with the economics.
7) i.e. Merchant silicon has to be 2x more performant per watt per $ just to be breakeven vs. internal silicon like the TPUs. Which is why all hyperscale cloud companies have internal programs albeit with varying degrees of commitment.
8) I might rephrase "The Moon is a Harsh Mistress" as "Tick Tock is Harsh Mistress." 😀

Science Fiction reference, but the modern semiconductor industry is the closest thing to magic in the world today.

Also: Tick Tock not TikTok.
9) More thoughts on the brutal treadmill of the modern semiconductor industry here:

medium.com/@gavin_baker/t…
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Gavin Baker
@GavinSBaker
1) So far in the battle of the irresistible force of the largest stimulus ever vs. the immovable object of the sharpest economic slowdown in history, the irresistible force is *overwhelmingly* winning.
2) Market has been rallying on new cases declining, massive stimulus, cleaner positioning and the fact that large parts of the economy will begin reopening - rightly or wrongly - by Memorial Day along with the reality that many of the largest index components benefit from Covid.
3) The market is always anticipatory - and it ripped into the economy reopening vs. around the economy reopening

Even after 20 years, I am surprised by just how anticipatory the market is. I thought I was weeks early writing this vs. only days early.

medium.com/@gavin_baker/v…
Read 18 tweets
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Gavin Baker
@GavinSBaker
1) "It will not last. Because they are the knights of summer, and winter is coming." - Catelyn Stark

Lots of "Summer CEOs" in Silicon Valley.

We are beginning to see who can become a "Winter CEO."

wsj.com/articles/coron…
2) Many of these "Summer CEOs" have sold a lot of secondary, are posteconomic to varying degrees and seem to care about their reputations above all else.

As a result, it is hard for some of them to become "Winter CEOs" and make the difficult decisions necessary for survival.
3) Being decisive and making the difficult decision to cut expenses early means that the cuts don't need to be as deep.

This puts the company in a much stronger position for the eventual recovery vs. those companies who wait to cut and as a result have to cut much deeper.
Read 4 tweets
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Gavin Baker
@GavinSBaker
1) Thought provoking chart from the best strategist:

When intra-sector valuation spreads are narrowing from really high levels - as they are now - estimate cuts haven't mattered. Dividend cuts have.

N is very low. Curious if the other instances came after a comparable rally.
2) My belief has been that we will not see a "true market price" until there are more accurate forward estimates.

Chart is a good reminder that there is no precedent for the current situation and it is good to keep an open mind given an exceptionally wide range of outcomes.
3) To the charts point, every single estimate cut so far has been bought aggressively. More than just a "transparency premium."

We will see if this persists post this rally. Really curious to see how the WFH names trade - what will be "good enough?"
Read 8 tweets

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