tequila bomb

**Some tech sites are reporting that the “shock” deal made between Intel and NVIDIA yesterday signals that we will now see Intel cram NVIDIA graphics technology into their CPUs. I don’t read it that way, and neither does AnandTech. It’s really more about the insane state of the US patent system… and ARM.

The state of the United States patent system is such that it’s difficult if not impossible to design and build a high-tech product without infringing on someone’s patent. Snark about patent trolls aside, there are often only a handful of good methods to implement a given technology, and all of those methods are patented by someone. For these reasons there are a number of broad cross-licensing agreements in the GPU and CPU markets so that all the major manufacturers can design and build products without running afoul of another’s patent portfolio. AMD and Intel cross-license, AMD and NVIDIA cross-license, Intel and VIA cross-license, etc. Most of these cross-licensing agreements have the participants as peers, with each side getting access to the patents they need to make their agreements equal in value.

Switching subject for a moment, this is pretty much how all the various ongoing smart phone patent lawsuits will end up being settled, eventually.

The biggest (or at least, least ignorable) component of the settlement is a cash settlement between Intel and NVIDIA. Intel will be paying NVIDIA a total of 1.5 billion dollars as part of the terms of the settlement. This is larger than the EU fine ($1.45bil) and larger than AMD’s cash payout ($1.25bil).

The cash settlement goes hand-in-hand with the rest of the settlement, which settles the outstanding legal ambiguity about the previous Intel/NVIDIA chipset licensing agreement, along with establishing a new 6 year agreement between the companies that largely extends the previous chipset agreement.

The most notable bit here is that the chipset license agreement will now formally define that NVIDIA does not gain rights to DMI/QPI, which the agreement defines as being Intel processors with an on-chip/on-die memory controller. So while the company can continue to produce C2D chipsets, they will not be able to produce a Nehalem or Sandy Bridge chipset. This seems to be quite alright with NVIDIA, who claims they are done making chipsets – as far as we know they wound-down their chipset operations some time ago, and the GeForce 320M chipset (largely seen in Apple’s 13” and 11” notebooks) was the final chipset for the company.

Intel has one less competitor in the GPU business that they are trying to expand into, and are free from being sued by NVIDIA or AMD over patent infringement with their IGPs.

Coming back to patents again, NVIDIA now also has access to a limited number of Intel’s x86 patents. And whilst they are focussing on an ARM based processor in the future (Denver), it is very likely that they will fall foul of some of Intel’s CPU patents. So this deal is most likely aimed at clearing the way for NVIDIA when its CPUs may well start competing with Intel’s.

NVIDIA and Intel originally cross-licensed in 2004 so that Intel could build IGPs using NVIDIA patented technologies and methods. That agreement was set to expire this year, which would have been a massive problem for a company whose CPUs almost always include a GPU. Today’s agreement with NVIDIA renews and extends that original agreement: Intel continues to cross-license with NVIDIA, allowing them to produce IGPs that use/infringe on NVIDIA patents. To be clear we believe this is a continuation of existing practices, and not any kind of agreement to integrate actual NVIDIA GPUs in to future Intel CPUs as others have claimed elsewhere.

The rest of what Intel gets would appear to be gaining a market advantage through not having to give anything up. Intel doesn’t have to license x86 to NVIDIA, Intel doesn’t have to license DMI/QPI to NVIDIA, and if our reading is right Intel won’t have to face direct competition from NVIDIA using an x86-to-ARM emulator. This may not be an “exciting” outcome, but keep in mind that Intel already has some of the best gross margins in the chip industry, so to maintain status quo for the company is a big deal for them.

In summary…

NVIDIA is receiving 1.5 billion dollars, continued rights to make C2D chipsets, and unspecified patent protection for their ARM-based Project Denver CPU. Meanwhile Intel will continue to have access to NVIDIA’s graphics patents enabling them to produce IGPs, and some additional security in the x86 market by continuing to lock NVIDIA out of it. NVIDIA seems to have gotten the better end of the deal here, but Intel certainly got something out of the deal too.

The moral of the story is that Intel is still incredibly healthy as a company, but times are changing and the threat from the multitude of manufacturers out there producing faster and faster ARM based SoCs is something that Intel is rightly very wary of.

x86 is firmly in [Intel's] hands, but ARM and future generations of Atom are set to compete in the SoC market, and at the same time NVIDIA’s ARM-based Project Denver could upset the server market in a way not seen in years. Intel has their work cut out [for] them, and as we’ve seen should they falter there are plenty of other companies waiting to capitalize on the opportunity. Lawsuits, fines, and inquiries may sound scary, but the biggest threat to Intel remains all the other companies that want to take down the 800lb gorilla of the silicon world.

**Jon Stokes, over at Ars Technica, has now corrected his article… To be fair Jon is normally pretty much on the ball, but apparently he had a bad fever when he broke the story. Bless. We live and learn.

Correction: NVIDIA wrote in to tell us that our original headline was not accurate. An NVIDIA spokesperson said, “Licensing a technology is different than incorporating an entire processor. The settlement provides Intel with access to our IP and patents, such as Sandy Bridge which already uses NVIDIA technology. The license enables Intel to extend that model for the next 6 years.”

Also, I deleted the following text from the article: “On the Intel side, NVIDIA CEO Jen-Hsuan confirmed that Intel could use the licensing agreement to produce a Sandy Bridge successor with an on-die GPU based on NVIDIA technology.” It looks like NVIDIA’s stance is that there’s already NVIDIA IP in the Sandy Bridge IGP, because Sandy Bridge’s GPU infringes on NVIDIA patents. This wrinkle wasn’t at all clear from the announcement or the call—at least, it wasn’t clear to me.

“We are not building any more chipsets, we are building SoCs now. We are building Tegra SoCs, and so we are going to take integration to a new level. [...] The chipset business [has] not grown largely this year because we have not really been expanding the sales of it.”

I have been trying to wrap my head around these comments attributed to Jen-Hsun Huang, chief executive officer of Nvidia. Ultimately SoCs, and a merge of OpenGL and OpenGL ES (at least in terms of API compatibility with stepped feature sets) is where we are heading. But I was quite surprised at how fast NVIDIA had come to this conclusion, when you consider they are in the business of shipping GPUs today, and not just R&D or licensing of the technology.

This article seems to illuminate NVIDIA’s strategy to some degree…

NVIDIA has spent the better part of a decade establishing itself as a major GPU player in everything from notebooks to workstations, but the imminent introduction of new products and technologies from competitors like Intel could detrimentally impact the company’s bottom line, particularly as these competing products transition to smaller process nodes and more advanced designs. Up until now, every CPU in existence had to be paired with a GPU that was either integrated into the motherboard or sold separately as a discrete solution; NVIDIA competes in both of these markets with its various integrated chipsets and discrete cards.

…

If Intel successfully establishes itself as a major player in the discrete GPU market, both NVIDIA and AMD will be faced with an unwelcome third opponent with financial resources that dwarf the two of them combined. As the dominant company in both desktop and workstation graphics, NVIDIA literally has more to lose from such a confrontation, and it’s the only one of the three that does not possess an x86 license or an established CPU brand. This leaves the corporation at a distinct disadvantage compared to AMD; the latter can combine a CPU and GPU into a single package and / or design itself a graphics core based on the x86 architecture. With no simple way to address these issues, NVIDIA is exploring a separate market altogether, and that’s where Tegra comes in.

…

The last twenty-five years are littered with examples of companies who claimed Intel (and, by extension, the x86 architecture) couldn’t possibly challenge the performance or scalability of their various processors or products. Faced with a future where integrated CPU / GPU hybrids chip away at its budget products and Larrabee challenges the midrange (at least), NVIDIA is pursuing the barely tapped market for smartbooks, UMPCs, MIDs, and next-generation smart phones. The company’s lack of an x86 license could prove to be a disadvantage, but the market space Tegra is targeting is the only one where a non-x86 architecture actually has a chance of succeeding.

Wars aren’t won by sitting at home and waiting for the enemy to come to you, especially when your foe has ten times your revenue and far-reaching connections. Graphics and GPU design will remain a critical part of the company’s future—you don’t pump two years into creating the concept of “visual computing” only to quit—but NVIDIA’s decision to capitalize on the on the same market opportunities Intel is working to create in Atom’s target market is, at the very least, strategically sound.

So, the benchmarks. Neocore gives us some weird results, with the Galaxy Tab hitting the same 54 fps cap we’ve seen before on the Galaxy S smartphones, but Tegra 2 only managing 28.1 fps. Neocore is a Qualcomm benchmark and is likely optimized for tile based architectures, and not for NVIDIA’s. A performance advantage here isn’t unexpected. In our Quake 3 benchmark though, Tegra 2 comprehensively beats Hummingbird – 49.1 fps versus 32.1, a 53% increase.

This is pretty much in line with what NVIDIA said about Tegra 2 potentially beaten in theoretical graphics benchmarks, but delivering better real-world gaming performance. With only two graphics benchmarks, it’s impossible to give a full conclusion on the graphics performance, but it looks like Tegra 2 has the potential to be the best SoC for Android gaming, making it a really attractive platform for tablets. The question is how well will it handle existing 3D content that’s likely optimized for Qualcomm and Imagination Technologies GPUs.

But for now, we can say that Tegra 2 is the most powerful SoC on the market at present and makes for a very capable tablet platform.

MacBook models with screen sizes of 13 inches and below are expected to switch to Sandy Bridge-only graphics, while higher-end MacBook Pros are expected to use graphics from Advanced Micro Devices, according to sources. Whether Nvidia will still be present in higher-end models is unclear.

Sandy Bridge is a watershed processor for Intel because, for the first time in a mainstream product, the graphics chip is grafted directly onto the main processor, boosting performance, while essentially providing the graphics function for free. And the step up in performance may be enough for Apple to rely on Intel’s graphics in some lower-end MacBooks.

Seems very unlikely to me. Intel has not got a good past history of delivering on GPU performance  promises.

Anyone remember how unpopular the GMA 950 IGPs from Intel were? I am not sure Apple want to go through that pain again. Their customers certainly don’t. Nor are they particularly happy with the current GPU restrictions imposed by Intel on much of Apple’s product line.

AMD is a likely shoe in for more components in future. And not necessarily just GPUs.

Apple’s plan for the future is most definitely to be as silicon agnostic as possible. It should be any manufacturers aim at this point in our industry’s history. For that reason I think Apple is likely to keep more manufacturers on tap, rather than less. Dropping NVIDIA means that they are less likely to be there in the future for Apple’s future needs.

Right now Intel are still being coy about how far they plan to go with OpenCL support. Without that any deal arrived at out of choice is simply not going to happen with Apple.

It’s a foregone conclusion that the personal computer of the future is [mobile phone sized]. You could add wireless HDMI to it someday, and it could also be your set-top box.

The PC of the future will be made by new OEMs, sold through new distributors and use a new instruction-set architecture. ARM will be the most important CPU architecture of the future, and it already is the fastest growing processor architecture.

Jen-Hsun Huang, chief executive of Nvidia, speaking at the company’s annual conference.

Couldn’t agree more.

There is no love lost between NVIDIA and Intel. And these comments are certainly directed Intel’s way, at least in part. But that doesn’t make his comments any less valid.

ARM’s shares price growth resembles the lower end of an exponential curve right now. I think that curve fits most charts relating to their business activities.

This is the PC of the future, right here.

Google and Intel are expected to announce a significant breakthrough into consumer electronics and the broadcast industry this week with the launch of a “Smart TV” platform.

Top executives from the Silicon Valley companies are reported to be ready to reveal a deal with Sony, bringing web services to its televisions, during Google’s annual developer conference in San Francisco.

From FT.com.

What will actually be announced we don’t know yet. But it seems that it is a fairly open secret that it will happen tomorrow at Google’s Developer Conference.

Apparently a range of devices, including both set-top-boxes and fully blown TVs will feature Intel’s Atom microprocessor (a SOC containing a cut down Intel x86 CPU core and an over-clocked PowerVR GPU), running a flavour of Google’s Android OS.

By the way, the actual GPU used in the latest Atom is basically the same as the GPU in the iPad.

It’s interesting that Intel’s debut mobile SOC offering, which is too power hungry to actually be a real mobile solution in its current form (because its CPU core is primarily of desktop origin, and its GPU is over-clocked), is perhaps going to end up being the core of media units and home TVs. In this application it can presumably get away with running flat out at the more power hungry, but consequently also more impressive, end of its performance envelope.

Sony are said to see their part in this partnership as a good way to get a foothold in a complex, new and consequently potentially risky marketplace.

What will Apple’s reaction be to all this? I am of the opinion that Samsung will tie up with Apple for the same reasons that Sony is said to have partnered with Google and Intel.