Intel Reinvents Itself to Stay King in a Changing World

Intel chips dominate the computer market. But the computer market is changing. So Intel is changing too.
The logo of Intel is seen during the annual Computex computer exhibition in Taipei
Tyrone Siu/REUTERS

Intel is bigger than all but 50 other U.S. companies, and that's because of something called the CPU.

If you were around in the '90s or the early aughts, you saw the TV ads. Intel Inside. For decades, Intel has supplied a majority of the chips that sit at the heart of our personal computers, including desktops as well as laptops. These chips are called central processing units, CPUs for short. They handle most all of the digital calculations that drive our PCs.

They also handle most of the calculations inside the millions upon millions of computer servers that run Internet services like Google Search, Facebook, Amazon, and Twitter. And Intel came to dominate this market too. It now builds 99 percent of all CPUs that wind up in a computer server, according to research firm IDC. When you use the Internet, you use Intel.

But the chip market is now shifting in new directions. And as it shifts, Intel is remaking itself in an effort to stay on top of the heap. The world's largest chip maker somehow missed the shift away from the PC and toward the smartphone. Other chip makers supply most of the silicon at the heart of our phones. But Intel now sees that the game is changing on the Internet as well. To run their myriad online services---operations of unprecedented size and complexity---Internet giants like Google, Facebook, and Microsoft need more than just CPUs inside their millions of servers. They're using all sorts of alternative chips to accelerate particular technologies, most notably the new breed of artificial intelligence. So, Intel is remaking itself as a company that can build these chips too.

Last summer, Intel paid $16.7 billion to acquire Altera, a company whose programmable chips, known as FPGAs, help choose search results inside Bing, the Microsoft search engine. This was the largest acquisition in the history of Intel. And then, earlier this week, the company agreed to acquire Nervana, a startup building chips just for deep neural networks, AI services that can learn tasks by analyzing enormous amounts of data. At Google, Facebook, and so many others, deep neural nets are now recognizing photos, identifying spoken words, and translating from one language to another---among other tasks---and that's why Intel paid an apparent $408 million for Nervana.

"We're now at the precipice of the next big wave of growth," says Intel vice president Jason Waxman, "and that's going to be driven by artificial intelligence."

These hefty buys show just how rapidly the global chip game is changing. As Microsoft explores FPGAs as a way of accelerating search, it's training deep neural networks with massive farms of GPUs, chips originally built for rendering images for games and other highly graphical software. So many other Internet companies are doing the same. And at Google, engineers have gone so far as to build their own alternative chip, dubbed the TPU. After GPUs help train a neural network to, say, recognize faces in photos, Google's TPUs help execute this neural network, putting it to use in the real world.

It's an attack of the geek acronyms. FPGAs. GPUs. TPUs. And certainly, keeping it all straight is far from easy. But the trend isn't hard to see. The world is moving onto Internet services, and these Internet services now require many chips beyond the classic CPU.

As Microsoft vice president Peter Lee explains it, our Internet services are evolving more quickly than our CPUs. CPUs continue to mature according to Moore's Law, getting faster every two years or so, but that's not enough to accommodate the rise of deep learning. Nor can it handle the tremendous growth of our online services. So, we need chips that can handle "post-CPU workloads," in the words of Lee, who oversees a new Microsoft Research operation called NExT. "Increasingly, we're looking at more specialized hardware," he says.

It's significant that so many acronyms are in the mix. We're at the beginning of this movement, with Internet companies exploring so many possibilities, and it's unclear how things will eventually pan out. Will the market settle on one or two chips? Or it will it be more? And what will those be? It's telling that Intel has acquired not just Altera, but Nervana too. Wherever the market goes, it wants to be there.