IBM Ultradense Computer Chips. Who Will Profit from the Innovation?

July 9, 2015

I don’t want to rain on IBM’s seven nanometer chips. To experience the rah rah wonder of the innovation, navigate to “IBM Announces Computer Chips More Powerful Than Any in Existence.” Note: You may have to purchase a dead tree edition of the Gray Lady or cough up money to deal with the pay wall.

The write up reveals, just like on an automobile rebuilding television program without Chip Foose, who shows the finished vehicle, not a component:

The company said on Thursday that it had working samples of chips with seven-nanometer transistors. It made the research advance by using silicon-germanium instead of pure silicon in key regions of the molecular-size switches. The new material makes possible faster transistor switching and lower power requirements. The tiny size of these transistors suggests that further advances will require new materials and new manufacturing techniques. As points of comparison to the size of the seven-nanometer transistors, a strand of DNA is about 2.5 nanometers in diameter and a red blood cell is roughly 7,500 nanometers in diameter. IBM said that would make it possible to build microprocessors with more than 20 billion transistors.

Okay. Good.

My question is, “Has IBM the capability to manufacture these chips, package them in hardware that savvy information technology professionals will want, and then support the rapidly growing ecosystem?”

Like the pre Judge Green Bell Labs, IBM can invent or engineer something nifty. But the Bell Labs’ folks were not the leaders in the productization field. IBM seems to connect its “international consortium” and the $3 billion in “a public private partnership” as evidence that revenue is just around the corner.

Like the Watson PR, IBM’s ability to get its tales of technical prowess in front of me may be greater than the company’s ability to generate substantial top line growth and a healthy pile of cash after taxes.

From my vantage point in rural Kentucky, my hunch is that the outfits which build the equipment, work out the manufacturing processes, and then increase chip yields will be the big winners. The proven ability to make things may have more revenue potential than the achievement, which is significant, than a seven nanometer chip.

Who will be the winner? The folks at Samsung who could use a win? The contractors involved in the project? IBM?

No answers, but my hunch is that core manufacturing expertise might be a winner going forward. Once a chip is made smaller, others know it can be done which allows the followers to move forward. IBM, however, has more than an innovator’s dilemma. Will Watson become more of a market force with these new chips? If so, when? One week, one year, 10 years?

Also, IBM has to deal with the allegedly accurate statements about the company which appear in the Alliance@IBM blog.

Stephen E Arnold, July 9, 2015


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