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China and the US are robbing Israel’s chip power to surface

Recently, Google “poached” former Intel executive Uri Frank, hoping that he can lead its strategic chip development team in Israel.

Frank has led the development of Intel’s data center and personal computer chips. The products he is responsible for bring about $30 billion in revenue to the company each year. It can be seen that he is likely to carry out similar activities on behalf of Google in Israel this time.

Frank’s recruitment is only a small part of what happened in the semiconductor world. According to industry insiders, the chip industry is ushering in “explosive growth”, and almost all major high-tech companies in the world are involved in the chip business. Intel has always been doing business in Israel.

But recently, Apple, Amazon and Microsoft have also started to develop chips in Israel, and now Google has joined their queue. As far as we know, Facebook also plans to establish a chip research and development team in Israel.

Technology giants are wrestling with chips, and Israel is becoming their main battlefield. In fact, almost all chip companies do business in Israel. For some companies, their offices in Israel are their most important bases outside their home country.

Develop more, produce less

In Israel, there are several senior chip development companies. For example, Intel has developed central processing units (CPUs) for personal computers, data centers and networks in Israel.

There is also a fab in Israel called Tower Semiconductor Ltd, which is a foundry that has long focused on analog chip manufacturing and is headquartered in Migdal haEmek.

In addition, the Israeli companies Nova Measurement Instruments Ltd. and Camtek Ltd. are world leaders in the development and production of machines that perform quality control—a key step in the production process. About two years ago, the California-based test giant KLA acquired the established Israeli company Orbotech for $3.4 billion.

Another company, Applied Materials, is deploying important R&D and production tasks in Israel. The two largest electronic design automation (EDA) software companies in the world, Synopsys and Cadence Design Systems, also have development centers here.

In addition, Apple is also developing LiDAR sensors for iPhones and self-driving cars in Israel. Cloud giant Amazon is doing most of its chip development in Israel, hoping to provide support for its cloud-based machine learning.

This week, according to TheInformation.com report, Amazon will begin to develop a new network chip for its server field here. Another cloud provider, Microsoft, has a small business in Israel, but they are also developing network chips for data centers here. In addition, as far as we know, Microsoft is expected to launch a chip for data centers soon.

The networking giant Cisco is developing its Silicon Silicon chip in Israel to meet the growing demand for data center data consumption. And tracing the development of the chip is also based on the technology acquired by Leaba Semiconductor, an Israeli start-up company they acquired in 2016.

Mobile SoC giant Qualcomm has set up a development center in Israel. Samsung has a very good base in Israel. Sony has acquired Altair (now Sony Semiconductor of Israel), headquartered in Hod Hasharon, which has developed energy-efficient cellular communication chips for the Internet of Things (IoT).

Cloud companies need dedicated chips

Like Amazon and Microsoft, Google is not just a major player in the Internet or software. These three global cloud giants have also been committed to developing proprietary chips in recent years. These proprietary chips will enable them to provide and other cloud providers. The different services offered by the company give Ali a better competitive advantage. Even Facebook has tried to cooperate with Intel to develop chips.

In today’s technological world, the prevailing view is that hardware/software integration is an inexpensive way to achieve higher performance. The main player concludes that it is important if we maintain control of the development of key hardware and make IP follow closely behind.

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At the same time, internally developed chips can also provide customers with better services and save more energy costs. According to Applied Materials, by 2025, data centers will consume 15% of the world’s electricity. In 2020, this figure is only 2%. To this end, in essence, chip energy efficiency and performance are equally important.

Shahar Carmi, an analyst at Psagot Investment House, said that in recent years, the global chip industry has experienced a wave of increased demand and is moving towards an annual turnover of US$400-500 billion. I heard that the CEO of Tokyo Electron predicts that between 2030 and 2031, global semiconductor revenue will reach US$1 trillion. ”

“Now, after a long integration process, the level of competition and profitability is encouraging new players to enter. Are we also in the best position of Israel’s chip revival? Thanks to the trend of SPAC and investment in small companies, we will Seeing a wave of semiconductor investment.” Psagot Investment said

The biggest limitation: talent

Intel has approximately 14,000 employees in Israel and they are regarded as the country’s main high-tech incubator. Intel has been doing business in Israel since the 1970s. In recent years, many of the company’s major developments have originated in Israel, including the concept of a central processing unit (CPU).

Oppenheimer & Co. analyst Sergey Vastchenok explained: “The biggest limitation to the company is manpower. High-quality people are more valuable than cash.” The company will do its best to visit the “talent pool”, and the only places to find it are Silicon Valley and Israel.

Intel has built a large technology incubator with a lot of knowledge in Israel, and everyone wants to get some of its expertise. GPU giant Nvidia is also hiring 600 programmers in Israel. And Intel will be their target of poaching.

Nova CEO Eytan Oppenheim believes that Intel will not be the only one in this wave of Israeli chips. As one of the world’s leading providers of metrology equipment for advanced process control in semiconductor manufacturing, Nova has inherent insight into industry events.

Oppenheim said that the industry skills that hardware engineers must possess are so similar that almost all local chip companies, even biotech companies, can be targeted by tech giants.

Obviously, this is just the beginning of the consensus model.

In 2000, Marvell Technology acquired Galileo of Avigdor Willenz for US$2.7 billion and converted its Israeli base into a development center. According to reports, the center currently has about 600 employees.

In 2015, Amazon once again purchased Annapurna Labs, another company of Willenz, for $370 million. Annapurna co-founder Nafea Bishara (now vice president of Amazon AWS) told Bloomberg that the company’s chip staff in Israel is now more than 10 times greater than at the time of the acquisition.

These prices have nothing to do with chip quality. A company may be acquired without selling any chips, even if the development is incomplete. Instead of creating something from scratch and wasting precious time, it is better to buy an Israeli startup company as the foundation of a local development center and then continue to develop it.

The same thing happened to the autonomous driving giant Mobileye. It is understood that in addition to self-driving cars, Mobileye is also a chip developer. Mobileye is currently building a new campus in Jerusalem that will accommodate hundreds of new employees, and the total number of employees in the area is as high as 2,700.

After acquiring Mobileye, Intel later bought the Israeli start-up Habana. In about six months, the number of employees in this office has increased from 170 to about 650 employees (including the transfer of internal personnel within Intel) .

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Nvidia, the world’s most valuable chip company, completed the acquisition of the Israeli company Mellanox at a price of approximately US$7.36 billion a year ago. Although the restrictions imposed by Covid-19 were not relaxed in Israel until recently, Nvidia announced last week that it intends to recruit 600 engineers locally.

It is worth mentioning that Intel and Microsoft also made acquisition conditions for Mellanox at the time, but they failed in the end.

Large sums of money also breed egoism. When Amazon launched its artificial intelligence chip in December last year, at the same time, it also announced with Intel that it had launched the Gaudi AI training chip for its cloud products, which almost all took away the entire exhibition from Intel.

Gaudi was developed by Habana Labs in Israel and, together with the company, sold it to Intel for US$2 billion. It is worth mentioning that both Annapurna and Habana were founded by Avigdor Willenz.

Back to Microsoft, it is reported that Xsight Labs, another company founded by Willenz, is developing the advanced stage of data center chips.

Industry sources said that after failing to acquire Mellanox, Microsoft may soon acquire an Israeli chip company and add it to its existing business to develop processors for its Surface computer product line.

Electronic engineer or code farmer?

Since the beginning of its development, Israel’s high technology has always focused on semiconductors, whether it is CPU/GPU, memory chips, sensors, network processors, or others.

Yair Snir, vice president and managing director of Dell Technology Capital in Israel and Europe, said: “We are now witnessing two big phenomena. First, the major chip players are already very active in Israel; second, the Israeli industry is playing a leading role.”

But he added that in the past ten years, electronic engineers have been developing computer science, which makes new employers now likely to be troubled by talent. Snir said that employers and governments should do their best to train talents for these professions.

“In the past ten years, most people with a technical background tended to favor software rather than electrical and electronic engineering. This is because the former has a faster learning curve, higher salaries, and shorter development cycles. Because the technology giants themselves are software developers. Business, so we must change the direction and guide more students to learn electronics and electrical engineering instead of software”, Snir emphasized.

Ido Bukshpan, vice president of chip design at Nvidia, believes this task is possible. “Relocating employees from chemistry, biology, mathematics and even medical engineering to high-tech fields will create diversity and generate more ideas.”

Who will fund the multi-billion dollar chip factory?

In recent years, high-tech pendulums have gradually turned to hardware. This change is accompanied by an increase in the number of data generation, streaming service usage and AI-based services. These applications have put forward higher and higher demands on storage, processing and network functions.

However, over time, the software functions used to improve performance have declined. At the same time, the demand for hardware continues to grow, it will make great progress and meet the constant demand. However, there are some obstacles to hardware improvement.

First of all, everyone has always been concerned about the high cost and long time involved in establishing a chip manufacturing plant. Most of these factories around the world have benefited from government support, including Intel fabs in Israel and Ireland that have also received tax relief.

Taiwan began investing in this field as early as the 1980s and established the Taiwan Semiconductor Manufacturing Company (TSMC), which is now considered the world’s leading chip manufacturer. Taiwanese also established the United Microelectronics Corporation (UMC) to compete with TSMC with the support of the government.

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However, even today, government support for this industry is necessary. TSMC is about to build a $12 billion factory in Arizona and has already received approval for government subsidies.

An example of a huge investment in a fab: In 2020, TSMC’s budget for upgrading its production infrastructure is approximately US$16 billion. In addition, the US government’s subsidies to TSMC are estimated to be hundreds of millions of dollars.

Compared with the planned amount of investment in the semiconductor field in the United States, all of this pales in strength. In the infrastructure upgrade plan recently approved by the Biden administration, $37 billion was allocated to the chip industry.

Intel is the most strategic technology infrastructure company in the United States. They announced last week that they would invest 20 billion U.S. dollars to build two factories in Arizona, and they said they would announce additional investments later this year. However, Intel did not specify a new target country-the United States, Israel or Ireland.

Intel has planned to invest about 40 billion NIS in its Israeli wafer fab, not to use existing technology to expand manufacturing activities, but to develop advanced manufacturing capabilities in the future.

The field of microprocessors has experienced a lot of turmoil. Like oil in the 1970s, chips have recently become the focus of geopolitical conflicts between China and the United States.

In this trade war, discussions about intellectual property (IP) are not just about the copyright of movies and TV shows, but about technology patents (mainly Internet infrastructure) and chips.

Chinese investment and U.S. pressure

The US government has imposed restrictions on the sale of chips to China, and these restrictions also apply to US allies, mainly Taiwan.

Unlike Internet services, China’s semiconductor industry still lags behind the West, especially in terms of performance and complexity. But China will never get it right. In response to the restrictions imposed by then-U.S. President Donald Trump, the Chinese increased their efforts to achieve independence in this area.

China has a clear goal in this matter. In its 2015-2020 multi-year plan, it laid the foundation for chip development capabilities for network equipment and mobile devices, and in its current five-year plan for 2021-2025, it plans to expand on this basis.

Dr. Avi Strum, Senior Vice President and General Manager of the Sensors and Displays Business Unit at Tower Semiconductor, said: “At the same time, their government is investing a lot of money in many factories in many other regions.

As an ally of the United States, Israel is considered a relatively safe place, which is a necessary condition for success. Israel also has one of the most developed technological ecosystems outside the United States. This explains why this will bring a lot of investment influx.

Today, big tech giants can invest in almost anything they want anytime, anywhere. This includes recruiting expensive talent from Israel, if talent in the microprocessor industry already exists, or even more.

At the same time, despite fierce competition, Israeli startups are not worried. Moshe Tanach, CEO of AI server chip company NeuReality, admitted: “Opportunities are getting smaller and smaller”, “because it is difficult for you to compete with Apple, Amazon and Nvidia. It is worth mentioning that Nvidia increased its salary by 10% after acquiring Mellanox. -15%”.

Avi Bakal, CEO of the startup Trieye, said he feels even more frustrated by this situation. “In addition, for smaller companies, there are also serious problems in the competition for talent and non-talent.

Even junior employees of Apple can earn 50,000 NIS. This is a wealth. But when we recently managed to recruit people from Apple, we needed to open a bottle of champagne. ”

V#duzline #chip #Israel

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