Retired Securities Attorney

Deep value, special situations, growth, intensely monitored positions
Retired Securities Attorney
Deep value, special situations, growth, intensely monitored positions
Contributor since: 2013
Enceladus,
Thanks for some good research, good reporting and a fair interpretation of both.
techy,
Actually, the Greek means simply someone who withdraws [from anything for any reason].
I agree.
>>But in any case I suspect the US government will do what it must to keep 3D XPoint technology out of China's hands. It strikes me as a bit odd that many view fabrication of 3D XPoint in Dalian as a fait accompli - I certainly don't perceive the matter in such terms.<<
It also gives Intel something good to say to China.
"I really wanted to build it here but my Daddy won't let me."
Stephen,
I haven't had time to read the comments yet so forgive me if I'm repeating something someone already said.
Maybe it is not as black-or-white as either an adversarial relationship or a cooperative relationship. maybe Micron and Intel cooperate on some things and compete on others.
Assume that there are legal problems with dividing up the market with Intel taking the Data Center and Micron taking the consumer space and the IMFT or Intel (depending on whether the 3DXP is on the package or not and on the chip or not) does the computer space. There are, however, no legal problems which I know of with Intel fabbing 3DXP in a way that works better in the data center space and Micron fabbing it in a way that works better for the consumer space. One is more cost sensitive and less reliability sensitive than the other. The result might be to divide the market but that would be a by-product of the differing fabrication models and would have no negative legal implications that I am aware of.
I asked someone who would know and, not surprisingly, he said, "It depends." Then it got very long and complicated. It's a good thing I didn't have to pay him for it. :-)
Ashraf,
<<As far as RealSense, Wireless Charging, etc. these are all silly gimmicks that look cool in trade shows but in reality the majority of customers simply don't give a crap.<<
I'm in the silent majority waiting for real sense to come with a new workstation with a sixth generation Xeon, and two PCIE SSDs in order to get one. I'm a gamer but all my games are played on Excel spreadsheets. :-)
Finally, somebody who understands the situation, although I think a 30% to 50% devaluation of the Reminbi is extreme and I disagree with some of the other details in the article. But they are just details. I am projecting that a 15% to 20% is more likely and would bring about an equilibrium albeit a temporary one.
As for the data, if you let me determine the inputs, I'll give you any amount of GDP growth you want. 20%? Sure. just let me raise this one a little; lower these two a little; and let's see if that gets us to 20%.
tx,
>>Help me out here.<<
You don't need any help.
vector,
There is more to Intel's server moat than 3DXP.

But yes, 3DXP does more than help. It is a necessity for cloud providers that require speed - Google being among them. 3DXP is much faster than NAND for SSD storage It does cost more so it is not cost effective for a data center customer which is cost sensitive.
There is also Omni-Path fabric which will compete with Mellanox's Infiniband It is compatible with Infiniband so no one need replace anything. It is cost effective since it costs less. Performance is disputed but my personal opinion is that Omni-Path is faster, cheaper, has more effective error correction built-in so as not to slow the data transmission among servers and will replace Infiniband in new installations. But the test data is not yet in so this is only my opinion.
Qualcomm is fighting an uphill battle with one hand tied behind its back. Again, just my opinion.
p.s.
There is overwhelming evidence that the woman who stood trial and was shown in the press as Gu Kailai was a body double, not her. http://bit.ly/1QLzxjA
I wonder who was going to be executed before her sentence was commuted to life? I had forgotten that her sentence was commuted. I guess there is a limit to what someone will do for permanent support for her poor family. Maybe.
Bruce,
>>It's like the central government watches what the provinces do and then decides to support it, monitor it or squash it. Does that fit with your observations?<<
Somewhat. It seems to depend a lot on who the sheng zhang (loosely "provincial governor") is. One, Bo Xilai, the governor of the province in which the city of Dalian is, was well known for building highways that went nowhere with provincial money. http://bit.ly/1QLyT5t
http://bit.ly/1QLyRdV
Bo was the son of Bo Yibo, one of the Eight Elders of the Communist Party of China. http://bit.ly/1QLyT5t
His wife, Gu Kailai, a Chinese lawyer, made the mistake of ordering an aide to kill a British citizen, Neil Heywood who was fronting for her on Swiss bank accounts. Her prosecutor was mysteriously found hanged in his apartment.
http://read.bi/1QLyRdW
The British guy wanted more and refused to turn over her money to her. The aide killed him. Britain investigated. Britain is not China. The aide ran to the Chinese authorities when it was clear he was going to get "indicted". She got the death sentence. Her husband, the sheng zhang, got investigated by China after British authorities reported what they had found out to China and the aide told everything he knew in an effort to get leniency. He got life in a Chinese prison. Too much publicity on this one for the Ruling Powers to sweep it under the great Chnese bear rug. (It's a white Panda.)
>>Regarding investments, I noted that Qualcomm made a deal with a province. Intel makes deals with the central government (AKA universities).<<
A very important distinction.
>>Is it correct to say that Universities are essentially the same as the central government?<<
Yes and no. Tsinghua is an arm of the Chinese government but it is also the "Harvard" and "Yale" of China. For real. My wife's grandfather was a founder and, for a while, the president of the university. I know graduates. They are all very smart and highly educated.
Thanks David. That is useful stuff.
frmrVZguy,
Thanks for the rewrite but I pay much more attention to what you say than I do to how you say it. So what if you have a little snotty side. You contribute real value and that is what's important to me.
Mapmaker,
>>What's crazy ?? I can't imagine North American countries even dreaming of this kind of growth yet market eggheads tell us China's a problem.<<
If you let me control the published data, I'll give you any growth rate you want. 20%? Sure. Just let me raise this number a bit; lower these few a bit; and check and see if it comes out to 20%.
EnerTuition,
>>the lease/PPA guys have been way too aggressive with their politics and pressure tactics that turned off a lot of people.<<
Yup. I'm one of them.
I apologize for expressing a lot of personal opinions on an investment site but I think my reasoning is worth considering from an investment perspective. As you can tell, I have strongly held personal opinions about the ruling powers in China and the provinces. I don't like them worth a damn.
frmrVZguy,
>>Intel's business dealings in China since mid-2014 have been a brilliant master-class in China business dealings.<<
Absolutely. And without violating the US foreign corrupt practices act - I think.
>>I'm ready to buy the book whenever BrianK writes it.<<
I'm reading it as it's being written.
Bruce,
Please see my reply to William above (or below, I can never figure that out). I think I answered you mostly there.
>>Strong nationalism<<
I don't think that is what's going on. I think it is a strong self interest in power and corruption having little to do with nationalism except that it makes for a good story to sell to the Chinese people. It's getting harder and harder to sell that story since they opened the borders. People travel; see what they see; hear what they hear; and come back and whisper about it. Some don't come back. I have numerous in-laws who didn't. Some go back to try to get their mother, father, sister, brother, husband, wife, boyfriend, girlfriend...to leave with them and spend years working at it. I also have a few of those.
William,
>>But how long will it take...<<
That depends on what happens economically in China and that depends on what the People's Republic ruling [committee?] does.
Right now, the Ruling Power is expending huge sums to hold the value of the reminbi (yuan) higher than the level market forces are pushing to. There is a large positive and a large negative to this policy.
The large negative is that manufacturing and assembling industries, which moved into China because of low labor and other costs, are gradually losing the benefit of those lower costs. A lower currency value means lower costs in labor, space, supplies, etc. for international or overseas companies manufacturing in China. Those operations will remain until they dissipate naturally by attrition. No one is going to abruptly move a factory to Vietnam. But new factories will be situated in Vietnam or India or some less expensive place than China.
So there will be losses in jobs and personal income but it will be a slow process. New factories will be situated in Vietnam or India or some less expensive place than China.
But sooner or later the people who are already restless will get more restless. Particularly the young as they reach adulthood. The young escaped the heavy political indoctrination thanks to the balance of the internet (which the tech-savy can still get despite the Ruling Power blocking every news organization which publishes anything negative about that Ruling Power or the Party (which is mostly all of them).
So that is a slow process.
The large positive, on the other hand, is that Chinese businesses with large amount of dollar-denominated debt might be able to pay the interest due (in dollars) by converting over-priced reminbi and thus live to see another day (or 1,233 days). If the Ruling Power allowed the currency to find its own (I think much lower) level, oops. Can't pay the interest and can't continue to borrow from the international banks.
That represents a more immediate loss of jobs and purchasing power.
I think that is the point. Kick the can down the road and take more bribes to give away what doesn't belong to you. It's cushy and it is no longer the big secret that it was. Too many political hands have been caught in too many cookie jars.
Another oops.
>>...and how messy/dangerous will it be?????<<
Messy but I don't think very dangerous. Even the powers that be know when to grab the money and run for the Alps. There are one billion Chinese who will be out to have a serious talk with those folk. OK, not one billion. Just a few tens of millions of the younger, angrier, more vocal folk. The Chinese army won't kill them all. They are the sons and daughters of the soldiers.
OK, I'm crazy but that is what I think. Actually, I used to be crazy. Then I got wealthy and now I'm insane. They tell me it's different. I think it's because I can afford to pay their bills.
End of rant.
Doron,
If I am understanding you correctly, you believe that the primary advantage Mellanox Infiniband has over Intel's Omni-Path is that Infiniband from Mellanox uses its own processor and does not draw any of the capacity from the server cpu whereas Intel's Omni-Path draws its processing power from the server's cpu thereby diminishing that cpu's availabily for processing the main tasks the server is dedicated to processing. Is that roughly correct?
If it is, and it this is an advantage for Mellanox's Infiniband, why would Intel not put a dedicated Xeon processor on the job of managing the Omni-Path fabric the way Mellanox does with Infiniband? Do you know or can you make an educated guess about it?
Nice job, Overbet, as usual.
From the perspective of competition between DRAM and 3DXP, I expect increasing costs per wafer and, at some point per bit, as we go down through 1x and 1y. While DRAM will be getting more expensive at lower nodes, 3DXP and 3D NAND both scale nicely. So I see 3DXP as more of a competitive problem to DRAM at lower nodes than to 3D NAND. Planar NAND I think will soon be ready for a tombstone.
>>or refusing to sell XPoint to anyone who does not also buy DRAM from Micron.<<
That might represent an illegal tying arrangement. But I am no longer sufficiently up on antitrust issues to speak other than as a lay person.
Thanks Bruce. I already posted one thought that jumped out at me.
Great discussion. My compliments to all.
Doron,
Thanks again for the reply. Just so that you know, I appreciate views contrary to my own. That's how I learn (and save money).
And especially thanks for the links. Now that I have a knowledgeable, well-reasoned and documented opinion, I may change my mind. I have work to do. :-)
Bruce, William,
I disagree on the Peoples' Government's ability or willingness to allow free market forces to control anything. The Peoples' Government is just trying to prevent getting itself overthrown. I don't think it will survive.
Thanks, Arnold. That's a great help.
frmrVZguy,
I agree with most of what you said. In particular, I completely agree that "A devalued CYuan allows more stuff to be sold by China and payments made in dollars...." So up until about a week ago, I could not figure out why China would not do what was clearly in its national economic interest and let the reminbi (Yuan) fall against the dollar. Then someone pointed out to me the trillions of dollar denominated debt owed by Chinese companies which they would be unable to repay in devalued reminbi. Too many business failures for the People's party so they started supporting the currency and bad-mouthing currency shorters.
Right now, China is experiencing significant capital flight out of China and into other currencies, mostly dollar. The decades old Chinese businessman's trick is to buy 200,000 widgets from a friendly supplier; pay for 200,000 widgets in reminbi or reminbi converted to the seller's currency; and then go visit his supplier and pick up the payment for 100,000 of the 200,000 widgets that he did not get, by agreement, less, of course, the seller's small money-laudering fee.
Where is that money going? I think into the US stock market and into US treasuries, raising process of both and lowering treasury yields to unheard of levels.
Negative interest rates here we come.
Doron,
It was not a "challenge". It was a request for comments.
And I am really glad you choose to give me the benefit of your knowledge. I have seen your writing and know enough to know that you know stuff.
>>One central major difference I see between Mellanox EDR and Intel's Omni-Path, is Mellanox adapters have a CPU-Offload engine, while the Omni-Path does not and relies on the CPU to manage the networking completely.<<
These are all respectful questions - not disguised arguments. How sure of that are you? If that is true for now, and there is a competitive advantage in using a smaller processor to manage the fabric and offload that work from the main processor, why wouldn't Intel do exactly that? And lastly, have you considered whether the Xeon D performs this function for Intel? I have not been able to answer these questions to my satisfaction yet.
>>For such applications, without CPU offload engine - ~50% of the CPU resources are used to manage the networking, leaving only ~50% of the CPU power to do the actual application processing.<<
You have said that before and I went to check it out as best as I could. I asked some Intel people who would know (for whatever that is worth) and although none would give me a direct answer, several laughed when I said it and one actually guffawed. Where do you get your 50% estimate from? No one that I have spoken with thinks it is realistic.
Your other points have to be given serious consideration.
Thanks, Bruce. Do you have any guesses on how many servers might be included in each "opening"?
Thanks, Arnold. Needless to say I agree. You said it better than I have ever seen it said before.
Bruce,
>>You went a bit far with: " . . . Closes All Openings Into The Server Market" :-)<<
How about "Closes all openings into the server market which involve more than a few interconnected servers"?
Or if you really do see some possible openings into the data center market that I do not, please share it with me. I'd also like to hear from anyone else who sees such an opening with his or her reasoning on how who goes through that opening. Please not just cheer-leading. Reasons are what I will appreciate.