On this episode of the Six Five Webcast—Infrastructure Matters, hosts Keith Townsend and Dion Hinchcliffe discuss the hottest topics in infrastructure and technology. They cover crucial developments affecting the industry, from the surge in Intel’s stock to the ethical landscape of AI advancement.
Their discussion covers:
- The recent increase in Intel’s stock value, the assistance it may be receiving from TSMC, and how geopolitical factors influence the semiconductor industry.
- The swift progression of artificial intelligence technologies, alongside the necessary ethical considerations and the international race to dominate AI development.
- Elon Musk’s proposal to acquire OpenAI and the speculation surrounding Grok 3, indicating a significant shake-up in the AI industry.
- CIOs’ approaches to navigating supply chain challenges in the realm of AI chips, ensuring the resilience and continuity of business operations in a volatile market.
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Disclaimer: Six Five Webcast – Infrastructure Matters is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded, and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors, and we ask that you do not treat us as such.
Transcript:
Keith Townsend: All right. You’re watching, or listening to, depending on your preference, episode 71 of Infrastructure Matters. Dion, I think we’re in trouble because Camberley isn’t with us this week, so we’re going to touch some third rail topics that she would typically rein us in on. We’re going to be as apolitical as possible when we talk about some of the happenings around AI, AI ethics. We’re going to talk Intel, Data Robot, SAP and Databricks in the same room. That’s going to be an interesting one. Of course, AI news and some internal. We’ve done some testing around Intel’s Gaudi 3 accelerator. So, a lot of great news. First off, well, let’s start out with, uh-oh, I think I might have sold my Intel stock too soon.
Dion Hinchcliffe: Yeah, I think so. Well, Intel stock surged this week, unexpectedly, and there a lot of speculation why. There’s been a lot of criticism over Intel’s leadership in the chip industry for the last decade. It’s gotten increasingly questionable, and the stock has really reflected that. But now the story is that Intel is getting help, or may get help from TSMC to modernize and catch their fabs up. Now, why would a competitor like TSMC do this? The speculation is that it’s trying to head off tariffs. The Trump administration has expressed that, and named Intel, that they would like to see our chip companies do better, and they may put tariffs on Taiwan in order to bring that about, and this may be a proactive maneuver to head that off. That’s the speculation, anyway.
Keith Townsend: Wow, that is interesting bedfellows, and we’ll get into more interesting bedfellows in a second. What do you think this means for the AI accelerators, mobile? What’s the downstream?
Dion Hinchcliffe: Well, I think we’re headed for interesting times. There’s only so much you can do to catch up a fab in the United States. Frankly, we’ve got more advanced laws around environmental protection, building codes. It takes longer to do things here. There’s just some things, there’s a limit to how much anyone can aid or accelerate a company in the United States. And there’s a reason why people don’t want to plunk $6-12 billion down in a fab here. They can’t get return out of it. They can’t do two nanometer anytime soon because of all the permitting and red tape and bureaucracy. And so the question, I think, is TSMC is probably hoping for something out of this. They’re trying to demonstrate something. I’m not sure they’re going to be able to really help consolidate in a dramatic way, but they may not need to. They may just get points for trying.
Keith Townsend: And I’m thinking that similar to how there’s always boutique manufacturers for, believe it or not, still seven nanometer processors, stuff that’s used in automotive today, all the time. TSMC, of course, will continue to lead the way when it comes to two nanometer and smaller, if you can imagine that. I think I saw 1.5 nanometer processors, or talk, which is insane. So I think there’s plenty of capacity. TSMC has all of the work, I think, that they can handle right now, and why not win some points with helping Intel out? Too big to fail. So DataRobot acquires open source AI startup Agnostiq, spelled with a Q. We’re running out of domain names.
Dion Hinchcliffe: Yeah. Terms were not announced. The Agnostiq has an AI agent framework and application portfolio that aligns well with DataRobot, which is a place where you can put all your data and run all your AI apps. And there’s going to be a lot of interest in creating a more consistent environment for AI. Instead of having all these patchwork AI models and data lakes that you were doing reg against and all of these things, platforms like DataRobot potentially allow you to bring a little bit of order to the chaos, but what they didn’t have was anything to do with agents. And if you’re not doing agent-based AI this year, if you’re not putting that in your product platform, you are behind. And this allows DataRobot to get into the AI agent space. It’s unclear their, Agnostiq has, I think they said 5,000 customers. If you consider most of those are probably small, medium-sized businesses, it probably needed this to get the R&D money to keep their AI agent portfolio going, because if they’re not acquiring your AI agent company this year, you won’t be able to afford it next year.
Keith Townsend: Yeah, and this interesting how this market continues to move forward. We haven’t covered it yet, but it seems like people are moving away from this idea of independent agents, to agent workflows. So agents not necessarily doing random chores, like you would think a ChatGTP would allow you to do, but workflows specific to, let’s say, cash flow, or order the cash, or some business process in which agents are specialized and have some type of chain of action programmability, versus just generically taking the agent. So this is moving much faster than most of us can follow.
Dion Hinchcliffe: It is. I’ve actually spent the last month and a half or so doing a full survey of the AI agent-based space in a report that will come out at Futurum here in the next couple of weeks. And I talked to a lot of companies and a few CIOs that are doing something with agents, and it’s all around service desk of some kind. It could be internal service desk, it could be external, but it’s about orchestrating some outcome for a stakeholder. An internal customer, an external customer attach a really big road service network, their CIO. And they say people only log in to their website two or three times a year, and so they forget everything about it. And so they don’t know how to change their address or update their payment system or anything like that. Now they can just log in. As long as they can log in, they can talk to a bot and say, “Change my address.” “Okay, great. What is your new address, and I’ll update it in the system.” That kind of thing. So we’re still seeing the crawl, walk, run thing where most people are at crawl with agents, but that’s the kind of thing that they’re doing.
Keith Townsend: Yeah, it seems like just yesterday, we were talking about AI assistance being kind of the future of AI, and that is quickly falling by the wayside. AI assistant becomes kind of a given. In our own email, Gemini has been activated. Mixed results in our email system. We’re moving much faster than most enterprises can adopt this technology. Speaking of data and data lakes and cleaning up data and organizing data, a surprise to me, at least… Both of us cover SAP and Databricks. SAP and Databricks announced a partnership in which SAP can resell Databricks into their customer, with allowing SAP customers to use Databricks platform to analyze their data. I used the term hell has frozen over, because I never thought something like this would happen. Basically this idea that you want to do large data analysis, you want it across your entire data landscape, your SAP transaction data, along with your flat data within your file system, other databases, et cetera, and come out with business insights, kind of the magic of these huge data analytics platforms. SAP has held this capability close to itself with its own cloud-based analytics platform. I’m shocked.
Dion Hinchcliffe: I think a lot of people were, and confused, because SAP has so many preexisting offerings in this space. If you look at SAP Data Intelligence Cloud, SAP Critical Data Cloud, SAP Customer Data Cloud, SAP Datasphere and SAP Analytics Cloud, and that’s just some of them. Adding yet another data cloud, which is what they’re calling this, powered by data spheres. This makes SAP look like they don’t have a clear strategy. They’re not explaining how this fits into all those other clouds. Which one should be up at the top, or how… Do they sit off to the side and each one performs a specific function? And it seems much more partnership-based, in terms of strategy, as opposed to actually real organized product strategy. So I think a lot of people are scratching their head, but clearly SAP customers and Databricks customers want this.
Keith Townsend: How much of you, as you think is warding off the eventual… I think it’s going to be a commoditization of analytics by AI. This seems like a… I don’t know if I’ve ever thought of this, but analytics as just a feature, versus a standalone product.
Dion Hinchcliffe: Well, I mean, I think you make a good point. The commoditization is going to happen, because everything’s going to go into AI and you’re going to be able to pull out the most advanced analytics. Build me a 3D visualization of all of our sales processes over the last year, and boom, it comes in. So you need access to the data, you need to all connect it. And where SAP didn’t have a clear story was, how does SAP and Databricks coexist? This answers that question. The question is, is it a major problem? Obviously, SAP thinks there’s a revenue stream to be had there, which is really important because we’re having a hard time getting a lot of the world to move off of perpetual licenses to subscriptions. So we are now seeing a number of these partnerships like they did with Datasphere before, and now Databricks today. I think it’s a race to the bottom, for the most part. This is something you’ll be able to be to do relatively easily and straightforward across the enterprise quite soon.
Keith Townsend: And SAP has a critical problem taking with this end of life of their legacy ECC product by 2030. SAP customers are notoriously difficult to get to upgrade. I think the latest number I saw, that by 2025, up to 25% of their customers still will be on legacy ECC by 2030, and getting third party support from somewhere else. So SAP is in essence competing against itself with this deadline. These are companies that have serious challenges. Some of it is self-inflicted, and some of it is the competition against AI and the agility AI is bringing to organizations or the expected agility. Which we’ll skip down until the run down to a big competitor, and frenemy of SAP sometimes, because a lot of SAP runs on Oracle. Larry Ellison wants all of our data.
Dion Hinchcliffe: Yes, he does. And so, it’s hard to read much into what Larry says, given that he doesn’t necessarily drive the entire industry like some of the other tech billionaires do. But yeah, he is suggesting, and he may be right about this, that unless we put all of our available data at a national level into a master database, and he is suggesting all available genomics too, so that we can marshal all of our data and organize as a nation to be a competitive against China, that we’re going to be at a disadvantage, because China will do it. China is definitely going to do that.
And of course, it’s still self-serving, because he thinks Oracle is the best place to do that. And I’ve done work with some of the other hyperscalers, like Bezos, same thing, he thinks that only AWS is reliable and global enough to run a lot of important government services, and he thinks these hyperscalers have built these global infrastructures that will allow nations to compete on AI, nations to compete globally on digital services, digital currencies, digital assets. Those are all big conversations that haven’t really come to the forefront, but with big changes in our presidential administration, these things now seem much more likely, suddenly, than they have been in the past.
Keith Townsend: Yeah, much of it seemed like big pie in the sky. Me and you were at the AWS RE-invent just this past year, and we’re talking about this idea of putting digital currency on the blockchain. Now you’re thinking, I’ve seen with Doge, this idea of putting all government transactions on the blockchain. And I’m all for transparency, but we end up with these really interesting dilemmas from a have and have-nots perspective. And one of the things I wanted to highlight from a subset of the Ellison comment was Vice President Vance in Paris announcing that this administration wants to take the shackles off of AI and ethics, and I think his term was somewhere around, something to the effect, we need to stop hand wringing around ethical AI and just advance AI as fast as possible to beat China.
All the VCs celebrated the comment. They were like, yes, this is the way to beat China in AI. The consensus is that China is level with us when it comes to models, if not ahead of us when it comes to models. And when I say us, I mean Western powers and companies. And then, as far as hardware, the US and Western allies are ahead of China. And then people, the argument is that China’s ahead when it comes to people, the people process and technologies. I think this rises an interesting dilemma for the enterprise. Usually US regulations have gated our access to some technologies. When they take those shackles off, of course there’s opportunity, but there’s also challenges in a global environment. The EU seems to be going in a completely different direction than the US.
Dion Hinchcliffe: Well, and if you look at responsible AI, I think is really the word more than ethical AI, because it’s more than just being ethical, that you have to do with the AI. You talk about first principles. With great power comes great responsibility, and AI is the most powerful technology we have, and soon we’ll be able to do things humans can’t, as I’ve talked about super intelligence in the last show. Who’s going to have access to the best super intelligence? That’s going to be a competitive global race. Europe, on the other hand, is saying, “Well, we’d rather be responsible more than we want to be number one.” And they may win that bet. If we end up having, which I think is likely, some accidents with AI, where it’s used in a place that causes significant harm somehow, as people put it in more and more critical places and it makes decisions without human intervention or human oversight and bad things happen, then Europe will be able to say, “Well, you can come here and use our AI, because it’s safer and more responsible. We’ve actually have regulations.”
So they may win that bet. Who knows? And they’re trying, because the EU just announced that they’re trying to organize it at a national level across the EU, because individually, the countries can’t compete with US or China. But collectively, the EU’s got 450 million people. They’re bigger than the United States, if they could get organized. So they’ve just committed $200 billion to their AI efforts at an EU level to compete with US and China. And of course, their story’s going to be, they’re do it best in terms of what’s right for people, and it’s nice to have another horse in the race, to see where that goes.
Keith Townsend: Yeah, diversity of ideas is just as important as competition, which actually brings me to a point we did not put in the rundown. I don’t know how we missed this. It’s big news. Elon Musk offered, and some other investors, a group, offered $97-point-something billion for OpenAI. And this is a little complicated. OpenAI is technically a not-for-profit, so I’m not quite sure how you offer to buy a not… This is beyond my financial expertise. But essentially, he’s looking to take control of the not-for-profit that manages the for-profit OpenAI company for $97 billion.
Dion Hinchcliffe: That’s my understanding.
Keith Townsend: Sam Altman said a reply, “Thanks, but no thanks, but I’m more than happy to buy Twitter for $9.7 billion.”
Dion Hinchcliffe: Yeah, I saw that. Yeah. Well, it’s interesting to see. The question is… The rumor is, the third run of Grok. So Grok 3 didn’t go well, and so they don’t have a model. It has spent an enormous amount of money, and they don’t have enough to retrain it. That’s the rumor. Can’t confirm whether it’s true or not, but that’s supposedly the reason why Musk is making some kind of move to at least get something out of it. I think OpenAI is actually worth more than that offer, but I think there’s secret covenants or stock or something. I mean, supposedly Musk divested himself from OpenAI, but he has some in on the offer, is my understanding, that gives him special privileges to make that, but I don’t think it’s going to happen. But there is some question about whether Grok will remain competitive, and so Musk had to do something.
Keith Townsend: Yeah, AI is moving much faster than we can keep up with, both on the software side and the hardware side. Internally speaking, our sister company, Signal65, has published the results of their Gaudi 3 testing. And the TLDR, I suggest you go to Signal65.com to download the full report, if you want to really geek out on numbers. Our colleague, Russ Fellows, wrote the report after all the testing, and we’ve been testing it for quite some time. Basically, it’s on par with the H100, which, if you kind of look back and say, well, H100, what’s the big deal? Well, DeepSeek was trained, allegedly, on H100s. Grok xAI built their data center around H100s, their super compute off H100s. While the B200s and the new chipsets from NVIDIA are all the rage, H100s and Gaudi 3 is absolutely data center level quality for doing inferencing, and doing enough AI for the vast majority of the enterprises. Any thoughts in general around just the non-NVIDIA market around AI chips and AI chip acceleration?
Dion Hinchcliffe: Yes, and the big question is, in AI, it’s what are developers going to use? And if it’s not CUDA, there’s a big question about, do I commit to something that may not last? It doesn’t have the heritage, it doesn’t have the staying power. Because CUDA is not going to go anywhere. Everyone feels completely confident making these very, very large investments on top of that stack. And the question is, chips like Gaudi are new kids on the block with an unproven track record. And sure, they’re doing great today, but can they sustain the competitive race? Is betting on Gaudi good? Is it going to pull ahead? Is it cost competitive? But most importantly, can they get developers to use it? Developers don’t don’t know anything about it. And so, that’s the real question. There is a huge headwind to break out in AI chips right now. It’s just, NVIDIA has got a lock on the market.
Keith Townsend: Yeah, I will say, if this was Intel of two or three years ago, we would say, “Well, it’s Intel.” Now we’re saying, “Well, it’s Intel.” We could put a lot of faith in Intel two or three years ago that they would just span their way to market parity, if not dominance. Now, this Intel has way more problems than just catching up in AI, AI development, AI platforms. They did a lot to normalize the access to Gaudi… I’m sorry, to CUDA and CUDA cores, so they could hide away the complexity. But you’re absolutely right. Folks like DeepSeek show what’s possible when you program to a machine level, and
Dion Hinchcliffe: That right there is, that’s to Intel’s advantage. They need to tell that story, that some of the most competitive AIs are not using a CUDA. They’re getting the best performance by going bare metal. And so, that’s very interesting.
Keith Townsend: Yeah, and I think someone should commission our Signal65 folks to do that comparison, to say, oh, if I went straight machine level on Gaudi 3, what does that get me relative to a B100, 200, or whatever the latest Blackwell chipset is from NVIDIA, and is it worth the investment? What does it mean for my power and cooling? One of the things that we haven’t talked about when it comes to DeepSeek and being able to basically run the entire model on a single Blackwell chip on a Digix, which is just air-cooled, what does that mean for the power and cooling race, specifically in the enterprise data center?
Dion Hinchcliffe: Yeah. Well, and I think that this whole conversation neglects the way that CIOs think about sourcing. The job of the CIO is business continuity at the end of the day. That’s the only time they ever really get a phone call from anybody, was when something doesn’t work. Other than that, occasionally they get a request, “Well, we’d like to do this or that, or use AI.” So they’re looking for a stable, reliable partner, and the question is, the Chinese government has been running these drills around Taiwan that raised a lot of supply chain questions about whether Taiwan… Something’s going to happen within the next 24 months. That seems to be the analysis. They’re basically dry running a blockade of… And it’s a tiny island at the end of the day. And with everything changing and all eyes elsewhere in the world, on all these other geopolitical issues, there’s a real concern that China may make their move.
And so what I’m hearing from CIOs, in my last CIO Roundtable that I participated in with a bunch of Fortune, that are like Fortune 100 CIOs, is that they’re looking to hedge their bets so that they don’t have operational discontinuity when they can’t get the chips they need to run their business. So they are looking at that level, and this is not the developer level. But developers are the kingmakers, but the CIOs now increasingly, their eyes looking, what are my other choices? And this is about, Gaudi’s really their biggest chance. They can tap into that demand to hedge bets about what’s going to happen in the world that may cut US enterprises, or everyone, off from NVIDIA chips. That’s a big deal.
Keith Townsend: Between tariffs, geopolitical challenges when it comes to borders, we as a industry are appreciative that I don’t do logistics. I’m just happy that I’m not into the business of figuring out where I’m going to get supplies. The big OEMs of the world, Dell, HPE, Lenovo, Cisco, the people who have to put these systems together in the end point really have to think through, how do they, one, not get on the wrong side of each one of these nations from a political perspective, but also able to mitigate some of this cost and access risk. It is an interesting conversation, and we’re here for it. Dion, let’s put in a plug, since Camberley isn’t here, we can put in a plug for our CXO Roundtables.
Dion Hinchcliffe: Oh, yeah.
Keith Townsend: You don’t know this, but we just signed on yet another client as of, I think, a few minutes ago, to do another CXO Roundtable. You want to fill us in on what is a CXO? We call them CXO Salons.
Dion Hinchcliffe: Yes, exactly.
Keith Townsend: What do we do at these things?
Dion Hinchcliffe: Well, these salons are for organizations that want to directly tap into the zeitgeist, or what are CIOs, where CTOs, chief digital officers, if you prefer, any of those digital CXO roles that you have, we’ve built up a community of such practitioners over the years. We can bring them together to think about and discuss the challenges of the day, evaluate new product offerings. And their motivation is, increasingly, they’re not feeling like, they don’t have a voice in a lot of product development in enterprise products because it’s moving so fast and being driven by Silicon Valley innovation, that a lot of their specific, unique enterprise needs aren’t being represented. This gives them a chance to get with leading product companies who are trying to build the future and get feedback from them, but it can be used for many different things, just as a sounding board, as a forum to understand what the major issues of the day are around a specific topic that affects that given a product offering. So there’s a variety of ways. But if you want digital CXOs in a room, we have gotten good at facilitating that, bringing them together and creating productive, useful, actionable outcomes. Concrete stuff comes out of these, and everyone really seems to enjoy the process on both sides.
Keith Townsend: I know I enjoy the process of hosting these, as you said, on both sides, the CXOs, the various executives from actual end customers, and the vendor, the IT enterprise vendor, both get wonderful insights. And we get the pleasure of just hosting these things and watching these conversations unfold. There’s really not much that we have to do, other than throw in a question and watch the magic happen and keep everyone on track.
If you want to learn more about these, you can visit us on the web, thefuturumgroup.com. Dion, as usual, I’ve had a wonderful time. If you’re thinking you’ve learned so much about the tech industry from these Infrastructure Matter episodes, you should share them with your grandmother. It will help her make more friends, whether she’s at home, enjoying the soothing sounds of Keith and Dion, or if she has a social group that she can listen to this while playing. It’s a gift for… We’re recording this on Valentine’s Day, so it’s a great Valentine’s Day gift for any of your grandmothers in your network. Until then, we’ll see you. The next episode of Infrastructure Matters will be 72.
Author Information
Keith Townsend is a technology management consultant with more than 20 years of related experience in designing, implementing, and managing data center technologies. His areas of expertise include virtualization, networking, and storage solutions for Fortune 500 organizations. He holds a BA in computing and an MS in information technology from DePaul University. He is the President of the CTO Advisor, part of The Futurum Group.
Dion Hinchcliffe is a distinguished thought leader, IT expert, and enterprise architect, celebrated for his strategic advisory with Fortune 500 and Global 2000 companies. With over 25 years of experience, Dion works with the leadership teams of top enterprises, as well as leading tech companies, in bridging the gap between business and technology, focusing on enterprise AI, IT management, cloud computing, and digital business. He is a sought-after keynote speaker, industry analyst, and author, known for his insightful and in-depth contributions to digital strategy, IT topics, and digital transformation. Dion’s influence is particularly notable in the CIO community, where he engages actively with CIO roundtables and has been ranked numerous times as one of the top global influencers of Chief Information Officers. He also serves as an executive fellow at the SDA Bocconi Center for Digital Strategies.
