Advanced Micro Devices (AMD, Financial) is joining forces with Baidu (BIDU, Financial) to work on GPU computing in data centers. They are teaming up to enhance optimization for applications that use Radeon Instinct accelerators. Advanced Micro Devices is eyeing the high-growing neural network and machine learning market with its current Radeon Instinct efforts.
Software optimization collaboration is expected to increase the performance of Advanced Micro Devices' GPU parts in data centers. The company's Instinct accelerators have a wide range of application for systems used in academics, life sciences and automotive. Radeon Instinct is intended for the high growing machine learning and neural network markets. Advanced Micro Devices claims that it offers cost-effective machine learning and interface solutions through its Radeon Instinct server accelerator products.
“AMD and Baidu will leverage the two companies’ world-class technology and software engineering capabilities to create a comprehensive and open ecosystem to address the growing demand for datacenter workloads and provide more intelligent human-computer interaction.” – Forrest Norrod, senior vice president and general manager, Enterprise, Embedded and Semi-Custom, Advanced Micro Devices
Neural network and machine learning bodes well
The company is targeting the machine learning and neural networks market with its new GPU architecture, Vega. It's finally targeting the right market. The company's new architecture supports FP16 and INT8 modes, which are highly beneficial for machine learning performance. This software optimization collaboration with Baidu will further fine-tune Radeon Instinct for machine learning applications.
It is worth mentioning that the deep learning market is expected to grow at CAGR of 65.3% to reach ~$1.8 billion by 2022. A report from MarketsandMarkets mentions Baidu as among the key players in this market alongside Google. Moreover, the neural network market in Asia Pacific is forecasted to grow at 33% in 2017-2023, according to kbvresearch. The report from kbvresearch further notes that China will continue to dominate the market in Asia Pacific.
Advanced Micro Devices’ collaboration with Baidu, combined with Vega's high-performance computing (HPC) capabilities, now makes the company a viable competitor for NVIDIA (NVDA, Financial) in the AI market.
Baidu’s position in China
First Baidu announced plans to deploy Advanced Micro Devices' Epyc processors in its data centers. Now, the company is collaborating for optimization. Being in business with Baidu, Advanced Micro Devices is materially exposed to China’s data center market. It’s not wrong to say that Baidu is the Google of China. Baidu's search is the most visited website in China, according to Alexa statistics. The company generates more than $10 billion in revenue each year. Imagine Epyc in Baidu’s data centers, and you will know how Advanced Micro Devices is getting a hold of the Chinese market.
Using Epyc server processors along with Radeon GPUs makes economic sense as the company will be able to benefit from sticking to the same supplier. All in all, this recent GPU collaboration between Advanced Micro Devices and Baidu is a threat for the dominance of NVIDIA in the AI market.
Software optimization is the key to data center ambitions
The most significant takeaway from the recent announcement is the software optimization efforts. One of the widely cited cons for Advanced MicroDevices' data center offerings is the lack of optimization and software support.
Collaboration with Baidu allows Advanced Micro Devices to accelerate software ecosystem development for Epyc and Vega, along with pushing frequent optimization updates. More cloud vendors and HPC players will deploy Advanced Micro Devices' silicon as more updates and optimizations kick in.
Bottom line
Advanced Micro Devices' collaboration with Baidu is a critical milestone for Advanced Micro Devices to get a foothold in the Chinese data center market. The company is exposed to the growth of the AI market in China as a result of this collaboration. Baidu will boost Advanced Micro Devices' top line as it’s one of the largest technology companies in China. More importantly, collaboration will lead to frequent optimization updates, which will attract more commercial players to use Advanced Micro Devices' products. The bottom line is that the Chinese market has started to look good for Advanced Micro Devices.
Disclosure: I have no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.
