Data centre or ai farm?

Gallium Price ($US/KG)
10 May 2024 : Price $799.60 
1 January 2024: Price $755.80

Source: (https://strategicmetalsinvest.com/gallium-prices/)

A week is a long time in markets. While most casual observers and traders are hanging onto every piece of economic data to divine the tea leaves on the next move in interest rates, corporations and Boards are getting on with running their businesses, especially those gearing up for Capex to support AI and its derivative infrastructure. On a side note, the current indicated gallium price of U$799.60 is the highest we have seen in the last 4 years.

The start of the week began with a Lex Column in the FT summarising data centre power demand in coming years. (Excerpt below). The only surprise appears to be the pace in which the demand has arrived. For those of you who have seen G50 Corp’s Gallium – Lifeblood of the Modern World presentation, you will know we are not surprised and have been across the daunting size and immediacy of the problem at hand. The FT article provides additional colour on new power infrastructure demand growth and potential supply but does not fully close the loop on the most likely solution – incumbent energy systems will need to become more efficient. GaN power semiconductors is the proven technological advancement for our green transition. I point you to a slide directly below that attempts to wrap some numbers around the GaN solutions for a Tier 1 Data Center.

CRITICAL METAL = THE CRITICAL OPPORTUNITY 

Transforming Power Electronics
  • Creating smaller, energy-efficient devices
  • Faster and more reliable 5G networks
  • Boost efficiency and performance in data-hungry processes
  • Expect broad integration, leading to a connected, energy-efficient, tech-advanced future.
Immense Market Opportunity
  • 5G telecommunications
  • Artificial Intelligence
  • Internet of Things
  • Electric Vehicles / Self-Driving Cars
  • Global Semiconductor Market was U$574.6 bn in 2022 and forecast to grow at 8.8% CAGR to U$1,307.7 bn by 2032
Golconda
  • Infrastructure
  • Patented Claims
  • Grade x Intercepts
  • Advanced Geological Model
  • Proximity to End Users
  • Strategic Location

A quick nod to Australia’s very own BluGlass Ltd – which develops and manufactures GaN blue laser diodes based on its proprietary low temp, low hydrogen, remote plasma chemical vapor deposition technology.

Goldman Sachs in the US weighs in on the energy demand from data center debate. Their view is a little more succinct and summarised in one chart…which points to efficiency gains required in minimising the environmental footprint.

Aixtron SE out of Europe reported revenue near the top of guidance, driven by growth in Asia and Europe for its systems for applications in SiC and GaN based power electronics.

We then rounded out the week with an earnings update from the industry leader in next generation power semiconductors, Navitas Semiconductor. The Q on Q growth in demand for the GaN semi’s is remarkable.

GALLIUM NITRIDE – MARKET ADOPTION

Potential Savings

For a typical major Tier One Data Centre Operator assuming 6 smaller and efficient GaN-based power supplies can perform the work of 10 Si-based units.

Servers p/rack go from 30 to 34. (Source: GaN Systems)

  • Operational savings from energy: U$5,600 / server rack saves U$241 million pa
  • Additional revenue from greater server density: U$5,100 / server rack adds U$1.1 bn pa
  • Lower capex from postponing construction of further data centers: $840 million in CAPEX saving
Decarbonising Data Centres will Shape the Green Transition Lex Column

Next time you turn to ChatGPT, try asking it how much energy it needs to respond to your query. The International Energy Agency reckons the answer is 2.9 watt hours (Wh), or 10 times as much as a Google search.  The excitement around AI helps explain why electricity demand from data centres is expected to take off. This extra load is a bugbear for the energy transition. But, as Microsoft’s deal to back perhaps $10bn of new renewable projects from Brookfield suggests, image-conscious tech giants are well placed to help. 

The challenge is clear. Demand from data centres will roughly double by 2026, from 460TWh to as much as 1000TWh says the IEA. Worse, data processing facilities tend to converge on favourable locations. In tax-friendly Ireland, for example, they will account for more than 30 per cent of overall electricity consumption by 2026.  Delivering that is a big job, especially when utilities and grids are already stretched. Indeed, Ireland will only allow new data centres to connect to the grid if they have the ability to switch to their own supply.  The risk is that the data centre boom may spur construction of new gas-fired power plants. Dominion Energy, active in data centre-heavy Virginia, has pointed to 9GW of potential new gas-fired capacity to help with reliability.

Microsoft is building a gas-fired power plant in Dublin to provide back-up power.  The upside, however, is that tech giants are rich, innovative and keen to curry favour with the general public. They are already big buyers of renewable energy, signing long-term power purchase agreements that enable developers to build new capacity. Microsoft’s deal with Brookfield — eight times the size of the previous single biggest corporate purchase — is an example. Adding green electricity to the grid is the easy bit. Data centres need electricity all the time, while renewables are volatile.

Matching consumption in every place and all the time — as Google and Microsoft have promised to do by 2030 — means getting creative. As well as batteries, they will need to think of solutions for the occasional sunless, windless or grid-outage day, creating a market for long-duration storage. The ideal solution, of course, would be a technology that delivers reliable clean electricity. Nuclear has not had an easy time of it in many parts of the globe. But Microsoft, for example, now has a director of nuclear technologies working on small modular reactors for its data centres. With the tech world behind it, nuclear’s renaissance looks that much more likely. 

Lex Column – FT.com  camilla.palladino@ft.com

BluGlass highlights progress in the March quarter MoU with Applied Energetics 

BluGlass and US-based advanced defence and dual-use photonics company Applied Energetics Inc are collaborating under a memorandum of understanding (MoU) on the development of advanced laser systems for next-generation military and commercial applications. Applied Energetics has complementary laser technology, specializing in ultrashort pulse (USP) optical systems spanning ultraviolet to infrared wavelengths for the US Department of Defense, defense primes, and the intelligence community.
The collaboration will leverage BluGlass’ full suite of gallium nitride (GaN) products, including its distributed feedback (DFB) lasers, for use within Applied Energetics’ advanced dual-use laser systems.
“This collaboration combines our highly complementary laser technologies and capabilities to address innovative new market segments where neither company can compete individually,” says CEO Jim Haden. “Laser technology is increasingly playing a larger role within modern military and national security strategies, where application size, weight and power are critical. Brighter, better-performing visible lasers have the potential to significantly reduce these key parameters in next-generation solutions while also unlocking a new era of exploratory technologies,” he adds. “While this collaboration is in its infancy, our work with Applied Energetics has numerous commercial and technical benefits, further strengthening our presence within the US government and intelligence communities, and advancing our next-generation product roadmap.”

The full article can be found: https://www.semiconductor-today.com/news_items/2024/may/bluglass-060524.shtml

Goldman Sachs Data Centre Efficiency 

A lot has been written about the coming power demand from AI data centers. The actual impact will be determined by a big unknown, future efficiency gains. Growth doesn’t always equal increased load. US power demand was flat from 2007-22 as efficiency gains offset economic growth. Same was true of data center load from 2015-19. This changed starting in 2020 as the easy efficiency gains had already been enacted. Since then, growth overwhelmed new efficiencies, translating to increased load. What’s changed now is the immense focus and incentives on finding ways to decrease energy consumption per pFLOPS.

The cost of power has become a very significant and quickly growing cost. AI companies are worried power will end up being the constraint on models. The strain on the grid is causing municipalities to rethink the net effect of new centers. Every developer is intensely focused on cutting energy demand today. Nvidia has clearly heard this and stressed the efficiency of its new Blackwell platform. I’m sure the numerous other efforts to make chips are focused on power consumption. Data center load forecasts like the one below assume gains, though at historically low levels. The pathway to ensuring there’s enough power to run future models and minimizing the environmental footprint of AI will be getting much higher levels of efficiency.

https://twitter.com/johnarnoldfndtn/status/1787887594153353654?s=46

Aixtron grows Q1 revenue and profit significantly year-on-year

For first-quarter 2024, deposition equipment maker Aixtron SE of Herzogenrath, near Aachen, Germany has reported revenue of €118.3m (near the top end of the €100–120m guidance range). This was down 45% on last quarter’s record €214.2m but up 53% on €77.2m a year ago (although the latter was reduced by delays in the issue of export licenses, pushing €70m worth of shipments out of the quarter).

On a regional basis, 58% of revenue came from Asia (up from 47% a year ago, almost doubling from €36.2m to €68.6m), 32% from Europe (up from 28%, growing by 77% from €21.6m to €38.2m) and 10% from the Americas (down from 25%, shrinking by 41% from €19.4m to €11.5m).
Of total revenue, 79% came from equipment sales (up from 73% a year ago), growing by 65% year-on-year from €56.3m to €93m, driven largely by systems for applications in silicon carbide (SiC)- and gallium nitride (GaN)-based power electronics. 

Gallium nitride-based power electronics continue to expand into new application areas, with the new G10-GaN MOCVD system (launched in September 2023) proving very popular among both new and repeat customers, based on performance and cost per wafer.

https://www.semiconductor-today.com/news_items/2024/may/aixtron-080524.shtml

Navitas Semiconductor Announces First Quarter 2024 Financial Results
  • Q1 revenue up 73% year-on-year, driven by continued GaN adoption in mobile fast chargers and AI-based data centers, and SiC sales in EV, solar and industrial applications.
  • New GaNSlim™ technology expected to advance GaN-based systems’ integration, ease-of-use, time-to-market, and manufacturability, which enable lower system costs compared to silicon-based solutions.
“I am very pleased with our first quarter revenue growth of over 70% from the prior year, despite an overall market slowdown,” said Gene Sheridan, CEO and co-founder. “Response to our latest technologies – GaNSafe™, Gen-3 Fast GeneSiC™ and now GaNSlim technology – has been impressive. Our customer pipeline – which has grown to $1.6 billion – shows that future demand for electrification and energy savings is stronger than ever.” 
 

https://navitassemi.com/navitas-semiconductor-announces-first-quarter-2024-financial-results/