August 1, 2022
Photo: artpartner-images via Getty Images
Hello and welcome to Protocol Enterprise! Today: why cost and latency considerations are leading some companies to move machine learning workloads from the cloud back into their own data centers, why the Biden administration just imposed a new export restriction on chip tool-makers, and the latest in enterprise tech funding.
Over the last several years, cloud providers have been urging their customers to adopt machine learning services to unlock new capabilities for their applications. The good news for the Big Three is that customers are really starting to show an interest in those services. The bad news? They don’t always want to run them on the cloud.
That’s the gist of a new report from Kate Kaye we published this morning, as Kate takes a well-deserved vacation from the daily news grind. Companies that started machine learning trials are increasingly pulling them back on-premises.
Cost isn’t the only consideration.
Cloud-based machine learning services aren’t going anywhere, but like compute services, in the future companies will probably split the difference between the cloud and their own machines more equally than once thought.
How global ecommerce benefits American workers and the U.S. economy: Alibaba — a leading global ecommerce company — is a particularly powerful engine in helping American businesses of every size sell goods to more than 1 billion consumers on its digital marketplaces in China. In 2020, U.S. companies completed more than $54 billion of sales to consumers in China through Alibaba’s online platforms.
The U.S. has undertaken years-long efforts to prevent China from acquiring the tech necessary to build the most-advanced chips. Last week American officials made a further offensive move: Chip manufacturing equipment-makers will now need an export license to sell tech for 14-nanometer equipment or anything more advanced, according to executive comments on earnings calls.
For the tool-makers themselves, the policy change is a red alert moment. One of the largest equipment vendors, Lam Research, disclosed in its latest quarterly filing with the SEC that China accounted for 31% of revenue in the March quarter; KLA reported 31% of its business came from China; and Applied Materials said 34% of sales were from China.
KLA, Applied and Lam Research declined to comment.
What’s not clear is precisely how the new restrictions will affect the tool-makers. Today, chipmaking equipment operates like a car; in order to get the best performance out of the machine, owners need to get it serviced, change the tires and so on. Similarly, the tool-makers have built large services businesses around their equipment sales, and it’s not clear whether they will be able to continue to do so.
Though the nanometer label isn’t as relevant as it once was — it’s essentially just marketing terminology today, which in turn makes the export controls harder to define — restricting the sale of chipmaking tech that’s nearly a decade old marks a significant shift in U.S. policy.
With prior export restrictions, American officials attempted to choke off China’s access to the most-advanced chipmaking equipment. Now the administration appears to hurt China’s ability by curbing access to tech it had already been able to buy.
Acronis raised $250 million from institutional investors, including BlackRock, that valued the data security company at $3.5 billion.
Cordial raised a $50 million series C funding round to expand its personalized-messaging services for customer experience improvement projects.
No-code app platform Retoolraised a $45 million round from existing investors that valued the company at $3.2 billion.Frontegg, which builds low-code and no-code development services for SaaS companies, raised a new $40 million funding round.
Oracle laid off several employees in its customer experience division, which has struggled in recent months according to Bloomberg.
Illuminate Education, which made news earlier this year after its educational software service was down for almost a week, just suffered a cyberattack that compromised the personal data of more than 1 million students.
How global ecommerce benefits American workers and the U.S. economy: Using economic multipliers published by the U.S. Bureau of Economic Analysis, NDP estimates that the ripple effect of this Alibaba-fueled consumption in 2020 supported more than 256,000 U.S. jobs and $21 billion in wages. These American sales to Chinese consumers also added $39 billion to U.S. GDP.
Thanks for reading — see you tomorrow!