China's Tianhe-2 supercomputer is world's fastest supercomputer, at 33 PFLOPS demonstrated and 55 PFLOPS theoretical performance.

Just as Intel’s (NASDAQ: INTC) CEO Brian Krzanich opened the regular staff meeting before a dramatically reduced IDF2015 conference, in Shenzhen, China – it is a good time to review how government and enterprises don’t see eye to eye when it comes to strategic business.

Remember the Tianhe-2 machine at Guangzhou Supercomputer Center, the current World’s number one according to Top 500 Supercomputer list? Unlike some other China supercomputers with their mixed architectures – Tianhe-2 is a fully Intel based machine, the world’s largest assembly of Intel Xeon CPUs and Xeon Phi accelerators.

Even after Intel ‘opened the kimono’ and gave a nearly 70% discount on its processors and accelerators, it has given Intel, and therefore US technology sector a major foothold in China and Asian region as such. Over the course of past two years, we were involved in a lot of discussions with Intel staff who were not privy to see the financial impact of the deal – and even argued our undoubtedly solid information. We’re not here to report how things should be, or are in marketing and investor presentations to its numerous staff, but how things really are.

During 2015, the Tianhe-2 supercomputer was supposed to be doubled in its size, up to 110 PFLOPS peak, again using the very same Intel processors and accelerators. Since now these are mature products with lower real manufacturing cost for Intel, they could finally make some real money.

Well, it was not to be: our tweety bird from the window chirped to us that Uncle Sam i.e. the State Department has put this supercomputer center, together with the National University of Defense Technology in Changsha, the system’s creators, and Tianjin center, among others, on so a so-called “Denial List”, which prevents any high technology from the USA to be sold to these sites. Our sources used even harsher words.

Knowing that these several sites alone are expected to order some 250+ PFLOPS of compute in the next few years (around 500,000 top-end Broadwell-EP Xeon E5v4 processors, or approximately $1 billion high margin list price) and they were THE Intel friendly ones, this is quite a loss to Intel, thanks to Uncle Sam.

But, what’s worse strategic loss in time is that, based on this decision as an excuse, indigenous China high end processor architectures can now push the government to gradually remove any dependence on US. This means just one thing: an AMD or Intel x86 processor technology is increasingly becoming ‘errata non grata’. Should the Chinese government react in force, it will give the Chinese vendors the blank check support to go all the way a developing their Alpha, POWER and MIPS processors for both the government and the mainstream commercial use.

You may think they are not up to the mark, but remember how fast the British ARM architecture became the dominant processing architecture in the world. And this group doesn’t need to worry about the antiquated x86 ISA, worry about satisfying the dumbed down shareholder masses, or overpaying their marketing and sales staff, as well as the fat check, golden parachute-protected CxOs.

They have taken the best that the USA has developed (some of key Alpha, GPGPU and MIPS architects left US over the course of past four years, a lot of them due to non-renewed visas) and discarded due to corporate shenanigans, and the continued developing it much farther than anyone expected both on hardware and software side.

So, thanks to Uncle Sam, China might not have a 110 PFLOPS Intel based supercomputer but it definitely will launch a 100 PFLOPS system based either on the upcoming 64-core ARM or a 64-core, TFLOPS-class ShenWei Alpha, with true blue CPUs possibly faster per socket then even the next generation Xeon Phi or Volta/Pascal-based Teslas. Next, of course 100 PFLOPS Chinese POWER8 or 9 – (thank you IBM) and then possibly even Loongson MIPS – it may come back into the high end field with renewed government support because of this Uncle Sam move. All are clean, elegant, scalable high-end RISC architectures.

So who are the winners and losers from this?

NUDT and Tianhe may be the losers for now, but only short term. They will simply speed up their HPC ARM plan.

Intel comes out the big loser from this and a lot: who will want to do a phased deployment large x86 machine in China now, and worry about future phases? Then comes Uncle Sam himself: they lost even that little bit of influence on the high end China HPC. How is that for “cutting your nose to spite your face?”.

VR WORLD’s Analysis: US government moves accelerate the Chinese CPU roadmap while curtailing juiciest sales for Intel and other US vendors.