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Did the Feds Just Snub Intel?

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The U.S. is building a new supercomputer and it wants Advanced Micro Devices (NYSE: AMD  ) and NVIDIA (Nasdaq: NVDA  ) to help build it. Cray (Nasdaq: CRAY  ) , whose technology is already embedded in the world's third-fastest supercomputer, is also in on the project. But not Intel (Nasdaq: INTC  ) . The worldwide chip leader and Silicon Valley pioneer will sit this one out.

Surprising? Definitely.

AMD has some history handling supercomputing, but NVIDIA only recently stretched beyond graphics processing with its Tegra chips for smartphones and tablets. Here, NVIDIA's newest GPU chipsets -- known as "Fermi" -- will be combined with core AMD processors to create a system that's two to three times more energy-efficient than Japan's K supercomputer, which is also the world's fastest, The Wall Street Journal reports.

The Department of Energy has commissioned the system, called "Titan," with the goal of retaking the computing lead. We don't know if the name draws from history, but if not, there's irony to the choice. Lockheed Martin's (NYSE: LMT  ) Titan rocket was used throughout the 1960s for the Gemini space missions that helped the U.S. win what at the time was a "space race" to the moon.

Welcome to the new space race. China has grown competitive. Japan leads now. And the U.S. government, beleaguered though it may be, doesn't like losing.

How this plays out long term is anyone's guess, but what's clear is that deep-pocketed federal agencies like the DOE see AMD and former niche supplier NVIDIA as viable alternatives for outfitting their most important computing systems. Don't be surprised if the breakthrough leads to more design wins, more contracts, and best of all, more profits.

Do you agree? Disagree? Please weigh in using the comments box below. You can also keep tabs on the comings and goings of the chip industry by adding any of these stocks to your Foolish watchlist:

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Intel and Lockheed Martin. Motley Fool newsletter services have recommended buying shares of NVIDIA and Intel. Motley Fool newsletter services have recommended creating a diagonal call position in Intel, as well as writing puts in NVIDIA. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (3) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 14, 2011, at 1:08 PM, Wavicle wrote:

    Titan is an update to the Jaguar supercomputer based on AMD technology. Cray would have to build ORNL a whole new supercomputer if it were to use Intel components. I'm sure Cray would be more than happy to do this, but I think ORNL would best serve the taxpayers paying for this by upgrading the existing supercomputer than spending more to build an all-new Intel-based supercomputer.

    This is an entirely financial pragmatic decision. Not a sign that the US government is hating on Intel.

  • Report this Comment On October 14, 2011, at 1:54 PM, propiloteab wrote:

    It seems logical... considering the government is in charge. AMD has been struggling to gain share in its respective markets, primarily due to Intel's strength. Intel chips are the best, hands down, especially in the server and data center markets. And that will continue for quite some time - per financial statements and demand for AMD vs. Intel. But like I said initially, the government typically does the wrong thing, and this is no different. Sure, it MAY (not holding my breath) save a few bucks, but when has the government ever cared about saving a few bucks? It's a perfect example of poor decision making that plagues politicians nowadays. In any other market, we'd say the government is basically subsidizing the underdog... why is this any different?

  • Report this Comment On October 14, 2011, at 5:20 PM, RedScourge wrote:

    I seem to recall the government being broke and looking for ways to cut spending. Are they buying this because it is going to save them money, or are the buying this because they need to prove their dicks are still bigger?

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