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The NVIDIA logo seen at the American GPU manufacturer NVIDIA Taipei office.
Nvidia forges deals in American Southwest and Southeastern Asia
The California-based chip giant is negotiating with Taiwan Semiconductor Manufacturing Company, or TSMC, the world’s top contract chipmaker, to manufacture its top-of-the-line Blackwell AI processors at TSMC’s Arizona facility. TSMC has invested billions to bring its high-tech manufacturing to the Southwest US, thanks in part to a $6.6 billion cash infusion from the Biden administration as part of the CHIPS and Science Act. Apple and AMD have reportedly already signed on to get their chips made in the Arizona plant when it starts production in the first half of 2025. That said, the chips won’t be entirely made in America: Final packaging is done back in Taiwan, which complicates and prolongs an already lengthy manufacturing process.
Halfway around the world, Nvidia CEO Jensen Huang met with the Thai and Vietnamese prime ministers last week as the company makes inroads in Southeast Asia. Nvidia also announced plans to establish Nvidia’s first research and development center in Vietnam, along with the acquisition of Vietnamese healthcare startup VinBrain for an undisclosed sum. In Thailand, the company signed a cloud deal with a company called SIAM.AI Cloud. Huang also emphasized the importance of “sovereign AI,” meaning that every country should have its own AI infrastructure and models.
In China, however, Nvidia is facing new scrutiny: The State Administration of Market Regulation is reportedly investigating whether the chipmaker violated antitrust laws when it acquired the Israeli-American company Mellanox in 2020. China previously gave conditional approval of the nearly $7 billion deal, but more than four years later, with the US restricting Nvidia from selling its most powerful chips to Chinese companies, the country is seeking new ways to gain leverage. A Nvidia spokesperson said the company is “happy to answer any questions regulators may have about our business.”
Hard Numbers: Doctor vs. machine, Pony rides to an IPO, Hot chips, Foxconn’s crazy demand
4.5 billion: A Chinese self-driving car company, called Pony AI, is attempting to go public on the Nasdaq stock exchange. The company, which is backed by the Japanese automaker Toyota among others, is seeking a $4.5 billion valuation for its initial public offering. The company previously tried to go public in the US through a blank-check company, but plans fell apart when China cracked down on such deals.
72: Nvidia's new Blackwell AI chips are reportedly overheating when installed in server racks designed to hold 72 chips. The company has already faced delays due to design flaws with these chips and is now asking suppliers to modify the designs of the racks numerous times. This issue could further delay sales to the largest tech companies in the world, such as Google and Meta.
Hard Numbers: Hey big spender, an iPhone boost, Google’s robot coders, Super Micro’s super downfall
200 billion: Capital expenditures from four of the largest US tech companies — Amazon, Microsoft, Meta, and Google — are set to exceed $200 billion this year, inflated by enormous spending on artificial intelligence software and hardware investments. Amazon’s spending alone surged 81% in a year, leading CEO Andy Jassy to assure investors the company’s bets will pay off. These are record sums at a time when Wall Street seems hesitant to keep rewarding excessive spending on AI.
46 billion: Apple reversed its fortunes after a bad year of iPhone sales, selling more than $46 billion of its signature smartphone between July and September — a 6% increase year over year. The company’s new iPhone 16 is part of its push into artificial intelligence — marketed as a phone capable of handling all of its Apple Intelligence features, such as a supercharged Siri, new writing tools, and call transcription — which started rolling out last week. The company hopes that AI can convince customers old and new that it’s time to pay up for a new iPhone, which starts at $799.
25: More than 25% of all new code produced by Google is written by artificial intelligence, according to CEO Sundar Pichai. AI produces the code, which is then reviewed and accepted by human engineers. A recent Stack Overflow survey found that 76% of all software developers are using or are planning to use AI to code.
45: Super Micro Computer, a key supplier of Nvidia servers, saw its stock fall 45% after its auditor, Ernst & Young, resigned because it was “unwilling to be associated with the financial statements prepared by management.” Once one of the hottest AI stocks, the company has now wiped out all of its 2024 gains.The logo of semiconductor company Advanced Micro Devices Inc (AMD) is seen on a graphics processing unit (GPU) chip in this illustration picture taken February 17, 2023.
AMD has a fancy new chip to rival Nvidia
The US semiconductor designer AMD launched a new chip on Oct. 10. The Instinct MI325X is meant to compete with the upcoming Blackwell line of chips from market leader Nvidia.
Graphics processing chips from Nvidia, AMD, and Intel have been the lifeblood of the artificial intelligence boom, allowing the technology’s developers to train their powerful models and deploy them worldwide to users. Major tech companies have clamored to buy up valuable chips or pay to access large data centers full of them remotely through the cloud.
Lisa Su, CEO of AMD, claimed that the market for AI data centers will balloon by 60% a year and hit $500 billion by 2028. Still, investors weren’t convinced by what AMD showcased: The company’s stock fell 4% in trading Thursday, perhaps because AMD didn’t announce any big new deals with customers, though it bounced back 2% on Friday.
AMD’s new chips feature increased memory and a new architecture that the company promises will improve performance relative to prior models. Nvidia is expected to release its much-anticipated Blackwell chips by early next year, as the rivalry between the two most important AI chip designers in the world only gets hotter.
An illustration of US and Chinese flags in front of a circuit board with semiconductor chips.
China wants its companies to ditch Nvidia
Nvidia’s highest-end chips are off-limits to Chinese companies due to strict export controls from the US. That hasn’t stopped developers from either buying lower-grade chips or finding the best chips in underground markets, but that may soon change.
Beijing has reportedly begun urging its private sector to use Huawei’s chips instead of Nvidia’s chips. China’s government hasn’t made an official announcement on the matter — at least not yet. Analysts expect that Huawei’s newest chip could perform better than the China-specific chip currently marketed by Nvidia. Huawei’s chips are nowhere near as advanced as chips from Nvidia or AMD, but they are more advanced than the ones Chinese companies can legally buy.
That all results in Huawei getting a boost in business from China’s domestic AI sector. If it can offer a decent chip for running and training AI models, and the government pressures companies to buy from them, it could be a boon for their pockets and help them develop better tech in the future.
FILE PHOTO: A smartphone with a displayed NVIDIA logo is placed on a computer motherboard in this illustration taken March 6, 2023.
Nvidia’s high-flying earnings aren’t good enough
Nvidia’s earnings reports have become a cultural phenomenon, with super-fan investors even throwing watch parties to tune into how high-flying the chip maker’s marks will be each quarter.
Last week, Nvidia, whose chips have fueled the current AI boom, reported more than $30 billion in sales in the second quarter of its fiscal year, up 122% from the same quarter last year. But even though it beat Wall Street analyst predictions, the stock sagged 7% after the report.
Nvidia’s stock is up 147% since the start of 2024, leading the hottest part of the stock market. While some wonder if AI is little more than a speculative bubble with AI stocks soaring, Nvidia is now the third-most-valuable company globally, and the biggest question each quarter is: How good is good enough for investors?Two hands touching each other in front of a pink background
Hard Numbers: Automate this, Everything’s expensive, Chips delayed, Intel cuts costs, Groq on the rise
106 billion: Capital expenditures from big tech firms are soaring this year, up to $106 billion, according to the self-reported estimates from Microsoft, Alphabet, Amazon, and Meta’s latest quarterly earnings reports. One of the biggest culprits? AI. These companies are acquiring expensive chips, and building out data centers to support their AI and cloud investments. And it may only be the start of a larger trend: Analysts say these figures could keep soaring for the next five years.
3: Nvidia’s latest chips will be delayed up to three months due to a critical design flaw. The chips, part of the company’s Blackwell series, are in high demand by AI companies such as Meta, Microsoft, and OpenAI, which have reportedly ordered tens of billions of dollars worth of the chips.
15,000: Intel announced late last week that it’s laying off 15,000 employees and halting non-essential work. The 15%-staff reduction is part of a $10 billion cost savings plan, the company said. It’s also cutting R&D and marketing budgets for the next two years. While Intel has benefitted from the Biden administration’s CHIPS Act stimulus, it’s not yet a major player in AI-grade chips, trailing Nvidia and AMD, so its business isn’t reaping the benefits of the AI boom — at least not yet.
$2.8 billion: Groq, the AI chip startup, raised $640 million in a new funding round as it seeks to challenge Nvidia’s dominance in AI-grade chips. The new investment, led by BlackRock, valued Groq at around $2.8 billion at the time of the investment. Meta’s Yann LeCun is also joining the company as a technical adviser.
A photo illustration of a smartphone displaying the NVIDIA Corporation stock price on the NASDAQ market, with an NVIDIA chip visible in the background.
A chip bottleneck
Margrethe Vestager, the European Union’s competition chief, has warned of a “huge bottleneck” involving Nvidia. The US semiconductor company plays a pivotal role in designing chips necessary for training and running artificial intelligence models and applications — good for 80% of the market. In recent months, Nvidia has become a $3.1 trillion company — now the third-most-valuable firm in the world behind only Microsoft and Apple.
It’s too much of a good thing: NVIDIA’s chips are so in demand that it can’t make enough for AI firms looking to train bigger and better models. EU regulators are starting to wonder whether that bottleneck raises concerns over fair competitive markets.
In Singapore, Vestager told Bloomberg that the EU’s watchdogs are asking preliminary questions of Nvidia but haven’t made up their mind about any further regulatory steps. Vestager said a robust secondary market could relieve competitive concerns, implying that as long as Nvidia respects smaller firms it should stay in antitrust regulators’ good graces. Meanwhile, AMD and Intel are looking to close the gap with Nvidia, something that intense regulatory scrutiny on the market leader might aid.