Photo credit: www.yahoo.com
Nvidia’s Supply Chain Strained by Musk’s Demand for Chips
Elon Musk’s increasing appetite for Nvidia chips is causing significant stress within the company’s supply chain. According to an internal email from a Nvidia sales leader, this insatiable demand is putting pressure on the tech giant to fulfill orders, as reported by the Journal.
A spokesperson for Nvidia responded to inquiries by stating that the company has been diligently working to satisfy the needs of all clients. In addition, they noted that Nvidia has significantly expanded its chip supply to better meet market demands.
Nvidia is amidst a surge of demand for its chips, largely attributed to various tech firms utilizing these components for artificial intelligence applications. The desire for these chips has made Nvidia products highly sought after. Musk’s demands are reportedly pushing Nvidia’s capabilities to the limit, as highlighted by the aforementioned internal email.
The report from the Journal, released on Wednesday, did not disclose the exact timing of the email, yet it painted a picture of the struggles Nvidia faces in keeping up with the rapid growth of AI technologies.
Tech giants like Meta are also heavily invested in Nvidia’s offerings. Meta CEO Mark Zuckerberg announced plans for the company to acquire over 340,000 Nvidia H100 GPUs by the end of 2024, emphasizing their capacity for scaling AI operations. Zuckerberg remarked on Meta’s unparalleled capability to deploy such resources effectively.
Meanwhile, Musk is not standing still. The billionaire established an AI company, xAI, in 2023 and has secured substantial funding for his initiatives. Reports indicated that Musk redirected significant resources, including $500 million worth of Nvidia chips intended for Tesla, towards both xAI and the social media platform X. He rationalized this decision by emphasizing that the chips had no immediate use at Tesla and would otherwise remain unused.
In September, Musk revealed that xAI had successfully launched an extensive new training cluster using Nvidia technology known as “Colossus,” comprising 100,000 Nvidia H100 GPUs. This ambitious project was completed in a remarkably short time, showcasing Musk’s distinct efficacy in managing complex engineering challenges.
Nvidia’s CEO, Jensen Huang, praised Musk’s engineering prowess, describing the achievement as “superhuman.” Huang expressed admiration for Musk’s unique understanding of intricate systems and resource mobilization during a podcast appearance.
Beyond Musk and Zuckerberg, other leaders in tech, including Oracle’s chairman Larry Ellison, have expressed a similar urgency for more GPU supply. Ellison revealed that he and Musk directly appealed to Huang for additional chips during a dinner conversation, highlighting the industry’s insatiable hunger for Nvidia’s technology.
The current chip demand has catapulted Nvidia into a position of immense value within the market. Recent financial disclosures showed that Nvidia recorded an impressive $35.08 billion in revenue for the last quarter, reflecting a 94% increase year-over-year. The company’s stock has also surged by an impressive 173% in 2023, further solidifying its status as one of the most valuable companies worldwide.
As the race for AI capabilities continues, the tension between demand and supply in the semiconductor industry remains a critical topic for many stakeholders.
Read the original article on Business Insider.
Source
www.yahoo.com