Nvidia CEO says customer relations 'strained' due to shortages
(Bloomberg) — Chief Executive Officer Jensen Huang of Nvidia Corp., whose products have become the technology world's most popular products, said the scramble for limited supplies has frustrated some customers and fueled tensions.
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“It's in high demand, and everybody wants to be first and everybody wants to be the most,” he told an audience at a Goldman Sachs Group Inc. technology conference in San Francisco. “We probably have more passionate customers today. Deservedly so. It's exciting. We are trying our best.”
Huang's company is experiencing strong demand for its latest generation of chips, called Blackwell, he told the audience. The Santa Clara, Calif.-based business outsources the physical manufacturing of its hardware, and Nvidia's suppliers are making progress to catch up, he said.
Nvidia's chips are used by data center operators to develop and run artificial intelligence models. And the voracious appetite for such services has sent its sales — and stock price — soaring. Shares have more than doubled this year after a 239% run-up in 2023.
The stock rose 8.1% to $116.91 in New York on Wednesday, marking its biggest one-day gain in six weeks.
But the company relies on a very small number of customers — data center operators such as Microsoft Corp. and Meta Platforms Inc. — for most of its revenue.
Huang was asked whether the massive AI spending is providing customers with a return on investment. This was a concern during the tech industry's AI frenzy.
But he said companies have no choice but to embrace “accelerated computing”. Nvidia's technology enhances traditional workloads — data processing — as well as AI to handle tasks that older technologies couldn't handle, he said.
Nvidia relies heavily on Taiwan Semiconductor Manufacturing Co. to produce its most important chips, and does so because that company is the best in its field by a large margin, Huang said. But geopolitical tensions have increased the risk. China views TSMC's home island as a rogue province, raising concerns that it might try to reclaim the territory. This could potentially cut Nvidia off as a key supplier.
Huang said he develops most of the company's technology internally, and that allows Nvidia to switch orders to alternative suppliers. Still, such a change would likely reduce the quality of his chips, he said.
TSMC's “agility and their ability to respond to our needs is incredible,” he said. “And so we use them because they're great, but if needed, of course, we can always bring up another one.”
(Update with stock performance in the fifth paragraph.)
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