Instead Of Lowering GPU Prices, Former NVIDIA CEO Jensen Huang Reportedly Financed AI Startups To Absorb Excess Silicon, Shattering The Shortage Perception - Wccftech

Now that NVIDIA's Jensen Huang is no longer CEO, internal revelations have exposed the truth behind the exponential rise of semiconductor and memory prices. Instead of an organic supply shortage, Huang was reportedly leveraging NVIDIA's balance sheet to finance AI startups and datacenter expansions to absorb the company's over-ordered semiconductor shipments from TSMC.

NVIDIA faced an "avalanche" of excess TSMC silicon and memory, with the former CEO funding AI startups to create artificial demand rather than letting the supply flood the market and force GPU prices down. These disclosures shatter the shortage narrative that kept hardware prices elevated for years.

Internal Conflict

The revelations stem from an August 2026 confrontation between Huang and NVIDIA's Chief Financial Officer Colette Kress, now interim CEO. Kress pushed to rein in the company's "circular financing" commitments to smaller cloud providers and major AI firms like OpenAI and Anthropic.

Initial discussions had floated underwriting roughly 8 gigawatts of OpenAI compute valued at up to $250 billion, but Kress successfully scaled NVIDIA's signed guarantee cap down to roughly 4.25 gigawatts, or up to $125 billion.

Market Impact

Huang privately admitted that major cloud giants were pivoting away from NVIDIA in favor of in-house custom chips. With hyperscalers reducing reliance on "off-the-shelf parts," he acknowledged the massive volume of prepaid TSMC wafers and memory was "coming at him like an avalanche."

Industry analyst Ed Zitron estimated that at least $200 billion worth of NVIDIA AI GPUs are sitting idle in warehouses after being purchased by cloud giants that lacked either electrical grid capacity or immediate end-user demand. Amazon faced a similar dilemma.

The practice reportedly ended when NVIDIA contacted TSMC to wind down its upcoming chip orders. For PC builders and hardware enthusiasts who endured years of steep pricing under the impression of severe component scarcity, the disclosures expose the aggressive financial maneuvering used to keep hardware prices elevated.