NVIDIA Allegedly Engineered Scarcity By Funding AI Startups To Buy Its GPUs - TechPowerUp
Former NVIDIA CEO Jensen Huang allegedly engineered a GPU shortage by funding AI startups to purchase excess semiconductors, according to a Wall Street Journal report.
Following the departure of former NVIDIA CEO Jensen Huang, a new report by The Wall Street Journal alleges that the company artificially inflated the ongoing GPU and memory shortage. NVIDIA reportedly invested in AI startups that would purchase its GPUs and build data centers, aiming to maintain the perception of high demand and move an oversupply of semiconductors from TSMC.
Internal Conflict
The WSJ report cites an August meeting between Huang and his senior finance team, including NVIDIA's CFO and acting CEO Colette Kress. During this meeting, Kress pushed for reducing circular financing agreements and scaling back NVIDIA's $250 billion deal with OpenAI.
deer in the headlights
Huang allegedly reacted harshly to Kress's suggestions, calling her a "deer in the headlights" after she questioned the investments. His push for further investment into small-scale cloud providers came as AI hyperscalers were moving away from off-the-shelf components toward custom solutions.
Financial Risks
The report describes NVIDIA facing an "avalanche" of GPUs from TSMC with no immediate buyers. Kress highlighted that the small-scale cloud providers NVIDIA was investing in couldn't afford to purchase its GPUs, potentially creating another financial dead end for the company.
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