WSJ: Nvidia backed startups to absorb surplus TSMC chips

Nvidia ↘ 2.01% reportedly used its balance sheet to back AI startups and small cloud providers so they could keep buying its GPUs, which helped it absorb chips it had already ordered from TSMC Taiwan Semiconductor Manufacturing Company Limited ↘ 1.67%. The account comes from a Wall Street Journal News Corp ↗ 2.45% report published days after Jensen Huang resigned as CEO. Hardware sites quickly read it as proof that the GPU and memory shortage was engineered. The Journal's reporting, however, describes financing for data center buyers and rests on unnamed sources, and no public document ties it to retail graphics card or RAM prices.

What the Journal reported

According to the Journal, Huang called his top finance executives to a meeting this summer because Nvidia was "in talks to provide billions of dollars of guarantees to companies that couldn't afford its chips." Those talks included deals led by his son-in-law, Nico Caprez, who offered financing to upstart cloud providers and data center developers in hopes of turning them into long-term customers. During the meeting, Huang interrupted CFO Colette Kress and called her "a deer in the headlights," a person familiar with the comments told the paper.wsj.com

Wccftech's summary of the Journal report says Kress pushed to limit Nvidia's "circular financing." She reportedly cut a proposed OpenAI guarantee from about 8 gigawatts, worth up to $250 billion, to roughly 4.25 gigawatts, worth up to $125 billion. The outlet says Huang justified the strategy by pointing to hyperscalers moving toward custom chips, and said the TSMC wafers and memory Nvidia had committed to were coming at him "like an avalanche." TechPowerUp added that Kress warned some of the small cloud providers Nvidia backed could not afford the GPUs at all.wccftech.com+1

The shortage link is unproven

The report came out right after Nvidia's leadership upheaval. In an SEC filing, Nvidia said Huang resigned on November 12 and that Kress would serve as interim CEO while remaining CFO. Huang stepped down after reports of extramarital affairs, including one with a suspected Chinese government agent, AP reported.sec.gov+1

Wccftech framed the revelations as "shattering" the shortage story for PC builders. But an analysis by Pasquale Pillitteri noted that the passages attributed to the Journal say nothing about graphics card or RAM prices. It also pointed out that consumer memory supply depends on SK hynix ↘ 4.30%, Samsung and Micron ↘ 2.52%, not on Nvidia. The same analysis cited TrendForce forecasts that tight memory supply comes from manufacturers moving capacity to server products.pasqualepillitteri.it

What comes next

Nvidia has not publicly responded to the financing allegations in the coverage reviewed. Kress is expected to lead the company's earnings call on November 17, according to NBC News. That call may be the first public chance for investors to ask how many of Nvidia's customer guarantees are still in place.nbcnews.com