Nvidia CEO says customer frustrations are due to shortages

SAN FRANCISCO – Nvidia’s chief executive officer Jensen Huang, whose products have become the hottest commodity in the technology world, said the scramble for a limited amount of supply has frustrated some customers and raised tensions.

“The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group technology conference in San Francisco on Sept 12. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.”

Mr Huang’s company is experiencing strong demand for its latest generation of chips, called Blackwell, he told the audience. The California-based business outsources the physical production of its hardware, and Nvidia’s suppliers are making progress in catching up, he said.

Nvidia’s chips are used by data centre operators to develop and run artificial intelligence (AI) models. And the feverish appetite for such services has sent its sales – and stock price – soaring. The shares have more than doubled in 2024, following a 239 per cent run-up in 2023.

The stock gained 8.1 per cent to US$116.91 in New York on Sept 11, marking its biggest single-day rise in six weeks.

But the company counts on a small number of customers – data centre operators like Microsoft and Meta Platforms – for much of its revenue. 

Mr Huang was asked whether the massive AI spending is providing customers with a return on investment. That has been a concern during the tech industry’s AI frenzy. 

But he said companies have no choice other than to embrace “accelerated computing”. Nvidia’s technology speeds up conventional workloads – data processing – as well as handling AI tasks that older technology cannot manage, he said.

Nvidia leans heavily on Taiwan Semiconductor Manufacturing Company (TSMC) for production of its most important chips and does so because that company is the best in its field by a large margin, Mr Huang said. But geopolitical tension has raised risks. China sees TSMC’s home island as a rogue province, stoking concerns that it might try to reclaim the territory. That could potentially cut off Nvidia from the key supplier.

Mr Huang said he develops much of the company’s technology in-house, and that should allow Nvidia to switch orders to alternative suppliers. Still, such a change would likely result in a reduction in quality of his chips, he said.

TSMC’s “agility and their capability to respond to our needs is just incredible”.

“And so we use them because they’re great, but if necessary, of course, we can always bring up others.” BLOOMBERG