This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
NVIDIA CEO Jensen Huang shared key details for his firm's future yesterday at the Goldman Sachs Communacopia + Technology conference. Huang's comments appeared to be just the catalyst that NVIDIA's shares needed, as the stock gained 10% yesterday and opened higher today as well. During the talk, he commented that even if the broader industry does not adopt artificial intelligence, the demand for NVIDIA's products will still be sustainable simply because of the physics surrounding semiconductor fabrication.
He added that NVIDIA has developed its semiconductor design capabilities so that even if its manufacturing partner TSMC were to face disruption, NVIDIA could continue its GPU supply by switching partners.
NVIDIA CEO Stresses That Semiconductor Design Limitations Place A Wide Trillion Dollar Opportunity Ahead Of Firm
Commenting on AI and whether it is necessary for NVIDIA to grow in the future, Huang started out assuming "the condition where there's no AI at all. Well, in the world where there's no AI at all, general purpose computing has run out of steam still." He believes that despite this, the physical limits of semiconductor design will still limit general purpose computing, since the principles that allowed for "Denard scaling and Mead-Conway's shrinking of transistors, scaling of transistors" are over.
This leads Huang to believe that "we're not gonna see uh, CPUs, general purpose computers that are going to be twice as fast every year," so while all that the industry previously had to do was to " just wait for the CPUs to get faster," now it has to account for computation inflation.
To adjust for computation inflation, "the thing that we have to do, is we have to accelerate everything we can. If you're doing SQL processing, accelerate that; if you're doing, um, any kind of data processing at all, accelerate that; if you're doing, if you're creating an internet company and you have a recommender system, absolutely accelerate it," believes the NVIDIA executive.
According to Huang, the computing industry's requirement for accelerated computing to make up for shrinking semiconductor performance gains is where NVIDIA's least risky market opportunity lies. He believes that "the first thing that's going to happen is the world's trillion dollars of general purpose data centers are going to get modernized into accelerated computing. That's gonna happen no matter what. That's gonna happen no matter what. And, and the reason for that is, as I described, Moore's Law is over."
Subsequently, one of the first things that will lead from this is the "densification of computers," which involves taking "that few, you know, call it 50, 100, 200 megawatt data center, which is sprawling and you densify it into a really, really small data center." This has allowed NVIDIA's server racks to enable its customers to save on costs.
According to Huang, "You know NVIDIA's server racks look expensive. Um, and it could be a couple of million dollars per rack. But it replaces thousands of nodes. The amazing thing is, just the cables of connecting old general purpose computing systems cost more than replacing all of those and densifying into one rack." He added that densifying also allows data center operators to use more efficient liquid cooling.
The final bit of Huang's talk saw him respond to a question of how his firm will manage any potential disruptions in Asia. He started off by sharing the complexity of NVIDIA's modern day products and comparing it to some of the first products that he designed. He stated, "When we say GPUs, you know, because a long time ago, when I announced a new chip, a new generation of chips, I would hold up the chip and that was a new GPU. NVIDIA's new GPUs are 35,000 parts, weighs 80 pounds, you know, consumes 10,000 amps. When you rack it up, it weighs 3,000 pounds."
So, as today's GPU is "built like a, like an electric car," the ecosystem responsible for producing it "is really diverse and really interconnected in Asia." In order to ensure that it can switch manufacturing partners if needed, NVIDIA tries to "design diversity and redundancy into every aspect wherever we can. and then the last part of it, is, to have enough intellectual property in our company in the event that we have to shift from one fab to another, we have the ability to do it," shared Huang.
He added that while "the process technology is not as great. Maybe, I, we won't be able to get the same level of, of, of performance or cost. But we will be able to provide a supply." He praised his manufacturing partner TSMC, though, by sharing that NVIDIA relies on the Taiwanese supplier "because it's the world's best. And it's the world's best not by you know a small margin, it's the world's best" by an incredible margin.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
Follow Wccftech on Google to get more of our news coverage in your feeds.
