At the SIEPR Economic Summit, Jensen Huang, CEO of artificial intelligence (AI) hardware leader Nvidia, touted the unrivaled quality and value of his company's products. Even if competitors offered their chips for free, they still wouldn't be able to compete with Nvidia's high-quality, albeit expensive, alternatives, he said.
Nvidia, which has reached the third-largest market capitalization in the world at $2.19 trillion, absolutely dominates the field of advanced AI hardware. This not only catapulted Huang to 20th place on the Bloomberg Billionaires Index with a net worth of $77.2 billion, but also confirmed Nvidia's status as a key player in the market.
In a discussion with John Shoven, professor of economics at Stanford University (SIEPR), Huang noted that Nvidia faces an unprecedented level of competition, not only from direct competitors, but also from customers who use Nvidia products to develop their own solutions . However, the company continues to maintain an open book policy, collaborating with almost all industry participants and providing information about its current and future chip designs.
However, there are questions about this openness. Last month, Groq, a startup that makes AI chips to run on Large Language Models (LLMs), noted that Nvidia customers are having to hide their deals to purchase AI accelerators from competitors to avoid potential delays in fulfilling orders from Nvidia. A similar measure is allegedly used by Nvidia as a form of punishment. In turn, former AMD vice president Scott Herkelman described Nvidia as a “cartel of GPU manufacturers” that controls all supply on the market. These statements raise questions about Nvidia's true degree of openness and collaboration with industry participants, as well as the ways in which the company ensures its dominance in the AI hardware market.
Speaking about the price of Nvidia's AI accelerators and whether competitors offer better value for money, Huang noted that only those who buy and sell chips think about prices, while those who run data centers think about the total cost of ownership (TCO). The Nvidia chief added that its chips demonstrate excellent direct and indirect cost performance due to factors such as deployment time, performance, utilization and flexibility. According to Huang, the total cost of ownership of Nvidia cards is so impressive that even if competitors gave away their chips for free, Nvidia products would still cost less.
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