Nvidia’s Jensen Huang bankrolls AI boom with $90bn deal spree

{"text":[[{"start":9.95,"text":"Nvidia is deploying unprecedented sums to tighten its grip on the artificial intelligence industry, committing roughly $90bn to dealmaking over the past 16 months as chief executive Jensen Huang becomes one of the biggest funders of AI groups reliant on its chips."}],[{"start":26.95,"text":"The world’s most valuable listed company committed about $47bn to investments and partnerships in the year to January 25 and has earmarked a further $43bn in the four months since, according to company disclosures and PitchBook data."}],[{"start":43.349999999999994,"text":"The spending spans more than 145 companies, from AI model developers and cloud providers to suppliers building the infrastructure underpinning the boom. “They are funding everyone,” said a Silicon Valley banker. "}],[{"start":57.55,"text":"Nvidia, whose quarterly results on Wednesday will be closely watched as a bellwether for global AI spending, has become the tech industry’s most aggressive dealmaker thanks to its enormous cash pile."}],[{"start":69.64999999999999,"text":"Investors, lawyers and recipients of the Nvidia largesse said the strategy was accelerating the build-out of the AI economy while also tying much of the industry more tightly to Nvidia’s technology."}],[{"start":83.3,"text":"But the deal spree also exposes the chip designer to growing financial and regulatory risks with transactions that reach across suppliers, customers and emerging rivals. "}],[{"start":null,"text":"

"}],[{"start":93.6,"text":"Huang has described backing AI groups as one of Nvidia’s top priorities, arguing it is “imperative” for the company to support foundational AI developers while doing “as much as needed, as little as possible”."}],[{"start":107.1,"text":"While the company has a venture arm called NVentures, people familiar with its recent dealmaking said the business development group has led much of the push, with investments often accompanying broader commercial partnerships."}],[{"start":120.39999999999999,"text":"Patrick Little, chief executive of semiconductor design start-up SiFive, said Nvidia took a stake in his company after the groups agreed to make SiFive’s chip designs compatible with NVLink, Nvidia’s proprietary interconnect technology."}],[{"start":134.95,"text":"According to Little, Nvidia’s investment rationale was to “make sure that [we’ll] always play well with each other’s solutions”."}],[{"start":143.25,"text":"Nvidia struck a similar agreement with Marvell, the chip designer behind Amazon’s Trainium AI accelerators, investing $2bn in the company in March alongside a partnership to make its future custom chips compatible with NVLink."}],[{"start":158.4,"text":"Analysts have voiced greatest concern over Nvidia’s backing of a new generation of cloud computing groups such as CoreWeave, which Huang has said “would not exist” without Nvidia’s support."}],[{"start":170,"text":"The company has helped foster upstart AI infrastructure providers as Big Tech hyperscalers such as Google and Amazon have emerged as both Nvidia’s largest customers and rising chip rivals."}],[{"start":182.8,"text":"Earlier this month Nvidia struck a deal with neocloud group Iren, agreeing to spend $3.4bn over five years renting its GPU capacity while investing up to $2.1bn in the company as it expanded its fleet of Nvidia chips."}],[{"start":198.05,"text":"The arrangement leaves Nvidia simultaneously acting as customer, supplier and a prospective shareholder. Lawyers who have structured deals with Nvidia said the tech giant’s partnership agreements at times take place concurrently with financings. "}],[{"start":211.70000000000002,"text":"“[Nvidia’s] tech team will be talking to companies which often introduce the biz dev people who come in with cheques,” said one San Francisco-based lawyer. “It’s two separate conversations which are going on at the same time.”"}],[{"start":null,"text":""}],[{"start":224.20000000000002,"text":"Nvidia’s expanding role across the AI industry has attracted scrutiny from competition watchdogs around the world."}],[{"start":231.85000000000002,"text":"In its annual report, the company disclosed that regulators in the US, EU and UK, among others, had made “broad requests for information” about its “investments, partnerships and other agreements with companies developing foundation models” as well as customer, supplier and partner agreements."}],[{"start":249.35000000000002,"text":"The dealmaking consumed about 40 per cent of Nvidia’s operating cash flow in its latest fiscal year, well beyond the 6 per cent of cash flow shelled out on deals by Alphabet, which has traditionally been Big Tech’s largest investor in start-ups. "}],[{"start":264.95000000000005,"text":"Nvidia’s largest deal last year was a $20bn agreement with chip designer Groq, structured around licensing its technology and hiring talent as AI workloads shifted towards “inference” computing, where the start-up’s processors excel. Nvidia has already unveiled a product based on Groq’s technology."}],[{"start":282.40000000000003,"text":"Two people familiar with Nvidia’s dealmaking said the company often encouraged investee companies to use Nemotron, its open-source AI models, which Huang hopes can replicate the success of Cuda, the proprietary software platform that has become one of its strongest competitive advantages."}],[{"start":299.3,"text":"“Founders are starting to learn that if you’re building on the Nvidia ecosystem, you can raise money from Jensen,” said one venture capitalist. “It makes it easier to get funding.”"}],[{"start":309.40000000000003,"text":"Nvidia said its strategy “accelerates and diversifies innovation by growing the AI ecosystem” and uses capital, infrastructure and technical collaboration “so developers and customers can innovate faster”."}],[{"start":323.65000000000003,"text":"“Our investments are not conditioned on exclusivity,” it added, describing AI as a “highly competitive global market” where customers choose Nvidia for the performance of its products."}],[{"start":334.3,"text":"Beyond its equity investments, Nvidia had also committed $95bn to lock in component supply and manufacturing capacity as of the end of January."}],[{"start":344.75,"text":"Major supplier deals announced in the past few weeks include two $2bn investments in photonics groups Coherent and Lumentum, as well as $3.2bn in warrants for Corning shares, which makes the optical fibre used in high-speed data centres. All three are major Apple suppliers, but Nvidia’s investments are helping it emerge as a leading customer."}],[{"start":367.95,"text":"Moon Surana, portfolio manager at Harding Loevner, said Nvidia’s funding supported suppliers’ expansion plans while also “enhanc[ing] Nvidia’s leverage within the supply chain, in an environment where capacity remains constrained”."}],[{"start":382.59999999999997,"text":"SiFive’s Little said Huang remained central to Nvidia’s investment decisions, with the company’s flat structure enabling rapid moves such as joining the start-up’s recent $400mn funding round as a cornerstone investor."}],[{"start":397.15,"text":"Nvidia’s chief has “tunnel vision” on what the AI market looks like “five or 10 moves out” and acts accordingly, Little said. “They have no interest at all in marching the pawn one box. They want to see the pawn become a queen.”"}],[{"start":410.84999999999997,"text":"Data visualisation by Clara Murray"}],[{"start":421.05,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1779264200_6519.mp3"}