The Two Trillion Dollar Question

Greg P

Posted April 8, 2024underCUDAFABFablessGPUGraphics CardJensen HuangNVDANVIDIATSMC

Nvidia, currently valued at $2 trillion, operates as a “FABless” semiconductor company, designing chips but not manufacturing them. This business model, which emerged in the 1980s, allows Nvidia to focus on chip design while Taiwan Semiconductor Manufacturing Company (TSMC) handles fabrication. Nvidia’s origins lie in graphics technology, making them a leading company in the industry. The shift from building physical fabrics to focusing on graphics processing units (GPUs) and the development of CUDA enabled GPUs in the early 2000s set the stage for Nvidia’s current success. CUDA, which allows engineers and scientists to harness the power of GPUs directly on their PCs, played a crucial role in the development of AI. Nvidia’s strategy involves accelerating deep learning everywhere and connecting GPUs to work together quickly, making them an essential component in the development and acceleration of AI. Nvidia’s transformation from a graphics card company to an “AI foundry” involves monetizing its CUDA platform and AI capabilities on a massive scale, with the potential to extend this model through initiatives like Digital Twins and generative workflow. The value of Nvidia depends on the future of AI and the size of the industries it represents, with uncertainty surrounding the market size and potential risks from competition and geopolitical tensions.

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