The Chip Insider®–NVIDIA reinvents itself. Capacity Maxed Out.

Summary:

NVIDIA RTX Spark™ reinvents its strategy and business model

The world got amazingly excited when NVIDIA launched its new chip targeted at the PC market. After all, it was just another chip. Then again, the world tends to find anything NVIDIA exciting. Pundits were skeptical and rightly so. Last year they launched the NVIDIA DGX™ Spark … but it didn’t visibly move the revenue needle. So, NVIDIA pugnacious as ever… is having another go at it with RTX Spark…

What have most missed in this announcement: What NVIDIA is really reinventing is its business model… NVIDIA move-fast imperative is because they arguably hold the greatest profit center in the history of semiconductors and computing hardware… The growth driver is shifting from AI industry expansion via data center to business consumers. This means it must on-board corporate AI-developers into its eco-system… Just think of the demand-scape…

The AI demand-scape is similar to that of the internet… During the early build out of the internet, investment analysts thought Intel was a dead man walking… But it was the beneficiary of the internet because it held the most important screen, the PC. Today, there are four screens of importance… Hence, the company’s need for a fourth reinvention as a consumer-facing company.

Problem is, NVIDIA faces two maxim barriers to their success. The first: A high-end product company attacking a low-end product is the one of the most difficult moves in business…

The second: When entering a market, in which a strong, well-entrenched leader exists, the assailant always has the disadvantage in gaining market share, which I repeat below.

To beat both, NVIDIA needs to tactically position itself to avoid them. What’s obviously visible is … So avoiding margin dilution means … Time will tell.

Q & A -Fab Capacity Utilization at 100%: Dan, Why is it that design tape outs are slowing due to capacity utilization? It doesn’t make sense… Actually, I’ve never see utilization get tight enough to constrain tapeouts in my more than 40 years of following it… Welcome to the new AI world. — Dan

Maxims: When entering a market, in which a strong, well-entrenched leader exists, the assailant always has the disadvantage in gaining market share. If the assailant is a small start-up, energy will be wasted getting buyers to believe them. If the assailant is the leader, it will lose credibility, while lending it to the start-up. The defensive position is always the strongest…

“The present is the new future…
that where you sit, you create everything that’s going to come”
— Sarah Jones