AI: Nvidia' Blackwell AI GPU delays. RTZ #439

...a short-term hiccup in Nvidia's 'accelerated computing' roadmap

Another delay in AI product release dates vs market expectations, in this AI Tech Wave. Last week I discussed Apple seeing some delays in their anticipated Apple Intelligence features later this fall, from September to October. It’s a rollout I continue to see as uniquely leveraging Apple’s advantages with AI in the long-term.

This time, it’s the AI foundation company that provides the base AI GPU chips and related data center ‘accelerated computing’ infrastructure, Nvidia of course. Led by founder/CEO Jensen Huang, who continues to drive his company at an extraordinary pace of product innovation, deployment, and execution at global scale. The delay involves the company’s next generation ‘Blackwell’ AI GPU chip roadmap, and related AI product infrastructure.

The Information reports in “Nvidia’s New AI Chip is Delayed, Impacting Microsoft, Google, Meta”:

“Nvidia’s upcoming artificial intelligence chips will be delayed by three months or more due to design flaws, a snafu that could affect customers such as Meta Platforms, Google and Microsoft that have collectively ordered tens of billions of dollars worth of the chips, according to two people who help produce the chip and server hardware for it.”

“Nvidia this week told Microsoft, one of its biggest customers, and another large cloud provider about a delay involving the most advanced AI chip in its new Blackwell series of chips, according to a Microsoft employee and another person with direct knowledge.”

“Nvidia unveiled Blackwell in March and CEO Jensen Huang said in May that the company planned to ship large numbers of Blackwells later this year. That was before design problems arose unusually late in the production process. Nvidia is conducting new test production runs with its chip manufacturer, Taiwan Semiconductor Manufacturing Company, to sort out the kinks, the people involved with the Blackwell chip said.”

“As a result, big shipments aren’t expected until the first quarter. After receiving chips, it typically takes cloud providers about three months to get large clusters of them up and running, according to someone who works on these types of data centers.”

“The design and production snag adds to the concerns hanging over Nvidia, which the U.S. Department of Justice is now investigating over complaints from rivals about alleged anti-competitive behavior. The company is still in a strong position, as the performance of its chips is far ahead of those of its competitors.”

“Shareholder expectations for the Blackwell chips are running high. An analyst at Keybanc Capital Markets projected that the Blackwell chips could drive Nvidia’s data center revenue to more than $200 billion in 2025 from $47.5 billion in 2024. (Such estimates may not account for the new delay.)”

The delay also impacts Nvidia’s related AI products:
”The design flaw will also impact the production and delivery of Nvidia’s NVLink server racks because the companies that work on the servers have to wait for a new chip sample before finalizing a server rack design.”

Further technical details around the detail can be found at Semianalysis, where they point out implications for the company’s current ‘Hopper’ chips in detail:

“In short Nvidia’s Hopper is extended in lifespan and shipments to make up for a chunk of the delays. Product timelines for Blackwell are pushed out some, but volumes are affected more than the first shipment timelines.”

AI products and services at this level of exponential improvements, and scale deployments will remain hard. For most companies up and down the AI Tech Stack chart above.

In this case, the Nvidia delays and its impact on the AI infrastructure ecosystem, will likely be felt by suppliers and customers up and down the stack.

But in the end analysis, the longer-term implications remain intact for Nvidia. The supply of these chips and infrastructure remain supply constrained for the next couple of years at least. And these specific delays do not necessarily open short-term advantages for competitors. Stay tuned.

(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here)