Dive Brief:
- Supply constraints are weighing down Nvidia’s financial outlook for its next fiscal year, executives said on an Aug. 26 earnings call.
- The shortages span the artificial intelligence infrastructure provider’s supply network, extending from high-speed memory and silicon vendors to suppliers of AI data centers under construction, co-founder and CEO Jen-Hsun Huang told investors.
- “We have a really gigantic supply chain, and so, we have incredible partners, and we've secured a lot of supply, but we just need a lot more,” Huang said, noting that while it has supply to drive 70% year-over-year revenue growth in fiscal 2028, that amount falls short of demand.
Dive Insight:
Supply constraints — particularly for high-speed memory — have plagued many technology vendors as the build-out of AI-powering data centers has outpaced semiconductor supply. The shortages have led companies like Dell Technologies and Hewlett Packard Enterprise to jockey with suppliers for more semiconductors and extend wait times for their AI-running enterprise servers.
Nvidia’s customers include many organizations building AI data centers, including large companies such as Amazon, Google and Microsoft, and national and regional governments.
Nvidia’s supply-demand gap is expected to remain a bottleneck at least through the fiscal year ending in early 2028, EVP and CFO Colette Kress said. The semiconductor shortage has also raised prices, particularly amid “extreme pricing conditions in memory,” Kress said.
"The magnitude of the price increase has exceeded our prior expectations and are headed even higher into next year," Kress said.
However, Nvidia has deep, long-standing relationships with three major memory suppliers and the AI systems maker is working closely with them to increase capacity, according to Kress.
The company has partnered with suppliers to secure critical components for the next several years, according to a securities filing. The company’s supply commitments rose from $119 billion in the first quarter to $279 billion as of the end of the period ended July 26.
Dealing with the shortages has pushed Nvidia beyond simply securing components for its products, Huang said. The company is aligning its supply chain with networks feeding AI data center construction to gain more visibility into the timing of customers’ future needs.
“They really need an entire factory platform built for them,” Huang said, referencing data center customers.
