Jensen Huang, the CEO of NVIDIA, acknowledged a design flaw in the upcoming NVIDIA AI accelerator “Blackwell” set to release at the end of the year, stating, “It is 100% NVIDIA’s fault.” Reports suggesting tensions with Taiwan’s TSMC were dismissed by Huang as “fake news.” In the semiconductor industry, some analysts interpret this situation as NVIDIA’s “de facto surrender” in its rivalry with TSMC, which dominates the advanced semiconductor foundry market.
According to Reuters, on the 23rd (local time), Huang, during his visit to Denmark, admitted the design flaw with Blackwell had resulted in a lower yield rate. He mentioned that they had to design certain chips from scratch while simultaneously manufacturing them and claimed the issue was now resolved. However, despite these explanations, NVIDIA’s stock fell by 2.81% in U.S. markets on that day.
NVIDIA had introduced the next-generation AI chip Blackwell in March, planning to begin mass production in the second quarter, but delays persisted. This led to suspicions within the semiconductor industry that production issues were due to design flaws, with some media outlets reporting a blame game between NVIDIA and its manufacturing partner TSMC. This resulted in speculation that NVIDIA could shift the production of some GPU chips to Samsung Electronics’ foundry division instead of TSMC.
On this day, Huang labeled reports on conflicts with TSMC as “fake news.” He stated that TSMC had helped them resolve yield issues and resume Blackwell production at an impressive pace. NVIDIA’s Blackwell is being manufactured using TSMC’s 4-nanometer process and advanced packaging technologies.
Industry analysts viewed Huang’s remarks as an indicator of TSMC’s towering presence in the advanced chip manufacturing sector, where it essentially holds a monopoly. A semiconductor industry insider mentioned that even NVIDIA, a major player, had to eventually concede.
As competitors like Samsung Electronics and Intel falter in the foundry business, NVIDIA finds it increasingly difficult to find alternatives other than TSMC. Amid a shortage of advanced semiconductor supplies, even top clients like Apple and NVIDIA reportedly struggle in negotiations with TSMC, as many of TSMC’s customers compete intensely to secure a larger share of production capacity. TSMC recently increased semiconductor production prices by about 8%, focusing on advanced processes, and reported an operating profit margin of 47.5% for the third quarter.