<\/p>\n
Some of Nvidia Corp\u2019s biggest customers have been told that the prices of servers containing its artificial intelligence (AI) chips are going up more than 15% in many cases as memory chip costs soar.<\/p>\n
The price hikes will go into effect on systems shipped early next year and will impact systems including those with the flagship Vera Rubin and Grace Blackwell chips, according to people familiar with the process.<\/p>\n
They asked to not to be identified commenting on communications that haven\u2019t yet been made public.<\/p>\n
Listen\/read: I wish I could press AI\u2019s \u2018delete\u2019 button \u2013 Wierzycka<\/p>\n
The increases will depend on the generation of Nvidia chips and the memory configurations, they said.<\/p>\n
Companies that build the servers under contract for large data centre operators \u2013 such as Microsoft, Alphabet Inc\u2019s Google and Oracle Corp \u2013 have recently notified their customers of the forthcoming increases, the people said.<\/p>\n
Nvidia representatives didn\u2019t respond to requests for comment.<\/p>\n
Chipmakers have \u2018unprecedented influence\u2019<\/p>\n
The inability of the industry\u2019s most dominant company to hold the line on prices or absorb growing costs shows how much leverage makers of memory chips \u2013 Samsung Electronics, SK Hynix, and Micron Technology \u2013 have amid a surge in demand for AI infrastructure.<\/p>\n
Read: Samsung chip profit soars 250-fold during relentless AI build out<\/p>\n
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Major technology companies including Apple and Qualcomm recently said they have been forced to charge more for their products because of chip shortages.<\/p>\n
Nvidia\u2019s accelerator processors are the heart of computers that create and run AI software. Their effectiveness depends on how much dynamic random access memory, or DRAM, they are paired with.<\/p>\n
The two Korean companies and Micron account for most of the world\u2019s production of that type of chip.<\/p>\n
While they have been increasing output, they still haven\u2019t caught up with surging demand.<\/p>\n
That\u2019s driven the price of the commodity-like components up massively and given their manufacturers unprecedented influence in technology.<\/p>\n
Nvidia\u2019s semiconductors<\/p>\n
Nvidia is one of the most profitable companies in semiconductors.<\/p>\n
It\u2019s able to charge tens of thousands of dollars per chip because supply \u2013 from contract manufacturer Taiwan Semiconductor Manufacturing Co \u2013 still can\u2019t meet runaway demand.<\/p>\n
The company has a gross margin, or percentage of sales remaining after deducting the cost of production, of 75%.<\/p>\n
Originally derived from PC gaming chips that sold for hundreds of dollars, AI accelerators have seen prices being driven up by incessant demand and, as yet, a dearth of viable alternatives for Nvidia\u2019s offerings.<\/p>\n
Nvidia has also raised prices for its gaming-oriented PC graphics cards, industry news site Tom\u2019s Hardware\u00a0reported\u00a0earlier this month.<\/p>\n
Opportunity for competitors?<\/p>\n
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How Nvidia\u2019s customers react to this latest move and whether it will create an opening for its competitors will likely depend on whether they\u2019re able to secure enough memory themselves.<\/p>\n
Major customers like Amazon, Microsoft, Google and Meta are all pursuing their own in-house chip programmes.<\/p>\n
They are however still dependent on purchases from Nvidia for their data centre build-outs.<\/p>\n
Their ability to push forward with greater independence will also depend on their access to supply from Samsung, SK Hynix and Micron.<\/p>\n
The price increases are also likely to add complexity to the industry\u2019s massive AI data centre build-out ambitions.<\/p>\n
Project delays, labour shortages, tightening capital markets and community resistance to developments have\u00a0already complicated many plans.<\/p>\n
Nvidia is reporting fiscal second-quarter earnings next week.<\/p>\n
The updates by the world\u2019s most valuable publicly-traded company have become a key update for the technology industry and investors who have poured money into AI infrastructure on the promise that it will transform the economy.<\/p>\n
Read: Nvidia\u2019s show of financial force soothes credit markets<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
#Nvidia #customers #told #AIrelated #price #hikes<\/p>\n","protected":false},"excerpt":{"rendered":"
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