Nvidia Chip Delay Could Slow Big Tech’s AI Data Center Push
Delivery of Nvidia’s new artificial intelligence chips has reportedly been delayed by months due to a design flaw, potentially upending plans to open hyperscale data centers early next year.
The recently discovered design error in Nvidia’s upcoming Blackwell line of graphics processing units will cause manufacturing and delivery delays of at least three months, The Information reported Friday evening, citing two sources directly involved in the chips’ production.
Tech giants like Microsoft, Google and Meta have ordered tens of billions of dollars worth of these processors, which are the central piece of the high-performance computing power required for new AI products and applications.
These firms have been building new data centers at an unprecedented clip to support the high-performance chips produced mainly by Nvidia. But while Microsoft and others had planned to start operating clusters of these Blackwell GPUs at new data centers beginning in early 2025, those plans are now likely on hold.
The discovery of a flaw in the processor’s design just months before scheduled delivery only emerged when chip manufacturer Taiwan Semiconductor Manufacturing Co. was in the final stages of ramping up to put the Blackwell GPU chips into mass production, The Information reported. TSMC engineers discovered the flaw, which reportedly decreased the production yield of the chip.
Hyperscalers ordered Blackwell GPUs in massive quantities. Google purchased more than 400,000 of one version of the processor, an order The Information estimates at more than $10B when combined with the cost of server hardware. Meta also has an order for at least $10B. Microsoft recently increased its order of Nvidia’s Blackwell line by 20%, bringing its total order to as many as 65,000 GPUs.
Microsoft’s engineering teams had planned to have data centers with clusters of these new GPUs ready for partner firm OpenAI to use by January of 2025. But now that timeline has been pushed back to early spring, according to The Information.
Nvidia disclosed the impending delay to Microsoft and another major cloud provider last week, according to The Information. Nvidia’s stock price had plunged 6.6% as of 2:40 p.m. ET Monday, with the firm’s value down more than 25% from its mid-June peak.
The snafu is the second major piece of bad news Nvidia has faced over the last week, a sudden patch of rough seas for a firm that had catapulted from relative obscurity to one of the most valuable companies in the world in a matter of months, thanks to Big Tech’s AI arms race.
The firm is also under investigation by the Department of Justice over alleged anticompetitive practices, according to reports last week. The antitrust probe comes after numerous complaints from Nvidia’s competitors.
Nvidia is scheduled to announce its second-quarter earnings results later this month.
