In this last month, the American processor manufacturer, Nvidia, has been in the eye of the hurricane. This company reached two billion market value, on par with giants like Microsoft and Apple.
Nvidia is an American company, a leader in chip manufacturing by developing powerful graphics processing units (GPU). These processors are the most used in the artificial intelligence (AI) industry. This article will shed some light on the success of this multinational and its origins.
This company made a great turning point in its growth in the last year and a half. Nvidia specialized in components specialized in AI processes (including everything surrounding OpenAI and its ChatGPT, among others). Specifically for its Nvidia Hopper GPU processor , specialized in training language models, recommendation systems and generative AI applications. These graphics processors are used by OpenAI, Meta, Google, Microsoft. among other companies.
However, this company was founded in 1993 by the Taiwanese Jen-Hsun Huang, the current CEO, and the Americans Chris Malachowsky and Curtis Priem, who designed chips in other companies.
Photo 1: The current CEO, Jensen Huang. Source: https://quartr.com/insights/business-philosophy/the-story-of-jensen-huang-and-nvidia
Nvidia started as a company that manufactured chips for video game development. At that time, the personal computer market was beginning to take off, and the trio saw the opportunity to bring the most advanced technology to the world of video games.
Its graphics processing units began to be in high demand for the development of display functions such as rendering videos, images and animations, ideal for highly demanding video games. This was for a long time Nvidia's main business. In 2000, Microsoft decided to use one of the GPU models for its first console, Xbox.
At the same time, engineers began using its chips to make artificial intelligence calculations, and the company realized that semiconductors designed for graphics processing were also useful for training artificial intelligence systems. Another key to Nivida's success was acquiring its competitors , such as: 3dfx . Icera in 2011 and Mellanox Technologies in 2019, allowing it to make the leap into other sectors.
Starting in 2006, Nvidia made its commitment to artificial intelligence clear. At that time, the company announced the creation of CUDA, a programming language that made it possible for the firm's chips to solve complex mathematical problems. In 2010, Nvidia made a breakthrough by using GPUs to train a machine learning model capable of identifying cats in YouTube videos. This was a huge milestone and showed the world the potential of GPUs for AI.
However, Nvidia had to face numerous setbacks. A major obstacle was the failure of the nv1 chip, designed to bring 3D graphics to PCs. Despite its technological achievements, the chip did not catch on with consumers due to its complexity, high price, and lack of compatibility with existing software and hardware.
Despite this failure, Nvidia knew how to recover. In 2013, based on promising research from the academic computer science community, Huang bet Nvidia's future on artificial intelligence.
During the SARS-CoV-2 pandemic, the technology sector was hit by supply chain issues and chip shortages. This had an impact on the market, including the video game sector. When Nvidia put its long-awaited RTX 3080 card on sale in 2020, it sold out immediately and was subject to a price hike.
However, the key moment for Nvidia was thanks to the popularity of artificial intelligence . Almost at the same time that OpenAI launched ChatGPT in November 2022, the chipmaker released its most powerful processor, the H100, aimed specifically at generative AI. Furthermore, it was sold for $40,000.
However, this company faces a growing technological struggle between the US and China. To avoid and stop Chinese technological and weapons development, in September 2022 the US Government took an important step forward in its technological war with China: it prohibited NVIDIA from selling its A100 and H100 chips to companies in this Asian country .
With the passage of time, this struggle has intensified. As a result, Washington adopted a new package of bans that came into effect in November 2023. Nvidia accounts for just over 90% of the Chinese market for artificial intelligence chips, where Huawei could shine and replace Nvidia in the Chinese market.
Another challenge for Nvidia will be how to maintain leadership. Other semiconductor companies like Intel and AMD have announced major advances in AI, and companies like OpenAI, AWS, and Google are also taking steps toward less dependence on Nvidia. Despite these challenges, Nvidia has managed to position itself as a lighthouse and leader in components specialized in AI processes and only time will tell if Nvidia will sit at the table of the giants or only in the short term.
Suggested readings:
Lacort, J. (2024) Nvidia Está desatada. Crece de forma vertical y ha Vuelto a destrozar sus récords de ingresos y beneficios, Xataka. Available at: https://www.xataka.com/empresas-y-economia/nvidia-esta-desatada-crece-forma-vertical-ha-vuelto-a-destrozar-sus-records-ingresos-beneficios
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