If you’re a fabless company that relies on outside chip fabrication from companies like TSMC, you’re forced to compete for limited wafer launches, especially on the newest nodes. Using a smaller node dramatically changes the basic performance and even the essential viability of your chip. That’s why industry giants like Apple, Qualcomm, AMD and Nvidia are all spending billions to secure their supplies. If they don’t pay, there are no (or fewer) chips for you!
Accordingly hardware times, Nvidia will pay the exorbitant amount of nearly $10 billion to secure its share of TSMC’s 5nm capacity. Nvidia is preparing to produce its next-gen Ada Lovelace GPU on TSMC’s N5 node. Of course, this next-gen family of GPUs will likely be referred to as the RTX 40 series. No one outside of management at either company knows exactly how the fees break down or over what timeframe, but as Hardware Times noted, Nvidia spent $9 billion on inventory and upfront payments on future products in the third quarter alone. This would suggest that Nvidia is already paying well in advance through its nose.
Securing 5nm production is critical to the success of the RTX 40 series. A node shrink can deliver a combination of higher clock speeds and better power efficiency, and this can mean the difference between winning or losing a head-to-head battle. While oversimplifying things, it may be that Nvidia’s use of Samsung 8nm is one reason its products can’t clock as high as AMD’s 7nm products, despite drawing more power.
The other benefit of using a smaller knot is better yield. More chips fit on a 300mm wafer if the chips themselves are smaller. More chips per wafer means more profit.
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The GPU shortage in 2021 may have raised concerns among gamers, but Nvidia certainly didn’t hurt, as the company reported $3.42 billion in gaming revenue in the January quarter, up 37% from the same quarter corresponds to the same period of the previous year.
The big hope is that mining demand will start to fall as crypto prices fall and PoW GPU mining falls out of favor, allowing more graphics cards to get into the hands of gamers rather than miners.
As gamers, we just want budget options available when we want them. Let’s hope there is enough 5nm capacity to at least meet player demand. Along with Arc cards from Intel, the next heavyweight battle begins later in 2022: AMD RDNA 3 vs. Nvidia RTX 40. Both on the same process node. Pound by pound, beat by beat. Struggle!
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