Nvidia Allegedly Manufactured GPU Shortage via Startup Investments
Original: Nvidia Allegedly Engineered Scarcity by Funding AI Startups to Buy Its GPUs
Why This Matters
Allegations of manufactured scarcity would reframe the entire AI GPU boom narrative.
A WSJ report alleges Nvidia, under ex-CEO Jensen Huang, invested in AI startups to buy its GPUs and absorb an oversupply from TSMC, artificially sustaining the appearance of high demand amid the ongoing GPU shortage.
A Wall Street Journal investigation, published shortly after Jensen Huang's resignation as Nvidia CEO, alleges the company deliberately engineered the perception of GPU scarcity by investing in small AI startups that would then purchase Nvidia hardware and build data centers. The alleged motive: absorbing an "avalanche" of GPUs committed under TSMC supply contracts for which Nvidia lacked genuine buyers. The report details an August meeting where CFO and acting CEO Colette Kress pushed back against these circular financing arrangements, specifically flagging Nvidia's $250 billion deal with OpenAI as a concern. Huang allegedly responded by calling Kress a "deer in the headlights." The strategy appears to have been a hedge against a broader market shift: major AI hyperscalers were moving away from off-the-shelf Nvidia components toward custom silicon, drying up large-scale demand. Kress also reportedly warned that the small cloud providers Nvidia was bankrolling often couldn't afford to actually pay for GPUs — making the entire arrangement a potential financial dead end rather than a demand solution.