Nvidia Manufactured AI Demand to Offload TSMC Oversupply
Original: Nvidia deliberately kept GPU prices high through circular financing deals
Why This Matters
Reveals how AI chip supply dynamics directly inflated consumer GPU and memory prices.
A WSJ profile reveals Nvidia used circular financing deals in mid-to-late 2026 to absorb a TSMC wafer oversupply, deliberately keeping GPU prices high — including a $250B OpenAI data center backstop.
Following Jensen Huang's resignation, a Wall Street Journal profile of interim CEO Colette Kress has exposed the mechanics behind Nvidia's controversial customer-financing strategy. According to the report, Nvidia pushed aggressively into financing deals with cloud providers and AI companies like OpenAI to absorb an 'avalanche' of semiconductors it had pre-ordered from TSMC — and to keep GPU prices artificially elevated in the process.
Kress, now interim CEO, had privately raised concerns about the scale of these deals. The company pressed on anyway, but by summer 2026 was questioning whether it had overreached. One deal alone involved a $250 billion backstop for what would have been the world's largest data center. Huang reportedly berated Kress around this period, calling her 'a deer in headlights.'
Nvidia and Huang had previously pushed back against comparisons to Enron, which used circular financing to illegally hide debt before its 2001 collapse. The fallout has been tangible for consumers: GeForce GPU prices regularly exceed 160% of MSRP, the RTX 5090 is effectively unobtainable, and diverted VRAM production has also inflated consumer RAM and storage prices. As financing deals wound down, Huang reportedly grew anxious about Nvidia's stock multiple slipping relative to other major tech firms.