This is pure speculation on my part but I think at some point a company's valuation became tied to how big their compute is so everybody jumped on the bandwagon.
If you were a reporter who didn't necessarily understand how to value a particular algorithm or training operation, but you wanted a simple number to compare the amount of work OpenAI vs. Google vs Facebook are putting into their models, yeah, it makes sense. How many petaflops their datacenters are churning through in aggregate is probably correlated to the thing you're trying to understand. And it's probably easier to look at their financials and correlate how much they've spent on GPUs to how many petaflops of compute they need.
But when your investors are giving you more money based on how well they perceive you're doing, and their perception is not an oracle but is instead directly based on how much money you're spending... the GPUs don't actually need to do anything other than make number go up.
Burn rate based valuations!
The 2000's are back in full force!
In my experience CPU/GPU power is used up as much as possible. Increased efficiency just leads to more demand.
Any asset depreciates over time. But they usually get replaced.
My 286 was replaced by a faster 386 and that by an even faster 468.
I’m sure you see a naming pattern there.
That's why "those chips are very valuable" is not necessarily a good way to value companies - and it isn't if they can extract the value from the chips before they become worthless.
> But they usually get replaced.
They usually produce enough income to cover depreciation so you actually have the cash to replace them.
Given that inference time will soon be extremely valuable with agents and <thinking> models, H100s may yet be worth something in a couple years.
How much was your 286 chip worth when you bought your 486?
This isn't true in the AI chip space (yet). And so much of this isn't just about compute but about the memory.
Chiplets have slowed the slowdown in AI, but you can see in the gaming space how much things have slowed to get an idea of what is coming for enterprise.
Isn't it because we insist on only using the latest nodes from a single company for manufacture?
I don't understand why we can't use older process nodes to boost overall GPU making capacity.
Can't we have tiers of GPU availability?
Why is Nvidia not diversifying aggressively to Samsung and Intel no matter the process node.
Can someone explain?
I've heard packaging is also a concern, but can't you get Intel to figure that out with a large enough commitment?
TSMC was way ahead of anyone else introducing 5nm. There's a long lead time porting a chip to a new process from a different manufacturer.
> I don't understand why we can't use older process nodes to boost overall GPU making capacity.
> Can't we have tiers of GPU availability?
NVidia do this. You can get older GPUs, but more performance is better for performance sensitive applications like training or running LLMs.
Higher performance needs better manufacturing processes.
Are they actually, though? Presently yes, but are they actually driving ROI? Or just an asset nobody really is meaningfully utilizing, but helps juice the stocks?
Isn't it because NVIDIA insists on only using the latest nodes from a single company (TSMC) for manufacture?
I don't understand why we can't use older process nodes to boost overall GPU making capacity.
Can't we have tiers of GPU availability some on cutting edge nodes, others built on older Intel and Samsung nodes?
Why is Nvidia not diversifying aggressively to Samsung and Intel no matter the process node.
Can someone explain?
I've heard packaging is also a concern, but can't you get Intel to figure that out with a large enough commitment?
(Also, I know NVIDIA has some capacity on Samsung. But why not go all out, even using Global Foundries?)
Otherwise you better keep them humming trying to find a business model because they certainly aren't getting any newer as chips
But, I'm not going to value an operating construction company based on how many shovels or excavators they own. I'm going to want to see them putting those assets to productive use.