Hacker News Reader

Comment by Lord-Jobo | Hacker News Reader

I also just don’t understand, as someone with no business experience, how they aren’t just pouring all of that money into enhancing their production capacity. That’s very clearly their bottleneck here.

Yes, I’m certain they are spending an astronomical amount on that already, but why not more? Surely paying more money for construction of more facilities still nets gain even if you run into diminishing returns?

Instead they set up this whacko tax laundering scheme? Just seems like more corporate pocket filling to me, an idiot with no business knowledge.

View on HN

The bottleneck is TSMC, who also make chips for almost every other hardware vendor.

TSMC is indeed increasing their production capability as fast as possible, but it's not easy... chip foundries are extremely expensive, complex, and take serious expertise to operate.

It’s called seeding the market. If they can accelerate the growth of potential customers, it will be more profitable than just increasing production to serve existing customers.

Think of exponential growth — would you rather increase the base or the exponent?

Hedging their bets against a potential sudden downturn in consumption of their product, e.g., an AI bubble exploding? If they invest heavily in production capacity only to find that there is not commensurate consumption, then they'll have lost badly.

> as someone with no business experience, how they aren’t just pouring all of that money into enhancing their production capacity. That’s very clearly their bottleneck here.

They know this madness can't go on forever. The last thing they need is to be left with billions of dollars of unused capacity when the bottom falls out of this very stupid bubble.

> They know this madness can't go on forever.

If they thought that, would they invest massively in the companies that own all these GPUs? They would not. They would invest in anything ELSE they could think of.

But doing that would spook investors and possibly pop the bubble, so they look for ways to mitigate risk and fuel the bubble at the same time.

That might be the case if nvidia commonly invested in its customers - if they suddenly stopped doing that - but I don't think that was the case. On the contrary, these investments surprised because they were NOT the usual.

Reply on news.ycombinator.com