Nvidia made headlines again with CEO Jensen Huang's Asia tour to Japan, Malaysia, Singapore, and Vietnam over the past week. Yet it takes a grander perspective to see the strategy behind Huang's recent efforts in forging ties and securing supply chains.
Huang's frequent visits to Asia but avoiding China in 2023 is quite telling. Media spotlights were cast on Huang's talk at a semiconductor and AI conference in Hanoi, where he said Vietnam will become its second homeland, revealing plans to set up an IC design center in the Southeast Asian country.
According to VnExpress and VietnamPlus, during Huang's meeting with Vietnam Prime Minister Pham Minh Chinh, he said Nvidia had already invested US$250 million in Vietnam.
It is noteworthy that over the past week, Huang also announced a partnership with YTL Power in Malaysia and disclosed Nvidia was in talks with Singapore about potential investments and working with the city-state to help develop its large language model, Sealion.
And don't forget Huang also promises to build the AI ecosystem in Japan. "The semiconductor industry that Japan is now starting to grow and foster will be able to produce GPUs," Huang was quoted by Reuters. "Countries like Japan are realizing that you need to own your data, build your own AI factories, and produce your own AI intelligence."
He also visited Taiwan in May, October, and November of 2023. Although the PR occasions vary in those circumstances, he took each opportunity to schmooze with partners, strengthen relationships, foster collaboration, and ensure Nvidia gets the capacity it needs.
As new business emerges in the investments made by Asian countries in forming semiconductor ecosystems and building AI infrastructures and AI models, Nvidia moves fast to seize the "mind share" of its potential customers in this region.
To make sure Nvidia and other chip companies focus less on the Chinese market and gradually lower their dependence on China, perhaps the best thing the US government should do is to help foster faster growth in markets elsewhere – be it Southeast Asia, India, Japan, Europe or the US itself.
Building out a presence in potential Asia Pacific markets
People unfamiliar with manufacturing processes would have missed the last piece of the puzzle. Nvidia now has its AI GPU chips manufactured by TSMC and Samsung and has recently hinted about sourcing a third partner for its next-generation chips.
Although some have speculated that Intel could be the third partner, its chips are now mainly assembled in Asia is a fact. Nvidia recently disclosed that its Asia Pacific logistic center will be established in Taoyuan, Taiwan.
Thanks to Taiwan's strategic position in the Asia Pacific Rim, Nvidia's chips produced in Asia can be sent here, organized, and distributed worldwide. Since Nvidia's products are applied in 5G, AI, autonomous driving, Cloud services, data centers, and high-performance computing, it makes sense to set up the logistic center in Taiwan, as the island is a manufacturing hub encompasses the manufacturing as well as the packaging and testing of those most advanced chips.
Although Nvidia was prohibited from exporting its most advanced chips to China, US Commerce Secretary Gina Raimondo made clear that her department was in a position to ensure that the most advanced AI chips would not help China develop its AI models used for malicious functions. She said Nvidia "can, will and should sell AI chips to China because most AI chips will be for commercial applications" in an interview with Reuters on December 11.
Jensen Huang has expressed full support for complying with the US regulations, although that can mean sacrificing some portion of the 90% share it used to enjoy in China's AI chip market.
