To help world gorge on GPUs, Nvidia brings cash bucket to fatten wafer-thin supply chain

Nvidia has decided that its future prospects rest on an improved silicon substrate and packing supply chain, so has dipped into its giant pile of cash to ensure it can get the parts it needs by ensuring its suppliers have the resources needed to play their small part in keeping the flow of GPUs and AI processors strong.

It’s not unusual for manufacturers to invest in their suppliers, because it helps to create certainty and spread financial risk. For those deals to be announced at a major tech company’s conference – as Nvidia did at its Berlin GTC gabfest – is somewhat novel, suggesting the company feels the need to show investors it is working to ensure it can meet demand for its products, and that demand will persist for years.

Several of Nvidia’s announcements pertained to silicon substrates, aka wafers. Whatever you call them, they’re blank, round, silicon slabs onto which chipmakers etch circuits. They’re made by companies that sell to foundries like TSMC and Intel, which then turn them into chips of various flavours.

At GTC Berlin, Nvidia CEO Jensen Huang observed that demand for AI hardware is vast, but that “Capacity is the constraint.”

Specifically, capacity for activities like building substrates, advanced silicon packaging, testing, and creating optical connectors.

Big Green therefore plans to increase substrate capacity for its products by 2.5x over the next three years.

To make that happen, Nvidia has added Samsung’s Electro-Mechanics business unit to its substrate supply chain. Samsung apparently has immediate capacity at a factory in South Korea and Nvidia intends to tap that now. The deal means that by 2028, about a quarter of Sammy’s substrate output will go to Nvidia.

Nvidia already has a deal with Japanese substrate outfit IBIDEN. In Berlin, the GPU giant pointed to further expansion that will triple production at an IBIDEN plant.

Taiwanese substrate player Unimicron is also benefiting from Nvidia’s generosity, in the form of a capacity reservation agreement and associated plant expansion plans.

It’s not just wafers that Nvidia wants to tuck into. The company has also signed a capacity reservation with Korean silicon packaging player Amkor. Again, Big Green’s involvement will see its partner expand capacity, in this case by 300 percent.

Nvidia says this deal “will support higher production volumes for current and next-generation platforms.”

AI systems need speedy networks, and many players see optical connections as the best way to build systems capable of handling the data deluges modern workloads create and require. Nvidia has therefore hatched a plan to boost manufacturing capacity at optics outfit SPIL. Again, Big Green already has a deal with the company, but in Berlin it expanded that arrangement in the hope it expands production capacity 15x by mid-2027, then doubles that again by the end of 2028.

All of which suggests that Nvidia believes the AI infrastructure boom has years left to run. ®