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.

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.

Why would they want to do that? The only sector that matter to nvidia is datacenter, its where 90%+ of their profits are. Making their consumer sector even less profitable just seems like a waste of time

How about positive mindshare? Regular people not growing up absolutely hating nvidia's guts and only begrudgingly buying their products. Also ensuring that a pretty big industry won't die from becoming too expensive.

Plus, diversification is good for when the bubble inevitably bursts.

But that's long-term thinking and we can't have that. People give Huang credit for having had a long-term vision on AI, but it feels like he definitely has blinders on right now.

The consumer gaming card market is minuscule in comparison to their primary market now, to the point where worrying about diversifying there probably doesn’t make sense. Nor does it really matter whether consumer gamers hate them. That is likely to have zero effect on their core customer now.

Underestimating compounding and secondary effects, especially while rationalizing the abandonment of their core market and capability is one of the most famous ways that big companies provide evidence of their downward spiral. I can feel the MBA energy from here.

Can you name any companies that suffered by switching focus away from one market where they dominate in order to also dominate a market that is 10x the size of the first market already, and growing faster?

If switching focus goes along with 'underestimating effects of ignoring core market and the treating competencies in it which lead to the market domination in other segments as legacy of the past which should be abandoned', then take your pick. A few off the top of my head: GE, Sony, HP, RCA, IBM.

Every specific situation is different, but the pattern I mentioned is easy to find. Here are three examples: RCA, GE, HP.

CUDA is where it is today because some years ago, people in grad school screwed around with CUDA on their personal gaming PCs

> How about positive mindshare?

Does anyone who can afford an nvidia card actually buy something else? Yes some people hate nvidia, but it's not like they have a hard time selling cards.

Consumers should already be glad that R&D for their products is being subsidized by OpenAI and Google