Singapore's Semiconductors Boost Nvidia's Revenue

Publication Type: Articles , ETP and Industry
Singapore's Semiconductors Boost Nvidia's Revenue

Nvidia, renowned for its cutting-edge graphics processing units (GPUs) and artificial intelligence (AI) technologies, operates in a dynamic landscape where the demand for high-performance semiconductor components escalates. Against this backdrop, Singapore's semiconductor sector emerges as a key player, known for its technological prowess and strategic importance in the global supply chain. As we explore the intricate relationship between Nvidia's revenue surge and Singapore's semiconductor industry, we will uncover the underlying factors, partnerships, and market dynamics that have propelled Nvidia's remarkable financial performance in recent times.

Nvidia posted stellar third-quarter results on November 21st, prompting industry analysts to highlight a significant portion of the U.S. chip giant's revenue originating from a singular, small country.

For the October quarter of 2023, Singapore accounted for approximately 15% or $2.7 billion of Nvidia's total revenue of $18 billion. For Q3 2023 revenue from Singapore witnessed an exceptional surge of 404.1% surpassing the $562 million. This revenue surge in Singapore even outpaced Nvidia's total revenue growth of 205.5% from a year ago.

In Nvidia's third-quarter sales rankings, Singapore held the fourth position, trailing behind the U.S. with 34.77%, Taiwan with 23.91%, and China, including Hong Kong, with 22.24%.

The contrast becomes even more pronounced when considering the size of Singapore: on a per capita basis, Singapore's expenditure on Nvidia chips in the quarter amounted to $600, a substantial difference compared to the $60 spent in the U.S. and approximately $3 per capita in China.

Moreover, This growth in Singapore is particularly noteworthy, with the quarterly business volume of chips shipped this year being five times greater than the corresponding figure from a year ago. Remarkably, this volume is even larger than the amount for any country worldwide during the same quarter last year.

This demand in Singapore is primarily due to data centers and cloud service providers. Singapore has a large number of such facilities (around 70 according to some estimates).

Nevertheless, Singapore's existing data centers are typically well-established and operate at high capacity. Integrating Nvidia's processors poses a challenge due to the substantial power requirements, necessitating significant upgrades in power and cooling infrastructure for any existing data center.

While Singapore has recently lifted a three-year moratorium on new data center construction, only a limited number of new projects have received approval. These are expected to primarily cater to conventional cloud services. Currently, Equinix, Microsoft, Airtrunk, and GDS collectively share the 80MW allocation permitted by Singapore authorities.

According to the SEC filing, it was disclosed that 80% of Nvidia's third-quarter sales were attributed to the data center segment. The remaining portion was distributed among gaming, professional visualization, automotive, and other sectors.

In the filing, Nvidia specified, "Cloud service providers accounted for approximately half of the data center revenue, with consumer internet companies and enterprises contributing to the remaining half." This breakdown underscores the significant influence of cloud service providers in driving Nvidia's revenue within the data center segment during the specified quarter.

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