Learning from Nvidia’s success

Silicon Valley-based Nvidia founded in 1993 has joined the $1 trillion market-cap club for the first time as a chipmaker. It joined household names like Apple, Microsoft, and Google representing new technologies and innovations. Only nine companies have achieved the $1 trillion market-cap threshold. Apart from Saudi’s state oil giant Aramco, the rest of the members — Apple, Amazon, Google, and Microsoft — represent the latest technologies: smartphone, e-commerce, and cloud. Nvidia has joined the rankings with the advent of the artificial intelligence age.

The thirty-year company has become a global behemoth on the AI boom which has sparked a shortage of graphics-processing units (GPU). At the current pace, companies must wait more than six months to receive the latest product from Nvidia, as its high-performance chips are “harder than to get than drugs,” according to Elon Musk. The company’s CEO Jensen Huang is truly enjoying the “iPhone moment of AI.”

Most media agree that Nvidia had the right product at the right time to command the AI space. It has been leading the AI bandwagon. In 2006, it released Computed Unified Device Architecture (CUDA), which helps develop, optimize, and deploy your applications on GPU-accelerated embedded systems, desktop workstations and others. Although it was shunned at first, the toolkit has become indispensable for AI developers. CUDA only works on Nvidia GPUs. AI engineers and programmers cannot swim beyond the Nvidia ecosystem.

The company’s strategy of selective concentration paid off. It was swift in exiting from the smartphone market in the 2010s to concentrate on advanced computing. Its technology-intensive culture also served well. Of 26,000 staff, 75 percent are involved in research and development.

Korean chipmakers like Samsung Electronics and SK hynix have seen their stock prices rebound thanks to the Nvidia hype. Demand for high-bandwidth memory chips of Samsung and SK will rise on the AI boom, but they will be no match for GPUs. Korea must strengthen its capacity in chip design or the fabless sector. It must support fabless start-ups to promote the logic chip ecosystem.

Huang has strongly criticized the U.S. restrictions on chip-related exports to China. CEOs of Korean chipmakers stuck between the U.S and China cannot complain to either of them. Before envying Nvidia’s success, the government must exercise its fullest diplomatic power to give more breathing room for Korean companies before it is too late.