Item — HN Reader

> ‘long run’

That’s on the order of years for this problem. I would imagine that Nvidia doesn’t think it could survive the reputational costs of charging market clearing prices for their cards for years - effectively proscribing their core gamer market for the entire period.

Sure, that’s what’s happening now, but it’s the fault of scalpers not a business decision by Nvidia. The scalpers get the ire of the core market, and Nvidia gets to look like it’s doing its best (while guaranteeing all the inventory it can make will sell)

It’s the same reason your favorite band charges a low face for tickets that doesn’t reflect demand - they don’t want to be the bad guy excluding poor people from the experience, they just let the scalpers do that.

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So they essentially got themselves in a pickle. It looks like they have not invested money in infrastructure and instead lowered prices to attract as many people as possible thinking what they currently have will be "enough". They have not predicted that the demand will be so high that it will exceed their current abilities and they have no money to increase the production and they are unable to raise the money without destroying the market they built. That they want to give the experience to the "poor" people it is just a poor excuse of poor management.

The problem is that everybody wants to build on newest TSMC and maybe Samsung fabs.

Apple outbid everyone (and given their budget, will continue to do so.), so the rest of them are fighting for whatever capacity is left.

TSMC is expanding, but new factories take years to build.

So the issue here is mostly the overreliance of whole world on TSMC and Samsung.

Yes, nVidia is not the only company with such unsustainable strategy. They wanted a shortcut and now they feel consequences.

Only Samsung and Intel have their own foundries and chip design. (outside microcontrollers )

Everybody else, is in the same boat as Nvidia. So this is the norm not the exception.

And NVidia is not in a mess, they are having record profits.

> unable to raise the money

I think Nvidia could borrow or raise basically any amount of money if they had capital-intensive projects to invest in that would solve current or future supply constraints. Retained earnings are not the only way a company can invest in itself.

The problem isn't capital, its fundamental inelasticity of supply for semiconductors. Fabs (or capacity in fabs) can't be spun up or down quickly, nevermind cheaply.

The problem is capital. Building your own fab is not something you can casually get funding for - there is a lot of risk and you looking for at least a decade before you could see any returns, if it succeeds at all - and you need to have the right money to get people who know this stuff and those people are scarce.

Right - so it makes sense that Nvidia wouldn’t do that, and instead pass that risk off, diversify across multiple vendors, and return earnings to their investors as dividend and buyback? And that the supply crunch is the result of global simultaneous supply and demand shocks that couldn’t have been foreseen in the timeframes required for them to have made investments to alleviate it, and aren’t likely to be repeated?