Item — HN Reader

> 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.

1 comments

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?