Nvidia Eyes Strategic Expansion with Samsung Partnership and $2 Billion xAI Investment

Last week, Nvidia (NVDA) experienced a decline of 4.89%. Over the past week, it fell by 2.38%, while year-to-date, it has seen a rise of 36.42%. The company's current market capitalization stands at $4,450.788 billion.

Nvidia has confirmed that its latest AI accelerator chip, GB300, will utilize Samsung's fifth-generation high-bandwidth HBM3E technology. This marks a significant development for Samsung, allowing the company to finally penetrate Nvidia's supply chain after several setbacks.

Sources reveal that Nvidia's CEO recently sent a formal letter to Samsung Electronics' Chairman, Jay Y. Lee, confirming that the GB300 chip will be equipped with Samsung's 12-layer stacked HBM3E technology. Currently, both companies are in final negotiations regarding supply quantities, pricing, and timelines.

Micron Technology is already a critical supplier for Nvidia's HBM solutions, including the HBM3E. Meanwhile, SK Hynix is another key memory chip supplier for Nvidia. It's noteworthy that Samsung has been striving for over a year to gain Nvidia's certification for its HBM3E chips. Although the AI hardware industry is gradually shifting towards the sixth-generation HBM4 chips, Samsung's provision of HBM3E holds milestone significance, potentially accelerating the mass production certification process for HBM4.

Insiders suggest that Elon Musk's AI startup, xAI, is moving forward with a funding round exceeding initial plans, which includes an investment from Nvidia. This round is expected to reach a total of $20 billion, with the funding linked to xAI's procurement of Nvidia GPUs for its "Colossus 2" project, the largest data center site of xAI located in Memphis.

Nvidia is considering a substantial investment of up to $2 billion in the equity segment of the transaction with xAI, marking a strategic move to expedite investments in the AI field from its clientele. This financing round appears amid aggressive investments by tech giants who are pouring billions into developing AI infrastructure.

Nvidia's executives previously emphasized their commitment to leveraging the company's financial strengths to accelerate AI adoption across industries. They focus on utilizing cash resources to assist other companies in adopting AI technologies more swiftly. This aligns with Nvidia's broader strategic aims despite ongoing debates over the real impact of computational power on genuine AI advancement.