Rumors are tearing Nvidia stock apart.
The AI boom is driving Nvidia's stocks to new heights. However, there's a piece of bad news: According to a report, the delivery of the Blackwell chips is being delayed due to a design flaw. The company's stock is plummeting as a result.
According to a report by tech news site "The Information", one of Nvidia's next-generation chips is facing a delay due to a recently discovered design flaw. The news site, citing multiple industry sources, reports that the delivery of the Blackwell B200 chip will be delayed by approximately three months. Nvidia's stock is reacting promptly, currently trading down nine percent.
The production of Blackwell chips was initially scheduled to begin in October 2024. With Nvidia's fiscal year running until January, a delay would push the revenue contributions of the B200 into the April quarter of 2025.
The Blackwell chips are the next generation of AI acceleration chips that have temporarily made Nvidia one of the world's most valuable companies. Demand for the company's current generation of Hopper chips still outstrips production.
In response to a query from "The Verge", the company stated that production will ramp up as planned in the second half of the year: "As we've mentioned before, demand for Hopper is strong. Broad sampling of Blackwell has begun and production will ramp as planned in the second half of the year. Beyond that, we do not comment on rumors." If the rumors prove true, it could have immediate consequences for the AI projects of major tech companies.
Nvidia is said to have already informed Microsoft and another major cloud service provider of this delay. Microsoft, Google, and Meta have reportedly pre-ordered chips worth "tens of billions of dollars". Uncertainties within the industry are already reflected in the trading of tech stocks, with them trading down by up to 15 percent on the German Tradegate platform ahead of the US market open.
Nvidia was previously the big winner of the AI boom theme, driving the overall market rally. Traders are now looking at international chip stocks with concern. At the end of the week, investors were particularly dumping tech stocks en masse from their portfolios. "It's not yet clear whether the bad Nvidia news from Friday was already priced in at the Wall Street," says a trader: "That could continue today. That would throw many schedules off and especially the utilization at TSMC," the trader adds.
TSMC has already blocked its production lines, according to a trader, and cannot quickly switch over to produce, for example, AMD chips. This could result in idle time and TSMC not reaching its planned utilization. "That also shifts the cash flow expectation for Nvidia and TSMC and also for customers like Meta and Google," the trader says. This could significantly disrupt stock valuations. In Taiwan, TSMC's stocks fell by 9.6 percent today.
The Taiwanese chipmaker TSMC produces semiconductors for numerous large technology companies. It also stands at the forefront of producing high-end computer chips needed for complex AI applications. In early July, the company briefly surpassed the $1 trillion market capitalization mark and briefly became the seventh most valuable company in the world, both in Taiwan and New York.
Despite the delay in the delivery of the Blackwell chips due to a design flaw, Nvidia remains optimistic about ramping up production in the second half of the year, as confirmed by their announcement to tech site "The Verge". Regardless, the potential three-month delay could impact the revenue contributions of the B200 into the April quarter of 2025, affecting Nvidia's partnerships with major tech companies like Microsoft and Google, who have pre-ordered Blackwell chips worth "tens of billions of dollars".
