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How Nvidia dominated the AI chip market

ARI SHAPIRO, HOST:

What company is now worth more than Amazon, Meta or Google's parent company, Alphabet? The answer - Nvidia. It's less of a household name, but it designs the chips powering artificial intelligence applications like ChatGPT. And Nvidia has seen explosive growth in its value in the last year, with its stock up more than 200%. Today the chip developer kicked off its AI conference in San Jose, Calif., dubbed the AI Woodstock. The writer Stephen Witt is there. He profiled Nvidia's CEO for The New Yorker. Hi.

STEPHEN WITT: Hi - great to meet you, Ari.

SHAPIRO: You, too. Will you just start by setting the scene? What is this so-called AI Woodstock actually like?

WITT: Well, they've taken over the San Jose Convention Center, and there's about 16,000 people here debuting all sorts of incredible products - robotics, self-driving cars, image generation, voice recognition, speech. It really feels like we're 10 years in the future here.

SHAPIRO: Now, the chip at the center of Nvidia's success - it's something called a GPU. Will you explain what that is?

WITT: Sure. Nvidia started out as a computer gaming graphics company, and they debuted something called a graphics processing unit in 1999. Well, it turned out that these GPUs were also really useful for training AI. So they started to build supercomputers around the GPU for things like ChatGPT, DALL.E and Copilot. And that's really what's driven their success in recent years.

SHAPIRO: And you wrote that the company's CEO bet the future of the company on artificial intelligence about 10 years ago. How radical a bet was that at the time?

WITT: Totally radical. I compared it to the movie "Field Of Dreams," where Kevin Costner's character builds a baseball field in the middle of his cornfield. That's basically what Jensen Huang did with this AI infrastructure. There were no customers at the time that he was building this. He built it in anticipation that someday, if he built it, they would come. And today they're here.

SHAPIRO: And at this point, how big a lead does Nvidia have on its competitors like Intel?

WITT: Massive, maybe five or 10 years.

SHAPIRO: Wow.

WITT: Competitors like Intel and AMD are finding it very hard to compete with Nvidia's AI training hardware simply because they've been at this for so long. It's really difficult to compete against Nvidia now. They have a virtual monopoly on this kind of hardware.

SHAPIRO: One Wall Street analyst you quote at the beginning of your story says, there's a war going on out there in AI, and Nvidia is the only arms dealer.

WITT: Yeah. Really this is just like that classic story about the gold rush. You want to be the guy selling the shovels. Well Jensen Huang is the guy selling the shovels, and it's a really nice shovel too.

SHAPIRO: Well a couple of years ago President Biden signed the CHIPS Act, which set aside more than $50 billion to support chip manufacturing in the U.S. How much impact does that have on the market?

WITT: You know, Nvidia does not actually manufacture these chips. They use those suppliers to make chips for them. Today, almost all of their stuff is outsourced to Taiwan and a network of suppliers across Asia. If the CHIPS Act succeeds, they may start to sort of reshore that and come back to places like Arizona and Ohio. That's what Biden is hoping for, at least. But Nvidia will always be a customer of the CHIPS Act. It will not be a direct beneficiary.

SHAPIRO: And so do you think it's likely that the CHIPS Act actually will bring manufacturing to the United States, as President Biden hopes?

WITT: Oh, yeah. Oh, for sure. I mean, they're building it now. They're building massive factories in Ohio, in Arizona. Some of these factories, they'll pour more concrete to lay the foundation than the Burj Khalifa in Dubai - the tallest building in the world. They're huge, massive complexes with $20 billion of investment. Now, the big problem they face is a lot of other countries are building similar things right now. So by the time they come online, there could be a glut of supply.

SHAPIRO: Well, you asked the CEO of Nvidia, Jensen Huang, if he's making any big bets today like the bet on artificial intelligence that he made 10 years ago. What did he tell you?

WITT: Well, he mentioned one word - Omniverse. And what this is, is the industrial metaverse. It's kind of this giant virtual reality space where anything can be made to exist essentially just with a voice command. I've had kind of limited ability to use Omniverse-style products. You speak a word to the computer, and it pops up a beautiful 3D render on the screen in a living environment. It kind of made me feel like the early book of Genesis, like I was speaking things into existence.

SHAPIRO: It's uncanny.

WITT: It's fantastic and unbelievable technology.

SHAPIRO: You describe a ramen shop where the light was glinting off the counters and the steam was rising from the pot.

WITT: It looked exactly like reality - indistinguishable.

SHAPIRO: That is tech writer Stephen Witt. His feature for The New Yorker is called "How Jensen Huang's Nvidia Is Powering The AI Revolution." Thanks.

WITT: You're welcome. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Michael Levitt
Michael Levitt is a news assistant for All Things Considered who is based in Atlanta, Georgia. He graduated from UCLA with a B.A. in Political Science. Before coming to NPR, Levitt worked in the solar energy industry and for the National Endowment for Democracy in Washington, D.C. He has also travelled extensively in the Middle East and speaks Arabic.
Christopher Intagliata is an editor at All Things Considered, where he writes news and edits interviews with politicians, musicians, restaurant owners, scientists and many of the other voices heard on the air.
Ari Shapiro has been one of the hosts of All Things Considered, NPR's award-winning afternoon newsmagazine, since 2015. During his first two years on the program, listenership to All Things Considered grew at an unprecedented rate, with more people tuning in during a typical quarter-hour than any other program on the radio.