NVIDIA Resolves "Blackwell" Yield Issues with New Photomask

[AleksandarK]

During its Q2 2024 earnings call, NVIDIA confirmed that its upcoming Blackwell-based products are facing low-yield challenges. However, the company announced that it has implemented design changes to improve the production yields of its B100 and B200 processors. Despite these setbacks, NVIDIA remains optimistic about its production timeline. The tech giant plans to commence the production ramp of Blackwell GPUs in Q4 2024, with expected shipments worth several billion dollars by the end of the year. In an official statement, NVIDIA explained, "We executed a change to the Blackwell GPU mask to improve production yield." The company also reaffirmed that it had successfully sampled Blackwell GPUs with customers in the second quarter.

However, NVIDIA acknowledged that meeting demand required producing "low-yielding Blackwell material," which impacted its gross margins. During an earnings call, NVIDIA's CEO Jensen Huang assured investors that the supply of B100 and B200 GPUs will be there. He expressed confidence in the company's ability to mass-produce these chips starting in the fourth quarter. The Blackwell B100 and B200 GPUs use TSMC's CoWoS-L packaging technology and a complex design, which prompted rumors about the company facing yield issues with its designs. Reports suggest that initial challenges arose from mismatched thermal expansion coefficients among various components, leading to warping and system failures. However, now the company claims that the fix that solved these problems was a new GPU photomask, which bumped yields back to normal levels.



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[Hyderz]

Maybe this time don’t early adopt, might have issues

 

[redeye]

CFO: and how are you going to pay for the new photomask?…. “will will just increase the price 100 bucks”.

oh, ya. silly me, i forgot that Nvidia is king of Gross margins…

“impacted“ gross margins. btw AMD and Apple have GM’s of 50 percent… Nvidia has GM’s of 70%… so Gross! (in a ”back-in-the-day” Valley Girl accent)

 

[Gucky]

CFO: and how are you going to pay for the new photomask?…. “will will just increase the price 100 bucks”.

oh, ya. silly me, i forgot that Nvidia is king of Gross margins…

“impacted“ gross margins. btw AMD and Apple have GM’s of 50 percent… Nvidia has GM’s of 70%… so Gross! (in a ”back-in-the-day” Valley Girl accent)

Nvidia always had good margins, while AMD sometimes had below 30%.
It is all about how is the price, how good is your product and how you run the company.
Intel was above 60% as well for many years, until the recent ones, where it dropped below 40%.

AMD is deliberately lowering their margins to get people to buy their products.

 

[Daven]

Nvidia is pushing 4 nm to its absolute limits. If all these companies weren't trying to push out their tech so fast, Nvidia could have waited for 3 nm.

 

[TheinsanegamerN]

Nvidia is pushing 4 nm to its absolute limits. If all these companies weren't trying to push out their tech so fast, Nvidia could have waited for 3 nm.

Some of the best tech comes from optimizing for older nodes. See also: Nvidia Maxwell.

 

[Daven]

Some of the best tech comes from optimizing for older nodes. See also: Nvidia Maxwell.

Optimizing is one thing but there is a physical limit to how many transistors you can fit within a certain processing node. Otherwise, let's go 28 nm! That was one of the best TSMC nodes in the recent past. The chip would be the size of a football field but who cares. It's Nvidia!

 

[evernessince]

Nvidia always had good margins, while AMD sometimes had below 30%.
It is all about how is the price, how good is your product and how you run the company.
Intel was above 60% as well for many years, until the recent ones, where it dropped below 40%.

AMD is deliberately lowering their margins to get people to buy their products.

Post 2011 Nvidia has had above average gross margins. Post 2023 they'd had disgusting margins.

Intel was a bit above 60% when they had a monopoly over the market that dropped about 1 1/2 years after Zen's launch when Intel finally realized AMD was a threat:

That pretty much tells you all you need to know about the state of the GPU market, Nvidia is pulling those kind of margins for two reasons: 1) It's essentially a monopoly in the GPU market that integrates vertically (at every level of software from the games to the APIs and even in related hardware like mice and keyboards) to expert maximum control. You can see even prior to AI taking off Nvidia's margins were slowly but steadily increasing since late 2011. 2) It's essentially a monopoly in the AI market employing all the same dirty tactics it honed over the years in the gaming space. Lock customers and devs in with software and use market leverage to force partners and customers to your will. Want to switch brands? Ops your allocation or orders are pulled and your company goes out of business.

“impacted“ gross margins. btw AMD and Apple have GM’s of 50 percent… Nvidia has GM’s of 70%… so Gross! (in a ”back-in-the-day” Valley Girl accent)

Actually Apple topped out at 48% a bit after the original iPhone's launch.

It just goes to show you how bonkers some of these margins are if they are overshadowing a company known for it's markup to such a degree.

 

[Daven]

Post 2011 Nvidia has had above average gross margins. Post 2023 they'd had disgusting margins.

View attachment 361173


Intel was a bit above 60% when they had a monopoly over the market that dropped about 1 1/2 years after Zen's launch when Intel finally realized AMD was a threat:

View attachment 361174


That pretty much tells you all you need to know about the state of the GPU market, Nvidia is pulling those kind of margins for two reasons: 1) It's essentially a monopoly in the GPU market that integrates vertically (at every level of software from the games to the APIs and even in related hardware like mice and keyboards) to expert maximum control. You can see even prior to AI taking off Nvidia's margins were slowly but steadily increasing since late 2011. 2) It's essentially a monopoly in the AI market employing all the same dirty tactics it honed over the years in the gaming space. Lock customers and devs in with software and use market leverage to force partners and customers to your will. Want to switch brands? Ops your allocation or orders are pulled and your company goes out of business.




Actually Apple topped out at 48% a bit after the original iPhone's launch.

It just goes to show you how bonkers some of these margins are if they are overshadowing a company known for it's markup to such a degree.

Very nice post and data! If you just include AMD it would be complete.

 

[thesmokingman]

This Blackwell issue is a MSM vehicle to keep a crapload of contracts from ITM.

When releasing a new gen there are always problems... this is why there is a ramp. Shit doesn't just start at 100% efficiency lol.

 

[Lew Zealand]

Very nice post and data! If you just include AMD it would be complete.

Here ya go, for completeness:

AMD

And why not, Apple:

 

[R-T-B]

Maybe this time don’t early adopt, might have issues

No gamer is getting B100 or B200.

 

[Hyderz]

No gamer is getting B100 or B200.

oh snap, thanks for correcting me much appreciated

 

[kondamin]

No gamer is getting B100 or B200.

Not for gaming that is.

 

[R-T-B]

Not for gaming that is.

Well that was what I meant yeah.