One tiny country drove 15% of Nvidia’s revenue – here’s why it needs so many chips

Microchip and Nvidia emblem displayed on a telephone display screen are seen on this a number of publicity illustration picture taken in Krakow, Poland on April 10, 2023. (Photo by Jakub Porzycki/NurPhoto through Getty Images)

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As Nvidia posted stellar third-quarter results final week, business observers identified {that a} substantial quantity of the U.S. chip big’s revenue got here from one small country.

About 15% or $2.7 billion of Nvidia’s revenue for the quarter ended October got here from Singapore, a U.S. Securities and Exchange Commission filing showed. Revenue coming from Singapore within the third quarter jumped 404.1% from the $562 million in revenue recorded in the identical interval a 12 months in the past. This outpaced Nvidia’s total revenue development of 205.5% from a 12 months in the past.

Singapore solely trailed behind the U.S. (34.77%,) Taiwan (23.91%) and China together with Hong Kong (22.24%) in Nvidia’s third-quarter gross sales rankings.

“I’d extremely suppose it’s because of information facilities as Singapore has rather a lot of information facilities and cloud service suppliers,” Maybank Securities analyst Jarick Seet advised CNBC.

“The chips may be despatched to Singapore for remaining meeting with different merchandise after which shipped out to different international locations,” mentioned Seet. They may be used for synthetic intelligence, computing and electrical automobiles, he added.

“What’s a tiny city-state doing with all these chips? Building information facilities, of course!,” mentioned Sang Shin, an ex-Temasek and GIC government, in a LinkedIn post. He beforehand served as director of digital innovation at Temasek and head of digital technique and structure at GIC.

“Because the nation is steady and safe, there’s a lot of expertise, the digital infrastructure is strong, and the federal government insurance policies are conducive to digital and information companies,” mentioned Shin.

… Singapore can be a rising space of specialised cloud service suppliers standing up information facilities within the area.

The similar SEC submitting revealed that 80% of Nvidia’s third-quarter gross sales got here from the info middle phase, whereas gaming, skilled visualization, automotive and others make up the remaining.

“Cloud service suppliers drove roughly half of information middle revenue, whereas client web firms and enterprises comprised roughly the opposite half,” mentioned Nvidia within the submitting.

Nvidia didn’t break down its Singapore revenue by enterprise phase.

“Regarding Singapore, a sure client web firm bought information middle options in Q3 to be stood up in Singapore information facilities. Lastly, Singapore can be a rising space of specialised CSPs standing up information facilities within the area,” Citi analysts wrote in a Nov. 27 report.

In January 2022, Singapore lifted a moratorium issued in 2019 that quickly paused the discharge of land for information middle use and sought to average the expansion of information facilities. Singapore subsequently awarded rights in July to Equinix, Microsoft, Chinese information middle options supplier GDS and a tie-up between AirTrunk and ByteDance to develop new information middle tasks in Singapore.

There had been more than 70 operational data centers in Singapore, as of January 2022. The city-state nonetheless accounts for 60% of Southeast Asia’s whole information middle capability.

Singapore emerged third globally and first in Asia Pacific in phrases of information middle market rankings, based on a report by Cushman and Wakefield. Northern Virginia and Portland within the U.S. tied for first whereas Hong Kong is available in at fourth.

“Demand for information facilities in Singapore will stay excessive with the fast development of digital apps, e-commerce, web of issues, synthetic intelligence, crypto-trading, blockchain actions, on-line gaming, and so forth. The shift to hybrid working and enterprise digitalization has additionally contributed to the demand for information middle area,” mentioned International Trade Administration in a report

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