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How a Small Nation Contributed to 15% of Nvidia's Revenue and Why It Requires so Many Chips

Lanon Wee

According to an SEC filing by chipmaker Nvidia, 15% or $2.7 billion of its revenue for the quarter ended October originated from Singapore. Jarick Seet of Maybank Securities commented to CNBC that this was likely due to a large number of data centers present in the city-state. Meanwhile, analysts from Citi indicated they believed Singapore is seeing a boom in cloud service providers setting up data centers in the area. Last week, Nvidia posted stellar third-quarter results, which prompted industry observers to take note of the fact that a substantial portion of the U.S. chip giant's revenue was generated from a single small country. Per an SEC filing, the amount in question came to $2.7 billion, a 404.1% increase from the $562 million recorded in the corresponding period of the previous year. This staggering growth eclipsed even Nvidia's overall revenue growth of 205.5% year-on-year. Singapore was second only to the U.S. (34.77%), Taiwan (23.91%) and China including Hong Kong (22.24%) in revenue rankings. Maybank Securities analyst Jarick Seet suggested that a lot of these chips likely ended up in Singapore for data centers or assembly, and were used for AI, computing, and electric vehicles. Sang Shin, an ex-Temasek and GIC executive, noted in a LinkedIn post that the country's stability, digital infrastructure, and government policies make it an ideal destination for digital and data services. The filing from the SEC exposed that the data centre segment provided Nvidia with 80% of its third-quarter sales, with gaming, professional visualization, automotive and remaining sectors contributing the rest. As of the filing, Nvidia mentioned that cloud service providers drove around half of the data centre income, with consumer internet companies and organisations constructing the rest. In regards to Singapore, Nvidia did not divide its revenue by business segment. In Q3 of 2021, a certain consumer internet company procured data center solutions to be set up in Singapore data centers. Furthermore, the launch of new data center projects in Singapore was greenlighted in July 2022, following the lifting of a moratorium imposed in 2019 which restricted the growth of data centers in the region. By the beginning of 2022, Singapore already had more than 70 operational data centers - accounting for 60% of Southeast Asia's total data center capacity. Singapore achieved a third-place ranking worldwide and topped the Asian Pacific region in Cushman & Wakefield's data center rankings. Northern Virginia and Portland both tied for first while Hong Kong trailed behind in fourth place. The International Trade Administration's report stated that growing digital applications, e-commerce, internet of things, artificial intelligence, crypto-trading, blockchain activities, and online gaming are driving demand for Singapore data centers. In addition, the transition to hybrid working and digitalizing businesses have added to the requirement for data center space.

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