Nvidia AI Server Prices to Rise Over 15% Next Year
Nvidia AI server prices are rising more than 15% from early next year, as memory costs increase. This news comes as a surprise to many, especially considering Nvidia's 75% gross margin and its status as the most valuable listed company worldwide.
Impact on Customers
The price hike affects even Europe's planned AI gigafactories, with bids and budgets built on last year's hardware prices now facing significant changes. Companies assembling servers under contract for operators like Microsoft, Google, and Oracle have already notified their customers of the upcoming price increases.
Driving Factors
Samsung, SK hynix, and Micron, who produce most of the world's DRAM, are primarily responsible for the memory shortage. This has led to rising prices across various sectors, including gaming cards (Nvidia raised its prices this month), CPUs (AMD followed suit), and cloud services (Amazon Web Services increased GPU prices by 20%).
European Implications
Europe's AI strategy heavily relies on public funding, with the EU committing approximately €20 billion to a set of AI gigafactories. A French consortium has even placed a $10 billion bid for one site, based on hardware prices from last year. The upcoming price increases could significantly impact these plans and similar data center projects across Europe.
Bottom Line
Nvidia is expected to report quarterly earnings next week, raising questions about who will ultimately bear the cost of memory. As of now, it seems everyone downstream will be affected.
By Ana-Maria Stanciuc, Editor-in-Chief at TNW.