How Nvidia’s ‘new’ hardware plans may be ‘bad news’ for Dell, HPE and others

Nvidia’s highly in-demand AI chips have boosted the company’s growth, making it the most valuable company in the world. As per a report, the company is now looking to design more hardware for its upcoming chips posing competition to server designers such as Dell, HPE and Supermicro.
“Nvidia plans to design server racks for its upcoming GB200 flagship artificial intelligence chips, a job that server designers such as Dell, HPE and Supermicro have long handled,” The Information reported citing two Nvidia employees involved in the plan.
The report said that while these server makers have benefited from rising sales of Nvidia chips, the chipmaker’s entry into server space may pressure their profit margins.

Nvidia is already holding a lion’s share when it comes to supplying AI chips and the company aims to capitalise on its strong position to “develop new lines of revenue and profits.”
“It may make it harder for customers of its chips to switch to alternatives,” the report noted.
Earlier this year, Microsoft and Nvidia reportedly disagreed on the design of server racks. While the specific details are not public, it's known that Nvidia eventually dropped its demands.
This comes at a time when a report claimed that Nvidia CEO Jensen Huang has a growing concern over slowdown of chip sales. Microsoft and Amazon Web Services are among the company’s largest buyers but Huang is worried whether they have enough space to set up data centres, and if not, they may not buy more chips.
“Nvidia CEO Jensen Huang called a series of meetings with company executives to discuss a growing concern: whether Nvidia's biggest customers were going to run out of data centre space to install its artificial intelligence chips, which could hurt sales,” the report said, citing a person who attended these meetings.