Nvidia’s Supply Chain- Part 1

Manufacturing

Taiwan Semiconductor Manufacturing Company (TSM)- TSMC sits at the heart of Nvidia's operations, manufacturing the advanced GPU chips that power the AI revolution. Taiwan's TSMC manufactures the world's most advanced chips, and their relationship with Nvidia runs deeper than a typical supplier arrangement. They have a strategic partnership that determines how quickly Nvidia can scale production.

TSMC controls the most advanced manufacturing nodes globally, particularly the 3nm and 5nm processes that Nvidia's latest H100 and upcoming chips require. When Nvidia announces production targets, TSMC's capacity allocation becomes the bottleneck that determines whether those targets are realistic.

Equipment 

ASML Holding (ASML)- ASML is the world's largest producer of photolithography systems, which optically etch circuit patterns onto silicon wafers. Every advanced chip that TSMC produces for Nvidia requires ASML's extreme ultraviolet (EUV) lithography machines (machines so complex that ASML holds a virtual monopoly).

Applied Materials (AMAT)- Applied Materials provides the deposition and etching equipment that works alongside ASML's systems. While less visible than ASML, Applied Materials' tools are essential for creating the multiple layers that make modern GPUs possible.

These companies not only support Nvidia's operations but represent chokepoints in the global semiconductor supply chain. ASML's machines cost over $200 million each and take years to manufacture, creating a moat that's nearly impossible to breach.

Large Models = Large Memory 

Micron Technology (MU)- Micron Technology and Samsung supply the high-bandwidth memory (HBM) that sits directly on Nvidia's AI chips. Samsung Electronics plays a pivotal role in Nvidia's supply chain, contributing to the fabrication of GPU chips and memory components.

HBM is critical for AI workloads because it allows massive amounts of data to move quickly between the processor and memory. As AI models grow larger and more complex, the demand for HBM grows exponentially. Micron has invested heavily in HBM production capacity, positioning itself as a key beneficiary of AI infrastructure spending.

Stay Tuned

Next week I will continue to breakdown the supply chain, unfortunately it is too complex for a single post. Additionally, I will cover why this matters for your money and potential trends that have emerged from my research which everyday ETF investors are missing.