Jensen Huang – TPU competition, why we should sell chips to China, & Nvidia’s supply chain moat

**Dwarkesh Patel** (0:00)
We've seen the valuations of a bunch of software companies crash because people are expecting AI to commoditize software. And there's a potentially naïve way of thinking about things, which is like, look, Nvidia sends a GDS2 file to TSMC. TSMC builds the logic dies, it builds the switches, then it packages them with the HBM that SK Hynix and Micron and Samsung make, then it sends it to an ODM in Taiwan, where they assemble the racks. And so Nvidia is fundamentally making software that other people are manufacturing. Software gets commoditized.
Does Nvidia get commoditized?

**Jensen Huang** (0:31)
Well, in the end, something has to transform electrons to tokens.
That transformation, there's no... The transformation of electrons to tokens and making those tokens more valuable over time, I think that that's hard to completely commoditize. The transformation from electrons to tokens is such an incredible journey.
And making that token, it's like making one molecule more valuable than another molecule. Making one token more valuable than another. The amount of artistry, engineering, science, invention that goes into making that token valuable, obviously we're watching it happening in real time. And so the transformation, the manufacturing, all of the science that goes in there is far from deeply understood and is far from, the journey is far from over. And so I doubt that it will happen. We're going to make it more efficient, of course. I mean, the whole thing about Nvidia, in fact, the way that you framed the question is my mental model of our company.
The input is electron, the output is tokens. That is in the middle, Nvidia. And our job is to do as much as necessary, as little as possible to enable that transformation to be done at incredible capabilities. And what I mean by as little as possible, whatever I don't need to do, I partner with somebody and I make it part of my ecosystem to do. And if you look at Nvidia today, we probably have the largest ecosystem of partners, both in supply chain upstream, supply chain downstream, all of the computers, computer companies and all the application developers and all the model makers and all the, you know, AI is a five layer cake, if you will. And we have ecosystems across the entire five layers. And so we try to do as little as possible.
But the part that we have to do, as it turns out, is insanely hard. And I don't think that that gets commoditized. In fact, I also don't think that the enterprise software companies, the tools makers, you know, most of the software companies today are tools makers. Some of them are not. But some of them are workflow codification systems. But for a lot of companies, they're tool makers. For example, you know, Excel is a tool, PowerPoint is a tool, Cadence makes tools, Synopsys makes tools.
I actually see the opposite of what people see. I think the number of agents are going to grow exponentially. The number of tool users are going to grow exponentially. And it's very likely that the number of instances of all these tools are going to skyrocket. It is very likely the number of instances of Synopsys design compiler is going to skyrocket. And the number of agents that are going to be using the floor planners and all of our layout tools and our design rule checkers, the number of agents that are, today we're limited by the number of engineers. Tomorrow, those engineers are going to be supported by a bunch of agents. And we're going to be exploring out the design space like you've never seen explored before. And we want to use the tools that we use today. And so I think tool use is going to cause these software companies to skyrocket. The reason why it hasn't happened yet is because the agents aren't good enough at using their tools yet. And so either these companies are going to build the agents themselves, or agents are going to get good enough to be able to use those tools. And I think it's going to be a combination of both.

**Dwarkesh Patel** (4:29)
I think in your latest filings, you had almost $100 billion in purchase commitments with people, foundries, memory, packaging. And then SemiAnalysis has reported that you will have $250 billion of these kinds of purchase commitments. So one interpretation is Nvidia's mode is really that you've locked up many years of these scarce components that are, you know, somebody else might have an accelerator, but can they actually get the memory to build it? Can they actually get the logic to build it?
And this is really Nvidia's big mode for the next few years.