We are on the eve of CES 2022 where the latest from NVIDIA should be presented: the RTX 3090 Ti, but the rumors are not focused on it, not even its two minor variants that will come later, but the RTX 40. And it is that the eyes are on them, so a new rumor has ended up being confirmed and it is nothing more than a very curious casuistry that has to do with NVIDIA directly: payment in advance to manufacture the RTX 40.
There is a saying that ensures the following: “first pay, then demand and if anything complain.” Well, this is precisely what they have told NVIDIA directly, which has been surprising because normally contracts work the other way around in the industry and are binding: first the number of wafers and chips for each of them is agreed and they are paid when they are manufactured and the two parts are in conformity. With the RTX 40 TSMC It is a game changer and this has been an impressive amount of money from NVIDIA.
Upfront payment is here for NVIDIA
The industry cannot cope, the investments are billions of dollars and the companies cannot manage their assets correctly because they are overflowing and to ask for loans is to lose money with banks and interests that are not optimal for the benefits. The solution to this problem comes with pre-purchase or pre-order financing, something that could become fashionable in the semiconductor industry.
TSMC requirements have reportedly changed completely in the wake of the company’s 6nm node high performance or N6, since this has been the last with “common” contracts. And it is that for “new” customers in large volumes, the Taiwanese have a way of proceeding that has changed: you will have to pay in advance for what has not yet been manufactured to reserve volume.
This is curious, since it reportedly does not apply to customers who have reserved wafers and chips years in advance.
Apple, Mediatek and AMD exempt from this policy
If already paying in advance is surreal for the industry, having exclusions from the same system for some clients is already a financing problem for many. It seems that everything has to do with the requested volume and in this case NVIDIA has a minor problem, although it would be necessary to quote “problem”.
TSMC has asked Huang’s people for an advance payment of $ 1.64 billion for the third quarter of this year and no less than 1.79 billion for this fourth quarter, where the figure for the first of 2022 is also not known. What has been leaked is that the total long-term figure amounts to $ 6.9 billion to be able to manufacture the RTX 40 GPUs at 5nm.
This seems to be a maneuver to guarantee the financing of the FABs, the production and retain the client despite the fact that the sales are not as expected (it is not the case of NVIDIA of course). The most striking thing about this is that Apple, Mediatek and AMD do not have to do this since they are customers who have requested volume well in advance, so they are “rewarded” with typical contracts, while NVIDIA comes and goes with different needs depending on Samsung can supply them. Does this set a precedent for Taiwanese, Korean and American people? Intel and Samsung could take note of the current financing need with skyrocketing costs at each node.
