- A new report reveals that Nvidia now scrutinizes suppliers for issues it previously overlooked.
- The audit claims this is a psychological tactic to intimidate suppliers to secure more preferable contracts.
- Nvidia uses this extremely high level of criticism to call out minor process variables and equipment matters.
The AI supply chain is an unforgiving battlefield that has all the tech giants vying for the most beneficial long-term contracts. Nvidia has been the leading figure in this arms race, but a new report shows that the green team is resorting to intimidation tactics with its suppliers.
The company’s recent audit of a key Samsung facility shows that it was involved in an ‘extremely high’ level of criticism. The report claims this nitpicking approach is being used to gain pricing leverage in its contracts.
Why it matters: The Nvidia inspection team’s internal audit reveals that the company reportedly uses intimidation tactics against suppliers to secure unit price reductions in large-scale supply contracts.
Per Business Korea, the green team is using a negotiation policy to pressure suppliers like Samsung and TSMC, which seems to be working out. An inspection team visited Samsung’s Pyeongtaek Campus—which is responsible for HBM processes—and performed an internal audit.
It found an unusually high level of criticism regarding technical details, including minor process variables and equipment matters.
These validation standards were set higher than before, which the audit believes is used to demand unit price reductions in large-scale contracts.
This appears to be a calculated move to psychologically intimidate Samsung Electronics by pointing out technical defects and use this as leverage to demand unit price reductions in large-scale supply contracts.
-Industry Insider.
The internal audit also finds that Nvidia used this same tactic with TSMC and SK Hynix in the past. On the flip side, Nvidia could explain the higher-quality qualification process as a new standard to maintain quality in the future.
However, no official comments have been made yet.
On a related note, Nvidia says its future GPUs can boast a million times better path tracing, thanks to AI improvements.
Do you think Nvidia being nitpicky with its suppliers to secure better AI chip deals is a scummy move, or is this tactic justified in the corporate world? Let us know your thoughts in the comments below, or join the discussion on the Tech4Gamers forum.
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Shameer Sarfaraz has previously worked for eXputer as a Senior News Writer for several years. Now with Tech4Gamers, he loves to devoutly keep up with the latest gaming and entertainment industries. He has a Bachelor’s Degree in Computer Science and years of experience reporting on games. Besides his passion for breaking news stories, Shahmeer loves spending his leisure time farming away in Stardew Valley. VGC, IGN, GameSpot, Game Rant, TheGamer, GamingBolt, The Verge, NME, Metro, Dot Esports, GameByte, Kotaku Australia, PC Gamer, and more have cited his articles.
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