Nvidia’s AI Guarantees Carry Up to $108.5 Billion in Gross Exposure

Samsung Electro-Mechanics, a Samsung Group subsidiary, received investments from Nvidia (2.6 trillion won) and Tesla (1.1 trillion won) for AI semiconductor production. The company produces MLCC and FC-BGA, crucial for AI data centers and semiconductors. Nvidia and Tesla aim to secure stable substrate supplies for their AI and automotive technologies.

Tesla (TSLA) and Nvidia (NVDA) plan to invest $2.8 billion in Samsung Electro-Mechanics to expand production of advanced substrates for AI processors. Nvidia will contribute $2.0 billion, while Tesla will invest $829.9 million for a five-year supply of substrates. Samsung expects Nvidia to become a major customer by 2028, with both companies aiming to secure supply chains for AI and autonomous-driving technologies.

AWS reported that customers have booked most of its 2027 capacity, with $220B planned for 2026 capital spending. NVIDIA and TCV invested in Higgsfield's Series B extension, with Higgsfield reporting a $1B annualized revenue run rate. Western Digital reported $4.381B in Q1 revenue, up 55% YoY, with a 57.8% gross margin.

Nvidia is financing AI projects, offering $500B in off-balance-sheet guarantees. CEO Jensen Huang aims to fund demand, citing strong interest. Nvidia's revenue hit $216B in FY2024, with $70B in free cash flow. Partners like CoreWeave face credit tightening, with shares down 30%. Nvidia's stock fell 7.6% in October, raising concerns about demand meeting expectations.

Tesla (TSLA) and Nvidia (NVDA) will invest $2.8B in Samsung Electro-Mechanics to expand production of advanced semiconductor substrates for AI chips, addressing a supply bottleneck. Nvidia will contribute $2.6B, and Tesla will invest $1.1B. These substrates are crucial for connecting AI processors to circuit boards, and their production is becoming increasingly challenging as AI systems grow in complexity.

Nvidia's CEO Jensen Huang is proposing to use the company's GPUs as collateral for loans to unlock $500B in financing for AI infrastructure, according to The Motley Fool. Nvidia shares fell 4.5% on Thursday, while the Philadelphia Semiconductor Index dropped nearly 7%. Huang argues that Nvidia's chips retain value longer than typical hardware, citing rising rental prices for older H100 chips.