Nvidia CEO reportedly described incoming TSMC wafers and memory as an 'avalanche' amid $125 billion guarantee cap

RespawnFirst, citing a Wall Street Journal report, said Nvidia CEO Jensen Huang told executives in an August meeting that major cloud providers were shifting toward in-house chips and reducing reliance on Nvidia GPUs. Huang said the company faced an incoming wave of prepaid TSMC wafers and memory, describing it as an 'avalanche.' The report says Nvidia had contacted TSMC to wind down chip orders, while Huang and CFO Colette Kress clashed over financial commitments to cloud and AI customers.

The report gives specific numbers: early talks reportedly floated backstopping roughly 8 gigawatts of OpenAI compute, worth up to $250 billion, before Kress scaled the signed guarantee cap to about 4.25 gigawatts, or up to $125 billion. It also cites analyst Ed Zitron's estimate that at least $200 billion of Nvidia AI chips may be sitting idle in warehouses because buyers lacked grid capacity or immediate demand. The material provided does not include the original WSJ article or Nvidia's response.

The account challenges the two-year explanation for high GPU and RAM prices: that AI demand alone was consuming scarce TSMC wafers and memory modules. If cloud customers were moving toward custom silicon while Nvidia had already committed to large wafer and memory purchases, the pressure would fall on Nvidia's balance sheet, financing arrangements, and channel inventory. The report also links that squeeze to Nvidia's willingness to backstop AI customers, suggesting demand signals may have been supported by financing as much as by end-user compute needs.

The stakes extend beyond Nvidia's earnings. If excess wafers and memory cannot be absorbed by AI data centers, they may need to be redirected to consumer graphics cards, DRAM, or other markets, affecting hardware pricing and supplier orders. Cloud providers, memory makers, TSMC, and investors tracking AI capex would also face questions about whether reported demand reflects real workloads or pre-purchased inventory. The report says Huang was replaced as interim CEO by Kress, who had pushed to limit Nvidia's guarantee exposure.