Nvidia Faces Concerns from Clients Over AI Chip 'Blackwell' Server Overheating Ahead of Earnings

Yonhap News

AI chip leader Nvidia has reportedly requested multiple design changes from suppliers due to server overheating issues with its new Blackwell product, according to US IT media The Information on the 17th (local time).

According to The Information, Nvidia has repeatedly asked suppliers to modify server rack designs because overheating occurs when Blackwell is connected to custom-designed server racks. Blackwell, first unveiled in March, is the successor to the previous flagship AI chip Hopper and was launched in the second quarter. It attracted attention for offering higher computational performance with lower energy consumption compared to Hopper. Big tech companies are reportedly concerned about the overheating issues of the Blackwell product.

Nvidia responded to foreign media requests for comment by stating, "Nvidia is working with leading cloud service providers as an essential part of our engineering teams and processes," adding, "Iterative engineering is normal and expected."

AI chips are known to have increased risks of defects or overheating as the number of components within the chip increases. Blackwell consists of numerous components, including two of Nvidia's advanced processors.

This is not the first foreign media report related to Blackwell defects. Earlier reports indicated that Blackwell, originally scheduled for release in the second quarter, was delayed by at least three months due to defects found during its own production process. Nvidia announced during its earnings report in August that it planned to mass-produce Blackwell starting in the fourth quarter (November to January). Nvidia CEO Jensen Huang admitted to design flaws in Blackwell at an event on the 23rd of last month. He explained, "We redesigned seven types of semiconductors from scratch to operate the Blackwell chipset."

There is analysis suggesting that it may take longer than expected for big tech customers such as Meta Platforms and Microsoft (MS) to apply Blackwell in AI data centers.

Meanwhile, Nvidia will release its third-quarter earnings (August to October) after the New York Stock Exchange closes on the 20th. According to data compiled by LSEG, Nvidia's third-quarter revenue is expected to increase by more than 80% year-over-year to $33 billion, with net income projected at $18.4 billion. Nvidia's earnings are anticipated to indicate the direction of the US stock market, where the 'Trump trade' is slowing down.