Nvidia has successfully resolved a critical design flaw in its highly anticipated Blackwell AI chip, thanks to collaboration with manufacturing partner TSMC, CEO Jensen Huang revealed on Wednesday. The admission comes as welcome news to tech giants like Meta and Google, who are eagerly awaiting the next-generation chips to power their AI infrastructure.
Huang took full responsibility for the issue, stating that “We had a design flaw in Blackwell. It was functional, but the design flaw caused the yield to be low. It was 100% Nvidia’s fault.” The problem resulted in lower manufacturing yields, potentially threatening the production timeline for what Morgan Stanley analysts estimate is already sold out for the next 12 months.
TSMC, the world’s largest chipmaker, played a crucial role in helping Nvidia overcome the yield deficiency and resume manufacturing “at an incredible pace.” The Taiwanese semiconductor giant’s intervention appears to have salvaged what could have been a significant setback for Nvidia’s AI chip roadmap.
Huang also addressed speculation about strained relations between the two companies, dismissing media reports as “fake news” and denying that the Blackwell delays had caused tension. Previous reports had suggested the problems stemmed from a new manufacturing process employed by TSMC, though Huang’s comments clearly place responsibility with Nvidia’s design.
Nvidia unveiled Blackwell in March as the successor to its wildly successful H100 chip, with Huang promising the new AI processor would deliver twice the performance of its predecessor. The H100 has been in intense demand as companies race to build more powerful AI systems, helping propel Nvidia to become one of the world’s most valuable companies on the back of the AI boom.
The production issues now appear resolved, with Huang telling a Goldman Sachs conference in September that Blackwell was in full production and shipping would commence in Q4. TSMC’s recent financial results underscore the strength of the AI chip market, with the company reporting a 54% rise in third-quarter net profit last week, suggesting the AI semiconductor boom continues to accelerate.
Key Quotes
We had a design flaw in Blackwell. It was functional, but the design flaw caused the yield to be low. It was 100% Nvidia’s fault.
Nvidia CEO Jensen Huang took full responsibility for the production issues with Blackwell chips, clarifying that the problem originated from Nvidia’s design rather than TSMC’s manufacturing process. This candid admission is significant as it demonstrates accountability while reassuring partners and customers about the resolution.
TSMC helped the tech company recover from that yield deficiency and resume manufacturing of Blackwell at an incredible pace.
Huang credited TSMC with helping resolve the manufacturing challenges, highlighting the critical partnership between the chip designer and manufacturer. This statement underscores how essential TSMC’s expertise has been in getting Blackwell production back on track to meet massive market demand.
fake news
Huang dismissed media reports suggesting tensions between Nvidia and TSMC over the Blackwell delays. This characterization aims to quash speculation about a rift between two companies whose partnership is crucial for AI chip production and the broader AI industry’s growth.
Our Take
Huang’s transparency about the Blackwell flaw represents a calculated risk that appears to be paying off. By taking full responsibility and crediting TSMC publicly, he’s managing expectations while reinforcing confidence in both companies’ problem-solving capabilities. The fact that Blackwell is sold out for 12 months despite these issues reveals the desperate hunger for AI computing power across the industry.
This incident exposes a critical vulnerability in the AI supply chain: the concentration of advanced chip manufacturing in a single partnership. While Nvidia and TSMC successfully navigated this challenge, it raises questions about resilience and redundancy in AI infrastructure. The resolution also demonstrates that even industry leaders face significant technical hurdles when pushing the boundaries of chip performance. The AI boom’s sustainability depends on overcoming such manufacturing challenges at scale, making this successful collaboration a bellwether for the industry’s ability to meet exponential demand.
Why This Matters
This development is critical for the AI industry’s infrastructure buildout and highlights the complex interdependencies in the semiconductor supply chain. Nvidia’s dominance in AI chips makes any production hiccup a potential bottleneck for the entire AI ecosystem, affecting major tech companies’ ability to scale their AI capabilities.
The successful resolution demonstrates the strategic importance of the Nvidia-TSMC partnership in maintaining AI development momentum. With Blackwell already sold out for a year, any extended delays could have significantly impacted AI progress across the industry. The incident also reveals the technical challenges of pushing semiconductor manufacturing to new limits as AI demands increasingly powerful chips.
TSMC’s strong financial performance and ability to help resolve Nvidia’s design issues reinforces its position as an indispensable player in the AI supply chain. For businesses and investors, this news signals that the AI infrastructure boom remains on track, with production capacity gradually catching up to unprecedented demand. The transparency around the flaw and its resolution may actually strengthen confidence in both companies’ ability to deliver cutting-edge AI hardware.
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