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Nvidia is now worth $102M per employee

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Re: Nvidia is now worth $102M per employee

#21

Post by Alifatisk »

jfoutz wrote: post #10
Rinzler89 wrote: post #7

Earlier quoted context omitted.

TSMC can charge as much as the market will bear. Nvidia already moved their production once to Samsung for the 3000 series GPUs just to call TSMCs bluff. TSMC are the best in town, but they're also not the only game in town. Pretty sure Intel and Samsung are constantly tempting Nvidia with good offers, which Nvidia can use as leverage in negotiations to keep TSMC prices in check.

Fascinating, for whatever reasons, I thought they were years ahead, and Nvidia’s (and apple) only option. Thanks!

Yeah I thought this as well, guess I got the wrong impression.

Re: Nvidia is now worth $102M per employee

#22

Post by Rinzler89 »

gizajob wrote: post #20
Rinzler89 wrote: post #7

Earlier quoted context omitted.

TSMC can charge as much as the market will bear. Nvidia already moved their production once to Samsung for the 3000 series GPUs just to call TSMCs bluff. TSMC are the best in town, but they're also not the only game in town. Pretty sure Intel and Samsung are constantly tempting Nvidia with good offers, which Nvidia can use as leverage in negotiations to keep TSMC prices in check.

It does seem strange, because ok there’s competition, but there’s very limited competition – we’re talking maybe five or six chip manufacturers? And it seems they would all know the metrics of price and can ratchet upwards what they would charge Nvidia, like a cartel without officially forming a cartel. If TSMC doubled or 10x what they charge Nvidia on Monday, Nvidia can’t switch suppliers overnight, and it would cra…

>If TSMC doubled or 10x what they charge Nvidia on Monday

Chip manufacturing isn't like selling lemonade. You're not paying spot prices. You negociate fixed prices upfront for the duration of the manufacturing contract with various exit clauses and penalties for both sides.

>Nvidia can’t switch suppliers overnight

They can't switch overnight, but you also don't make good business by screwing over your customers for a one time hitjob just because you've locked them in for a few years. That trick will only work once. After that they'll avoid you with a 3,048 meter pole.

You stay afloat by building long term trust with your customers.

Re: Nvidia is now worth $102M per employee

#23

Post by analognoise »

adam_arthur wrote: post #9
jfoutz wrote: post #4

TSMC apparently doesn’t charge nearly enough for their services.

I've wondered this for awhile. Theres a very recent comment from the CEO stating something similar... But historically it's seemed they've allowed their customers to take most of the margin. They should have a lot of leverage being on the most advanced node, but doesn't seem they use it. Likely a cultural thing, but if somebody has more insight would be curious

We consider repeatably providing good value to customers as some kind of weakness?

Re: Nvidia is now worth $102M per employee

#24

Post by sfmz »

chx wrote: post #18
grobbyy wrote: post #6

Earlier quoted context omitted.

I think about it the other way. Businesses with high $/revenue per employee, high margin, etc. tend to be fundamentally better managed and more robust. I'm not claiming that applies to Nvidia either way specifically, but it's a good sign in the generic: 1. They're efficient. 2. They've avoided the curse of overhiring (hi, Google!) 3. They can stay afloat even if business drops a lot.

But this article is about market cap not revenue. But even revenue is almost meaningless for the things you mention -- it's profit per employee which would be interesting. And for that, tech companies are nowhere near the top. Check this https://airleasecorp.com/press/air-lease-corporation-announc... they made 753.6M in 2023 with 163 employees or 4.6M per employee. No one comes even close. No one. I believe Fannie Ma…

why bother

Re: Nvidia is now worth $102M per employee

#25

Post by gizajob »

Rinzler89 wrote: post #22
gizajob wrote: post #20

Earlier quoted context omitted.

It does seem strange, because ok there’s competition, but there’s very limited competition – we’re talking maybe five or six chip manufacturers? And it seems they would all know the metrics of price and can ratchet upwards what they would charge Nvidia, like a cartel without officially forming a cartel. If TSMC doubled or 10x what they charge Nvidia on Monday, Nvidia can’t switch suppliers overnight, and it would cra…

>If TSMC doubled or 10x what they charge Nvidia on Monday Chip manufacturing isn't like selling lemonade. You're not paying spot prices. You negociate fixed prices upfront for the duration of the manufacturing contract with various exit clauses and penalties for both sides. >Nvidia can’t switch suppliers overnight They can't switch overnight, but you also don't make good business by screwing over your customers for a…

I realise I’m oversimplifying yeah, but it still seems like TSMC has a fairly huge amount of leverage that they’re not wielding.

Re: Nvidia is now worth $102M per employee

#26

Post by chx »

sfmz wrote: post #24
chx wrote: post #18

Earlier quoted context omitted.

But this article is about market cap not revenue. But even revenue is almost meaningless for the things you mention -- it's profit per employee which would be interesting. And for that, tech companies are nowhere near the top. Check this https://airleasecorp.com/press/air-lease-corporation-announc... they made 753.6M in 2023 with 163 employees or 4.6M per employee. No one comes even close. No one. I believe Fannie Ma…

why bother

Probably the Sicilian mob too. So what? Criminal enterprises do not count.

Re: Nvidia is now worth $102M per employee

#27

Post by TMWNN »

jfoutz wrote: post #10
Rinzler89 wrote: post #7

Earlier quoted context omitted.

TSMC can charge as much as the market will bear. Nvidia already moved their production once to Samsung for the 3000 series GPUs just to call TSMCs bluff. TSMC are the best in town, but they're also not the only game in town. Pretty sure Intel and Samsung are constantly tempting Nvidia with good offers, which Nvidia can use as leverage in negotiations to keep TSMC prices in check.

Fascinating, for whatever reasons, I thought they were years ahead, and Nvidia’s (and apple) only option. Thanks!

>Fascinating, for whatever reasons, I thought they were years ahead, and Nvidia’s (and apple) only option.

It's easy to get that impression based on all the recent talk about TSMC and Taiwan's importance to the global economy. My understanding is that while TSMC is currently ahead, the lead over Intel and Samsung is very slight. Intel was historically the global leading-edge producer until relatively recently, and there is no reason to think that it (or Samsung, or even someone else) cannot regain the lead. Intel is, as I understand it, the first purchaser of ASML's newest lithographic machines, in hopes of leapfrogging TSMC.

Re: Nvidia is now worth $102M per employee

#28

Post by scottiebarnes »

gizajob wrote: post #3

Brilliant. Thanks for posting. Actually quite a good metric for thinking about valuation, ie it’s 5x what it should be right now.

Or here's another perspective:

Remember the point of "AI" is getting human-like productivity out of machines.

So should it be surprising that the company at the forefront of this is has a low human-to-everything ratio?

Re: Nvidia is now worth $102M per employee

#29

Post by adam_arthur »

analognoise wrote: post #23
adam_arthur wrote: post #9

Earlier quoted context omitted.

I've wondered this for awhile. Theres a very recent comment from the CEO stating something similar... But historically it's seemed they've allowed their customers to take most of the margin. They should have a lot of leverage being on the most advanced node, but doesn't seem they use it. Likely a cultural thing, but if somebody has more insight would be curious

We consider repeatably providing good value to customers as some kind of weakness?

Nvidia is getting ~90% margins on their cards, which are manufactured by TSMC. Nobody else can manufacture to the same levels of density/performance/efficiency. TSMC is clearly not capitalizing well on their process advantage.

Apple and Nvidia can switch to other fabs, but performance and competitiveness will be impacted. TSMC seems to be running more like a charity than a business with the amount of margin their customers get on their products (both Apple and Nvidia)

Re: Nvidia is now worth $102M per employee

#30

Post by shawabawa3 »

chx wrote: post #18
grobbyy wrote: post #6

Earlier quoted context omitted.

I think about it the other way. Businesses with high $/revenue per employee, high margin, etc. tend to be fundamentally better managed and more robust. I'm not claiming that applies to Nvidia either way specifically, but it's a good sign in the generic: 1. They're efficient. 2. They've avoided the curse of overhiring (hi, Google!) 3. They can stay afloat even if business drops a lot.

But this article is about market cap not revenue. But even revenue is almost meaningless for the things you mention -- it's profit per employee which would be interesting. And for that, tech companies are nowhere near the top. Check this https://airleasecorp.com/press/air-lease-corporation-announc... they made 753.6M in 2023 with 163 employees or 4.6M per employee. No one comes even close. No one. I believe Fannie Ma…

If you take their latest quarters results ($6B profit) you get $220k/employee per quarter or $880k/year
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