Jensen Huang "There will be no oversupply of memory in 2029"...Rebutting Semiconductor Supercycle Controversy

Nvidia CEO Jensen Huang, whose company is a leader in artificial intelligence (AI) chips, said he does not expect there to be too many memory chips in 2029. Recently, excitement about investing in AI has cooled down. Shares of companies connected to AI have fallen because investors worry that the memory chip market could face a slowdown. Huang also said that U.S. restrictions on chip exports have helped China develop its own chip technology faster.

"One of the biggest advantages of memory is that having more is always better," Huang said in an interview with CNBC at Nvidia's GTC Berlin technology conference in Berlin, Germany, on October 22, local time. When asked whether companies might make more memory chips than the market needs in 2029, he said he expects demand for memory to grow enough in the coming years.

He especially said that Nvidia will keep using high-bandwidth memory (HBM), an important part of AI chips, for many years. HBM works by stacking several memory chips on top of one another so data can move quickly between them. Nvidia uses HBM in its AI accelerators, which are chips that help AI systems work faster. Samsung Electronics, SK Hynix, and the U.S. company Micron supply this memory.

Huang also explained why LPDDR, a type of memory that uses less electricity, is important. LPDDR is mainly used in smartphones and other devices because it helps save power. "We are the first company in the world to bring LPDDR memory from mobile phones into data centers," he said. "This allowed us to make a system that uses energy twice as efficiently as any other product in the world." He added, "We will continue using large amounts of this kind of memory in the future."

Some people in the chip industry predict that the current memory chip supercycle could end by 2029, followed by a slowdown. A supercycle is a long period of strong growth when demand rises quickly, chip prices go up, and companies make more money.

Shares of major memory chip makers, including SK Hynix, Samsung Electronics, and Micron, fell after this prediction became public. Investors are worried because if companies make more memory chips than customers want to buy, prices could fall and chip makers could earn less profit.

Elon Musk, CEO of Tesla and SpaceX, has also joined the discussion. "China will produce a huge amount of RAM in 2028," Musk said. RAM is a type of computer memory. His comment suggests that Chinese companies could quickly increase the amount of memory they make and change how memory chips are supplied around the world.

New technology from Chinese memory chip company Changxin Memory Technologies (CXMT) has also made investors more worried. CXMT recently announced a new chip design that could make memory production more efficient. This has raised concerns that Chinese companies could catch up with more advanced competitors and take customers away from the three major memory chip makers: Samsung Electronics, SK Hynix, and Micron.

Huang also said Nvidia might work with CXMT in the future. When asked whether Nvidia plans to use memory made in China, he answered, "We are open to it." He explained, "We are working with Chinese companies, and almost every company in the world works with Chinese companies somewhere in its supply chain." A supply chain is the network of companies that help make and deliver a product.

Huang also praised China's ability to manufacture products. "China has amazing abilities in the basic technology and infrastructure needed for industry," he said. "When you look at all its manufacturing strengths together, no country is better than China." He added, "We must take China's abilities very seriously."

Huang also pointed to the unwanted effects of U.S. government rules that limit chip exports to China. The United States has restricted sales of powerful chips to China, including Nvidia's most advanced AI chips. These rules are meant to slow down Chinese companies as they try to get the latest AI technology. But Huang argued that the restrictions have actually pushed China to develop its own chips faster. "China has clearly sped up its development because of all these rules," he said. "There is no doubt that we have helped China move faster toward making its own chips and encouraged its government to give more support to the chip industry."

Even so, Huang said he believes U.S. technology companies can compete successfully. "American companies have strong technology and are ready to compete with companies from any country," he said. [Silicon Valley correspondent Wonho-seop]