Inside Valley – Nvidia makes cars smart
The former graphics chip maker Nvidia is today one of the world's most valuable companies. It is working with Mercedes on self-driving cars.
In this episode of Inside Valley I explore a chip company that transformed itself in three decades from a niche graphics card maker into the world’s most valuable semiconductor company – and became, of all things, the most important supplier to German industry: Nvidia.
What is at stake
Whether Siemens, Mercedes or Bosch: Nvidia is landing one major German contract after another. When Roland Busch and Nvidia founder Jensen Huang sealed their cooperation in Munich in late June 2022, they tried to present themselves as partners on equal terms. The stock market tells a different story: Nvidia is worth around five times as much as the DAX company Siemens – at less than half of Siemens’ revenue.
Why Nvidia is so sought after
What Nvidia delivers, nobody else does as well: the most powerful chips for computer graphics and artificial intelligence. Originally developed for computer games, these GPUs have become the standard in data centres and AI systems. For the automotive industry they are doubly important: Nvidia supplies the hardware for driver-assistance systems and autonomous driving, plus the Omniverse simulation platform on which Mercedes and BMW today build complete digital factories before construction begins. Huang, the son of Taiwanese immigrants, co-founded the company in 1993 and has led it from day one.
How the headquarters signals the company’s ambitions
In southern Silicon Valley, in Santa Clara, the Nvidia campus dominates the streetscape. The 70,000-square-metre complex named “Voyager” and “Endeavor” – after spacecraft from Star Trek. Giant tent-like roof structures span the open-plan office floors. “At our company, everyone has a good view from their desk,” says Danny Shapiro, head of the automotive division, on a tour. The architecture is an expression of the brand: open, self-confident, oriented towards the future.
The risk German companies are taking
The fact that German automakers are sourcing their intelligence from California is shifting the balance of power in the supply chain. In the traditional supplier business, BMW, Mercedes and VW were the strong partners. In the partnership with Nvidia they are the smaller customers – the chip company is worth more on the stock exchange than all German carmakers combined. Tesla shows a different path and develops chips in-house. For German industry the question is whether it is walking into a dependency that will be strategically hard to reverse.
I wrote the full analysis for Handelsblatt.