NVIDIA CEO Jensen Huang
Currently, the market is gripped by anxiety. On Monday, news emerged that the AI chip giant had reached a $500 billion cooperation agreement with the South Korean conglomerate SK Group. Simultaneously, media reports indicated that NVIDIA is also in talks to assist with fundraising for OpenAI, planning to build a $500 billion data center campus in Ohio. These two pieces of news combined caused NVIDIA's stock price to drop 5% in a single day. However, investors need not worry: neither of these announcements represents truly new developments, and neither cooperation plan has been solidified.
For example, NVIDIA and SK Group stated last Friday that they had only signed a letter of intent. A letter of intent is not legally binding. It is worth noting that NVIDIA and OpenAI signed a letter of intent as early as last September, touting a "milestone strategic partnership," yet that cooperation plan fizzled out just a few months later.
Furthermore, the official announcement from NVIDIA and SK Group last Friday essentially reiterated statements from two other announcements made in early June. First, NVIDIA and SK Telecom, a subsidiary of SK Group, announced plans to build a "gigawatt-scale AI cloud infrastructure" in South Korea based on NVIDIA's DSX technology. Interestingly, the Friday press release included a link to the original announcement, and the latest cooperation plan doubles the scale of the Korean AI cloud to 2 gigawatts. Second, NVIDIA and SK Hynix, another SK Group subsidiary, officially announced a memory chip collaboration. As for the details of how the $500 billion investment will be split and the respective capital contributions of each company, NVIDIA has remained silent. My colleague, Liu Feibi, reported on Friday that company executives avoided all related details during the press conference.
The Wall Street Journal report on Monday that sparked market discussion about NVIDIA and OpenAI is also not new news. The Information, a tech media outlet, had already disclosed the negotiations in early June, and the specific terms remain vague to this day. The report suggested that if NVIDIA enters the picture, it would assume a significant amount of risk for OpenAI. However, given the history of cooperation between the two companies, there is no guarantee that this deal will ultimately be finalized.
NVIDIA is known for frequently releasing various cooperation announcements. Today, two more announcements were added: the company will invest in the AI startup Safe Superintelligence, founded by Ilya Sutskever, and will also lead the formation of an open-source software cybersecurity alliance. It is already difficult to identify truly valuable new developments in the AI field, and the media's repeated rehashing of different versions of the same story only adds to the confusion. Before investors panic over NVIDIA's various capital commitments, they must distinguish between what is genuinely new and what is old news being repackaged.
Amazon Enters Satellite Mobile Communications Business
If only Amazon had not canceled its Fire phone project! This e-commerce and cloud computing giant has taken a key step toward launching its own satellite direct-to-phone communication service. On Monday, Amazon filed an application with the Federal Communications Commission (FCC) to launch 5,105 satellites to implement the previously announced satellite direct-to-device mobile communication service. In April, Amazon finalized its acquisition of Globalstar, at which point it expressed its intention to build this service. The business will directly compete with SpaceX's similar offerings. Globalstar already operates several satellite phone communication services, and Apple's iPhone satellite emergency feature relies on its network. Amazon's new communication service will also be built on its low Earth orbit (LEO) broadband satellite project, which has not yet launched and is designed to compete with SpaceX's Starlink. Of course, Amazon does not position this mobile communication business as a competitor to traditional carriers like Verizon or T-Mobile. Amazon stated on Monday that the new service aims to "supplement existing terrestrial mobile networks and fill coverage gaps," a strategy similar to SpaceX's approach. It is difficult to estimate the future market size of this business, but it is certain that when both Amazon and SpaceX enter the arena, it will be challenging for either to generate high profits from this service alone.
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