Elite partner of German industry

Santa Clara, Munich At the photo shoot in Munich in late June, Roland Busch and Jensen Huang made jokes about their height for the first time. The photographer had a hard time getting the high Siemens CEO and a much smaller Nvidia founder in the photo that would benefit both of them.

Busch and Huang made visible efforts to present the cooperation they had just sealed as an equal partnership. Not that simple, because at least on the stock exchange the balance of power is clear: a chip specialist is worth about five times more than the Dax group. And this despite the fact that the California high-flyer does not generate even half of Siemens sales.

Like at Siemens headquarters at Wittelsbacherplatz in Munich, Huang is entering and exiting an increasing number of corporate headquarters in Germany. The Silicon Valley billionaire has become one of the most important suppliers for German industry. Be it Bosch, Mercedes or Siemens: the chips of the 59-year-old electrical engineer are set to pave the way for the future of traditional companies.

Why is Nvidia such a desirable partner among German corporations? What sets the company apart that Taiwanese immigrant Huang has made the world’s most valuable chip company in three decades? A look at the nervous center of the company provides information.

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Nvidia feels at home on a spaceship

In the south of Silicon Valley, in Santa Clara, a new building complex dominates the street’s landscape. With the 70,000 square meter Voyager office colossus and the adjacent Endeavor building, Huang has built a futuristic headquarters. The names denote the world of the founder’s thoughts: this is what spacecraft are called in the Star Trek space series.

Nvidia’s headquarters

The Voyager and Endeavor office complexes are named after Star Trek spacecraft.

(Photo: Nvidia)

The gigantic roof structure, resembling tents, covers an open office space. “Every job here has a good view,” says Danny Shapiro, head of Nvidia’s Automotive Division, as he visits the plant.

The complex is a solid record of human performance that has shaped Nvidia like no other: Jensen Huang, a married father, co-founded the company in California in 1993 and has been running it since day one. “Huang saw early on that great technology trends required an incredible amount of computing power,” says Peter Fintl, an integrated circuit expert at consulting firm Capgemini.

Huang and his people developed the most powerful graphics chips. Processors known as GPUs are crucial to computer games. However, they have also long been indispensable in data centers and artificial intelligence (AI) applications, such as those required for autonomous driving or virtual worlds. Cryptocurrency mining processors are also a small but interesting business.

The enormous demand for semiconductors has given Nvidia impressive growth. Sales were just under $ 5 billion in fiscal 2015 (ending January 30), followed by sales of $ 26.9 billion seven years later. The business is also very profitable: Nvidia will earn $ 9.8 billion in fiscal year 2022.

Car manufacturers partners

German companies have been world leaders in many areas for decades. Cars and machines “made in Germany” are still among the best in the world. But they can only jump into the digital world with the help of Americans. “Nvidia doesn’t just have the strength to survive,” emphasizes the Fintl consultant. “The group also has the necessary funds to invest heavily in future areas. Determination and financial strength set the company apart from many European technology players. ” The company is helping Siemens to make factories more efficient. Works with Mercedes and Bosch for autonomous cars. Nvidia is working on a supercomputer with Continental. BMW is also one of the customers.

Nvidia

The chips of the American manufacturer are popular with German companies.

(Photo: Reuters)

Nvidia has retained its entrepreneurial spirit to this day. This can be seen directly across from the headquarters. Huang rented a garage there. Dozens of Mercedes cars swarm the streets of the Silicon Valley every day. “These aren’t just regular Mercedes sedans,” says Shapiro, head of the automotive division. The vehicles have been supplemented in many places with sensors. “We test the best systems so that the cars can run on their own soon.”

It’s typical of Nvidia not to just sell chips. Huang is always dedicated to taking technical development to a new level. “If the problem is easy to solve, I don’t care,” he once said during a performance in Munich.

Huang knows German corporations need him, but he doesn’t let them know, at least to the outside world. On the contrary: the leader of the company flatters his customers. “Mercedes is an amazing partner. I can’t think of a better one, ”he said recently. “Mercedes will become the world’s most valuable luxury brand,” added Huang. And Mercedes boss Ola Källenius is a visionary. German car bosses rarely hear such courtesies from Silicon Valley.

>> Read here: The chip race threatens to fail – the future of German industry is at stake

The partnership does come with a catch, however: Nvidia has a largely free choice among the car manufacturers the company wants to partner with. The only notable competitor is Qualcomm. So Huang has an advantage when it comes to conditions. That’s why Mercedes even agreed to a revenue share – a novelty in the car industry as well as in the chip industry. Until now, they have supplied their semiconductors at a fixed price as if they were ordinary screws. In the future, Nvidia will receive a significant share of the proceeds from all autonomous driving applications that Mercedes sells to its customers.

There is great potential in vehicles for Nvidia. The auto division “marks another multi-billion dollar deal for the group,” an analyst says CJ Muse convinced by the investment bank Evercore ISI.

Metaverse for industry

This is not the only future field Huang is entering. Nvidia manager Richard Kerris presents another ray of hope in the darkened demonstration room at the company’s headquarters: Huang’s vision of a perfectly controlled factory. The screen does not show a real production line, but a virtual twin of the factory. “We can create a digital image of anything,” says Kerris. For example, improvements to a manufacturing process can be simulated before being implemented.

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Takes care of the necessary platform in Nvidia. While the Meta Facebook group talks about “metaworld”, Nvidia talks about “universe”. “Our platform is the backbone of digital worlds – including the metaverse,” says Kerris confidently. Simply put: without Nvidia chips, there will also be nothing with virtual worlds on Facebook. The system already has over 150,000 users and 300 corporate customers.

Recently, Siemens is one of them. As with Mercedes, Huang uses his malicious charm to entrap a new customer. In June, he flew to Munich to announce the collaboration. Sitting next to Siemens CEO Busch, dressed as always in a leather jacket and all black, Huang predicted, “Siemens will be one of the largest technology companies in the world.” The semantic similarities with his Mercedes compliment are of course coincidental.

Busch and Huang have been negotiating for months. Engineers understand each other, reports from the environment. Huang studied electrical engineering, Busch physics. Both have a reputation for delving deeply into technical topics. And they both concluded that the age of partnership and collaboration has come. The future belongs to open interfaces, not closed systems.

At Siemens, Nvidia’s computing and graphics power should enable the creation of a photorealistic digital twin of systems, machines and buildings in real time. This partnership could be a catalyst for breaking into the industrial meta-world, says Huang. The digital twin will one day become the most used application in the industry.

However, his plans do not end there. The company is just beginning to enter other sectors. This includes healthcare.

Nvidia enters the healthcare sector

Nvidia manager Kimberly Powell places a large black box in front of her. “It allows us to take existing medical devices to a new level,” says Powell, who heads the medical business. The Box is a high-performance computer that can, for example, better process sensor data from an ultrasound machine or aid in the analysis of MRI images.

>> Read also: The Dark Side of Subsidies: The chip industry fears a planned economy

Nvidia relies on artificial intelligence to enable new applications in medicine. The Clara platform aims to help identify diseases earlier and develop drugs faster. For this purpose, methods of decoding genomes are optimized, among other things.

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These types of brilliant visions, combined with solid double-digit growth, have captivated investors for a long time. At its peak last fall, the company was worth over $ 800 billion on the stock exchange. However, the breakdown in the ranking of tech groups has recently hit Nvidia as well. The stock was still trading at around $ 330 in November, recently trading at a good $ 150.

“Nvidia is the best choice,” said Jefferies analyst Mark Lipacis. In the medium term, it forecasts a price of $ 370. It’s true that important business with the gaming industry is under pressure. Nvidia can counter this with its future territories and data center business. In any case, the group still has its best times ahead, says Capgemini expert Fintl: “The capabilities of Nvidia’s chips are as welcome in the digital world as they are of physical machines – whether they have four wheels or robotic arms.”

More: Comment: America-dependent: The German industry also doesn’t dare when it comes to chips

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