Global demand for Nvidia’s AI chips grows as nations develop language-specific models

 Governments worldwide are increasingly using Nvidia’s AI hardware to develop customised national AI models, contributing significantly to the company’s revenue growth.

Nations worldwide are boosting demand for Nvidia’s AI chips by developing AI models tailored to their languages and cultures. Countries increasingly adopt generative AI for national security and regional needs, contributing significantly to Nvidia’s revenues. The company’s forecast predicts low double-digit billions in revenue from these AI-driven initiatives by January 2025.

Nvidia’s hardware, such as the H200 graphics processors, plays a crucial role in building AI infrastructure, with Japan‘s National Institute of Advanced Industrial Science and Technology being a notable example. These efforts highlight the importance of AI expertise and infrastructure as national priorities.

While Nvidia faces challenges due to US export controls on chip sales to China, other regions continue to drive the company’s growth. Countries aim to build AI models customised to their political, cultural, and scientific contexts, which are essential for maintaining sovereignty in an AI-driven world.

Businesses are also tapping into this trend, with firms like IBM assisting nations like Saudi Arabia in developing AI models in regional languages. Nvidia’s GPUs are expected to benefit significantly from these global efforts to build national AI platforms.

Aug 28 (Reuters) - Nations building artificial intelligence models in their own languages are turning to Nvidia's (NVDA.O), opens new tab chips, adding to already booming demand as generative AI takes center stage for businesses and governments, a senior executive said on Wednesday.

Nvidia's third-quarter forecast for rising sales of its chips that power AI technology such as OpenAI's ChatGPT failed to meet investors' towering expectations. But the company described new customers coming from around the world, including governments that are now seeking their own AI models and the hardware to support them.

Countries adopting their own AI applications and models will contribute about low double-digit billions to Nvidia's revenue in the financial year ending in January 2025, Chief Financial Officer Colette Kress said on a call with analysts after Nvidia's earnings report.

That's up from an earlier forecast of such sales contributing high single-digit billions to total revenue. Nvidia forecast about $32.5 billion in total revenue in the third quarter ending in October.

"Countries around the world (desire) to have their own generative AI that would be able to incorporate their own language, incorporate their own culture, incorporate their own data in that country," Kress said, describing AI expertise and infrastructure as "national imperatives."

She offered the example of Japan's National Institute of Advanced Industrial Science and Technology, which is building an AI supercomputer featuring thousands of Nvidia H200 graphics processors.

Governments are also turning to AI as a measure to strengthen national security.

"AI models are trained on data and for political entities -particularly nations - their data are secret and their models need to be customized to their unique political, economic, cultural, and scientific needs," said IDC computing semiconductors analyst Shane Rau.

"Therefore, they need to have their own AI models and a custom underlying arrangement of hardware and software."

Washington tightened its controls on exports of cutting-edge chips to China in 2023 as it sought to prevent breakthroughs in AI that would aid China's military, hampering Nvidia's sales in the region.

Businesses have been working to tap into government pushes to build AI platforms in regional languages.

IBM (IBM.N), opens new tab said in May that Saudi Arabia's Data and Artificial Intelligence Authority would train its "ALLaM" Arabic language model using the company's AI platform Watsonx.

Nations that want to create their own AI models can drive growth opportunities for Nvidia's GPUs, on top of the significant investments in the company's hardware from large cloud providers like Microsoft (MSFT.O), opens new tab, said Bob O'Donnell, chief analyst at TECHnalysis Research.