Supply Chain Challenges and Order Reductions Threaten AI Industry
The market originally anticipated that NVIDIA's next-generation Blackwell chips would enter mass production in January next year after resolving issues with TSMC's CoWoS-L 2.5D advanced packaging process.
However, the sole supplier of downstream backplane connector copper cables, Amphenol, recently encountered low testing yields, causing GB200's mass production timeline to be delayed once again to March next year.
NVIDIA's GB200 introduces backplane connectors to link 72 Blackwell GPUs with 5,000 NVLink copper cables, totaling over two miles in length. Amphenol, NVIDIA's primary copper cable supplier, now produces components similar to splitters called "cartridges" instead of individual copper cables. Each cartridge contains thousands of wires, achieving a data rate of 112G per wire under GH200 specifications. However, GB200 specifications are expected to upgrade to 224G per wire, resulting in poor yields and failed testing.
Amid multiple issues, including chip overheating, quick-connect leaks, and insufficient copper cable yields, Microsoft became the first to reduce its GB200 orders. The company's main OEM, Foxconn, saw its orders slashed from 20,000 units to 12,000 units, with some orders shifted to the GB300, scheduled for delivery in June next year.
Considering a GB200 unit price of $3 million, Microsoft's reduction of 8,000 units represents a $24 billion revenue risk for Foxconn. The market had initially forecast Foxconn's revenue to grow by 25% to $280 billion next year. Following Microsoft's GB200 order cuts, Foxconn's revenue growth is now projected to shrink significantly to 15%, indirectly impacting profits, P/E ratios, and likely putting substantial pressure on its stock price in the near term.
Ingrasys Inc., a subsidiary of Foxconn Technology Group, is a world-class technology leader in intelligent cloud network service products. The company offers a wide range of products and services, including servers, storage devices, high-performance computing accelerators, and innovative eco-friendly solutions, helping global customers meet their usage demands.
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