However, the company's financial strategy is seen as risky due to its reliance on Nvidia's chips, which have a built-in expiration date as they will soon be replaced by the H200 chips. Furthermore, competition from companies like Microsoft, Google, and Amazon, who are trying to make their own chips, could potentially devalue CoreWeave's collateral. The company's situation is further complicated by geopolitical risks associated with TSMC, the manufacturer of the world's most advanced chips, which is based in Taiwan.
Key takeaways:
- Cloud computing startup CoreWeave has secured a $2.3 billion debt facility using Nvidia’s H100 GPUs as collateral. The company plans to use the funds to purchase more high-end chips.
- CoreWeave, which was originally founded to mine Ethereum, has pivoted to cloud infrastructure and has seen rapid growth, with projected revenues of $500 million this year and $2 billion next year.
- The company's loan is seen as risky due to the built-in expiration date of the chips used as collateral and the competition from other companies like Microsoft, Google, and Amazon who are trying to make their own chips.
- There are also geopolitical risks involved as most of these companies are bottlenecked by TSMC, a Taiwan-based company that manufactures the most advanced chips in the world. Any worsening of US-China relations could potentially affect the demand for Nvidia’s chips.