Fewer suitable Nvidia Blackwell chips are rolling off the production line at TSMC than hoped. Due to the lower yield of the production process, there may be further delays in the delivery of ordered accelerators.

Blackwell is a tough ask for Nvidia compared to previous AI accelerators. First, Nvidia discovered a design flaw in test models of the Blackwell GPU, and now production yields seem to be lower than expected. The second problem is related to the first.

To fix the error, Nvidia had to make some adjustments to the process. Specifically, a new lithography mask was needed to build the Blackwell GB200. Such a mask is a kind of stencil with a piece of the blueprint of a chip through which light with a short wavelength is shined onto a wafer. The imprint of this light triggers a chemical reaction, whereby the components of the chips are formed layer by layer.

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Chip manufacturing is fundamentally a chemical and analog process that is associated with a variety of challenges. Nvidia is building these new chips on TSMC’s latest process, which apparently still had some teething issues. The adjustments to the production process meant that Nvidia was only able to ramp up production of the Blackwell chips with a delay.

A postponement is not an adjustment. Nvidia has tens of billions of orders for Blackwell, including from Microsoft, Meta and Google. As soon as the chips roll off the production line in large quantities, money will flow back to Nvidia.