Nvidia customers notified about AI-related price hikes above 15%

Some of Nvidia Corp.’s biggest customers have been told that the prices of servers containing its artificial intelligence chips are going up more than 15% in many cases with memory chip costs soaring.

The price hikes will go into effect on systems shipped early next year and will impact systems including those with the flagship Vera Rubin and Grace Blackwell chips, according to people familiar with the process, who asked to not to be identified commenting on communications that haven’t yet been made public.

The increases will depend on the generation of Nvidia chips and the memory configurations, they said.

Companies who build the servers under contract for large data center operators such as Microsoft Corp., Alphabet Inc.’s Google and Oracle Corp. have recently notified their customers of the forthcoming increases, the people said.

Nvidia representatives didn’t respond to requests for comment.

The inability of the industry’s most dominant company to hold the line on prices or absorb growing costs shows how much leverage makers of memory chips – Samsung Electronics Co., SK Hynix Inc. and Micron Technology Inc. – have amid a surge in demand for AI infrastructure.

Major technology companies including Apple Inc. and Qualcomm Inc. have recently said they’ve been forced to charge more for their products because of chip shortages.

Nvidia’s accelerator processors are the heart of computers that create and run AI software.

Their effectiveness depends on how much dynamic random access memory, or DRAM, they are paired with.

The two Korean companies and Micron account for most of the world’s production of that type of chip.

While they’ve been increasing output, they still haven’t caught up with surging demand.

That’s driven the price of the commodity-like components up massively and given their manufacturers unprecedented influence in technology.

Nvidia is one of the most profitable companies in semiconductors.

It’s able to charge tens of thousands of dollars per chip because supply — from contract manufacturer Taiwan Semiconductor Manufacturing Co. — still can’t meet runaway demand.