Nvidia’s Physical AI Pivot Lifts Asian Suppliers’ Cost Share to 90%, Sparks 15% LG Surge
Nvidia expanded into robotics, autonomous systems and AI manufacturing, lifting Asian suppliers’ share of its production costs to 90% from 65% last year and spurring a 15% surge in LG Electronics shares. Microsoft and Amazon earmark about 50% and 25% of their $200 billion AI capex for Nvidia, boosting SK Hynix’s earnings fivefold.
1. Nvidia’s Shift to Physical AI
Nvidia has broadened its focus beyond semiconductors into robotics, autonomous systems and AI-enabled manufacturing, labeling this strategy “physical AI.” CEO Jensen Huang describes physical AI as the next major wave, integrating advanced chips with real-world devices to accelerate intelligent automation across industries.
2. Surge in Asian Supplier Performance
Asian contract manufacturers and memory specialists now represent roughly 90% of Nvidia’s production costs, a jump from 65% last year. Partners such as LG Electronics saw shares jump 15%, Nanya Technology gained 10%, while Huizhou Desay SV Automotive and Pateo Connect reported significant rallies on new AI-driven vehicle solutions.
3. Hyperscaler AI Capex Impact
U.S. hyperscalers Amazon, Microsoft and Alphabet plan nearly $200 billion each in AI capital expenditure this year, allocating about half and a quarter of their budgets respectively to Nvidia hardware. This spending surge contributed to a 48-fold profit increase at Samsung’s semiconductor division and fivefold quarterly earnings growth at SK Hynix.