Recent insights from analyst Ming-Chi Kuo reveal that Microsoft (MSFT, Financial) is currently the largest global customer for Nvidia's Blackwell GB200 chips. Orders from Microsoft in the fourth quarter are projected to surge three to four times, surpassing the combined total orders of all other cloud service providers.
Microsoft's demand for the GB200 chipset has significantly increased, with the fourth quarter seeing a notable rise. Suppliers of key components for the GB200 are gearing up for large-scale production and shipment in the fourth quarter of 2024, ensuring Microsoft receives priority over other cloud service providers. The revenue recognition by component suppliers is expected to occur ahead of assembly vendors due to advanced shipments regardless of the latter's assembly capacity.
Nvidia's Blackwell chip capacity expansion is set to start in early Q4 2024, with anticipated shipments between 150,000 and 200,000 units. A significant growth of 200% to 250% in shipments is expected in Q1 2025, reaching between 500,000 to 550,000 units.
Microsoft is aggressively pursuing GB200 procurement. In addition to planned test orders in Q4 2024, Microsoft is set to secure custom GB200 NVL72 units before the reference design enters mass production in mid-Q2 2025. The order volume for Microsoft in Q4 2024 has jumped from the initial 300-500 racks to approximately 1,400-1,500 racks, with 70% being the NVL72 model. Subsequent orders will focus mainly on the NVL72.
Even as assembly supplier Foxconn's capacity remains uncertain, Microsoft has negotiated with key component suppliers to expand production capacity in Q4 2024 to 1.5 to 2 times the original capacity, preparing for anticipated demand.
According to investigations on assembly suppliers Foxconn and Quanta, Microsoft's GB200 orders currently exceed the total of other cloud service providers. Microsoft plans to prioritize deployment in cooler climate data centers, such as those in Washington, USA, Quebec, Canada, and Helsinki, Finland, to mitigate potential impacts from insufficient cooling system optimization time.
Other cloud service providers like Amazon have placed smaller orders for Q4 2024, with 300-400 rack orders for GB200 NVL36, and Meta focusing on Ariel architecture instead of Bianca, indicating Microsoft's current commanding demand for GB200 chips compared to its peers.
