Nvidia’s Surprising Source of Revenue
Nvidia surprised many when it reported its third-quarter earnings in November 2023. The US chipmaker had seen exceptional growth, with a significant portion of its revenue coming from an unexpected source.
Revenue from Singapore accounted for 15% or $2.7 billion of Nvidia’s revenue for the quarter ended October. This represented a massive increase of 404.1% from the $562 million in revenue recorded in the same period a year ago.
Singapore came in fourth behind the U.S., Taiwan, and China including Hong Kong in terms of Nvidia’s sales rankings for the third quarter. Analysts pointed to the expansion of data centers and the rise of cloud service providers in Singapore as factors driving the growth in revenue.
Data Center Boom in Singapore
Maybank Securities analyst Jarick Seet suggested that the growth might be due to the presence of data centers and cloud service providers in Singapore. He also mentioned the possibility of the chips being sent for final assembly or for their use in artificial intelligence, computing, and electric vehicles.
Former Temasek and GIC executive, Sang Shin believes that Singapore is taking advantage of its stability, talent, digital infrastructure, and government policies to build advanced data centers necessary for the fast-growing digital economy. Similarly, Citi analysts noted the growth of specialized cloud service providers standing up data centers in the region.
A report filed with the U.S. Securities and Exchange Commission showed that 80% of Nvidia’s third-quarter sales came from the data center segment, indicating the growing significance of Singapore as a hub for data center growth.
Singapore, a Data Center Hub
The city-state has also taken steps to capitalize on the growth of the data center industry. In January 2022, Singapore lifted a moratorium on data center development to meet the growing demand caused by the rapid growth of digital applications, e-commerce, internet of things, artificial intelligence, and online gaming.
With more than 70 operational data centers as of January 2022, Singapore accounts for 60% of Southeast Asia’s total data center capacity. According to a report by Cushman and Wakefield, Singapore can be considered a key player globally, and first in Asia Pacific, in terms of data center market rankings. The International Trade Administration also emphasized that the demand for data centers in Singapore would continue to be high due to rapid technological growth and the shift to hybrid working and business digitalization.
In conclusion, by leveraging the growth of data centers and the rise of cloud service providers, Singapore has emerged as a significant contributor to Nvidia’s revenue stream and a key player in the global data center market.
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