Nvidia is on a tear. It is also, according to its billionaire CEO Jensen Huang, in danger.
The semiconductor maker, whose processors are used in games, data centers and autonomous vehicles, plays a role key role in the artificial intelligence boom that has rejuvenated Silicon Valley. Tech giants are competing to buy up its expensive AI chips. This year it is joined the select group of companies with a market cap of $1 trillion more.
But “no business is assured of its survival,” Huang warned Thursday during the Future of Business edition of the Harvard Business Review. event.
Nvidia over its 30-year history has faced several existential threats, which explains why Huang recently said THE Acquired podcast that “no one in their right mind” would start a business. For example, it nearly went bankrupt in 1995 after its first chip, the NV1, failed to attract customers. It had to lay off half of its employees before the success of its third chip, the RIVA 128, saved it a few years later.
“We have the advantage of building the company from scratch and having non-exaggerated circumstances where we almost went bankrupt several times,” Huang said this week. Observer reported. “We don’t need to pretend that the business is still in jeopardy. The company East always in danger, and we feel it.
But Huang thinks it’s important to avoid stressing too much about it.
“I think a company that lives somewhere between aspiration and desperation is much better than either one. [being] always optimistic or always pessimistic,” he noted.
One of the challenges the Santa Clara, Calif.-based chipmaker now faces is tougher U.S. rules on technology exports to China. This could cause Nvidia lose billions of dollars after canceling planned deliveries to Chinese companies.
“The restriction is a capacity restriction,” Huang said. “It’s not an absolute restriction…The first thing we need to do is comply with the regulations, understand what the limitations are and, to the best of our ability, come up with products that can still be competitive.”
But trying to sell lower-capacity chips in China leaves Nvidia more exposed to competition from local rivals. “It’s not easy and competitors are moving quickly,” Huang said. “It’s like anything else, you have to stay vigilant and do your best.”
Meanwhile, even though Nvidia has exceeded expectations in recent quarters, many analysts warn that competition from rival AMD and others are sure to intensify. Among them is David Trainer, director of the New Constructs research firm.
“The rest of the world will not roll over and let them dominate AI,” Trainer said. Fortune in August. “They face the same curse as You’re here. Nvidia has benefited, like Tesla, from being first to market. But when Tesla became profitable, many competitors entered the electric vehicle business, cutting into its margins and slowing its sales. The same thing will happen for Nvidia.
Huang said Acquired that he read the business books of a former Intel CEO Andrew Grove, calling them “really good”. Among these is Only the paranoid survive.
Huang seems to have taken it to heart.
“If you don’t think you’re in peril,” he said this week, “it’s probably because you have your head in the sand.”