Over 90% of Nvidia’s chips are made at TSMC in Taiwan. This includes Blackwell. Much of Taiwan’s energy is powered by natural gas (about 90%). According to the Atlantic Council, “Taiwan relied on imports to meet 95 percent of its energy needs in 2025, including over 99 percent of its demand for oil and natural gas.”
From a profit standpoint, Nvidia (NASDAQ: NVDA | NVDA Price Prediction) has a 70% gross margin, so the problem isn’t massive early on. However, if this persists, Nvidia begins to run low on supply, and then the AI industry has problems. So does Nvidia’s share price.
Nvidia CEO Jensen Huang said the demand for Blackwell is extraordinary. According to Reuters, “Nvidia builds the GPU (graphics processing units), but we also build the CPU (central processing units), the networking, the switches, and so there are a lot of chips associated with Blackwell.” At the same time, he reminded people of the importance of his relationship with TSMC. Huang said Nvidia’s success actually depended on the Taiwan-based company.
For at least the last two years, the enemy of AI’s growth has been the ability to build AI data centers, due to construction constraints, energy availability, and the challenges of locating large electricity-generating facilities in many places. Data center builders are trying to make the process easier by creating their own electricity and staying off the public grid. In some cases, they have also said they would underwrite any additional payments resident customers might need to make due to data center demand.
Data centers still face the hurdle of water use and the fact that some electricity is generated by fossil fuels. Each of these is considered a threat to AI growth in America. Tech companies that believe AI is their future bemoan that Chinese competition has access to almost limitless electricity. And China has its own chips, although they do not approach Blackwell’s capabilities.
AI’s biggest challenge may be Iran, and no one expected that.
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