wanted to add more details related to my article below:

Nvidia used to work primarily with its long-time partners to sell its products. Most of them are based in East Asia, and Nvidia used to collect revenue through its Singapore subsidiary for tax purposes and for the convenience of its partners.

But that has changed. Why? Customers started demanding discounts on bulk orders, and Nvidia began to classify “VIP” customers, which can mean lower margins - which is a big NO for Nvidia.

In addition, the law of large numbers has started to kick in. Once that happens, you need tighter control over the market to ensure you can continue the “beat and raise” cycle for as long as possible, ideally indefinitely.

So what did Nvidia do? It moved to completely control GPU supply and demand, getting paid directly while reducing its partners’ margin share and gaining the visibility it needs.

Year-end 2022: Nvidia collected about 77% of its revenue through its Singapore subsidiary.

Year-end 2023: This dropped to 70%.

Year-end 2024: It declined further to around 50%.

Just to be clear, there are also direct clients of Nvidia that are billed through Nvidia Singapore. So the actual share of revenue Nvidia books from direct customers, rather than through partners, may be even higher than the percentages shown here.

Also, for clarity:

Partners = SMCI, Dell, Asus, Gigabyte, etc.

Direct customers = Microsoft, Meta, etc.