NVIDIA is facing increased costs for building AI data centers (AIDC) due to a surge in memory prices and an ongoing export control scandal. Many domestic companies have yet to secure contracts for graphics processing units (GPUs), leading to a need for larger financing.
According to market research firm TrendForce on November 12, DRAM contract prices, including high bandwidth memory (HBM), are projected to rise by up to 20% in the fourth quarter compared to the previous quarter. This forecast has been revised upward from an earlier estimate of 15% in September. The average selling price of HBM used in AI semiconductors is expected to increase by 121% next year compared to this year.
The price of server racks, essential equipment for AIDC, is also on the rise. Morgan Stanley estimates the price of NVIDIA's next-generation Vera Rubin racks at approximately $7.8 million, double the previous price of about $3.99 million. The cost of memory in each rack is expected to increase from around $370,000 to about $2 million, raising the memory's share of the rack's total cost from 5-10% to 25-30%.
For a 1GW AIDC, the financial burden could reach trillions of won, with HBM price increases potentially adding up to 12 trillion won. It is estimated that over 1.2 trillion won will be needed for every 100MW. Bloomberg reports that NVIDIA plans to raise prices for AI servers, including Vera Rubin, by more than 15% early next year.
The challenge lies not just in funding but also in ensuring a stable supply. NVIDIA's board is set to decide on the potential ousting of CEO Jensen Huang on November 11. Given that the global IT industry has been working to build relationships with Huang to secure the latest chipsets, his removal could complicate supply acquisition significantly.
Export control issues are also a concern. The U.S. Department of Commerce is investigating whether Megaspeed, a Singaporean company linked to Huang, circumvented export controls to China. Meanwhile, bipartisan lawmakers in Congress are calling for stricter limits on chip exports to China.
If Huang is ousted and export controls are tightened, the chips produced by NVIDIA are likely to be supplied primarily to major U.S. tech companies. NVIDIA has already secured contracts worth $1 trillion through 2027. In contrast, domestic AIDC operators have not finalized purchase agreements for supplies beyond next year.
Last October, NVIDIA committed to supplying over 260,000 GPUs to the South Korean government and companies like Samsung, SK, Hyundai, and Naver by 2030, but the financial terms and pricing conditions remain undisclosed, raising concerns about a potential supply shortage.
Funding for AIDC projects is still in the early stages. Among domestic hyperscale AIDC plans, only SK's 100MW Ulsan AIDC has secured financial investors. Other projects are still in the process of attracting investors.
Construction costs are also rising. Global real estate services firm JLL forecasts that data center construction costs will increase by 6% year-over-year to $11.3 million per MW this year. Cushman & Wakefield reports that construction costs per MW have risen by an average of 21% since the end of 2024. Domestic companies planning to enter GPU contracts next year will need to secure over 20% more funding than initially planned.
* This article has been translated by AI.
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