Morgan Stanley Lowers NVIDIA GB200 NVL 72 Shipment Forecast Amid Trump Tariffs Impacting TSMC Pricing Strategy

This content should not be construed as investment advice. The author holds no shares in any of the companies mentioned.

Recent Developments Impacting NVIDIA and TSMC

In a recent evaluation by Morgan Stanley, DeepSeek’s innovative advancements in artificial intelligence (AI) are significantly affecting NVIDIA’s bottom line. Concurrently, the aggressive tariff policies initiated by former President Trump are creating substantial challenges for TSMC’s pricing strategy.

DeepSeek’s Groundbreaking R1 Model

China-based DeepSeek has recently made waves in the tech industry with its R1 model, a highly competitive alternative to OpenAI’s o1 model. Remarkably, DeepSeek’s R1 can achieve similar capabilities with only about 2% of the typical costs associated with training complex language models (LLMs).Despite this, some analyses speculate that DeepSeek’s capital expenditures could have reached up to $1.6 billion, with operational expenses potentially climbing to $944 million.

The emergence of DeepSeek’s R1 has heightened efficiency awareness within the sector, creating pressures for NVIDIA.

Morgan Stanley Securities pointed out that as Microsoft’s capital expenditure growth slows and its comments on model efficiency improvements negatively impact the supply chain, the shipment forecast for NVIDIA’s GB200 NVL 72 this year has been significantly revised downward from…

— Jukanlosreve (@Jukanlosreve) February 4, 2025

Revised Shipment Forecasts

According to Morgan Stanley, the yearly shipment forecast for NVIDIA’s GB200 NVL 72 has been downgraded from an estimated 30, 000 to 35, 000 units to now only 20, 000 to 25, 000 units. This adjustment stems from Microsoft’s sharpened focus on operational efficiencies and a subsequent decrease in capital spending growth.

In a potential worst-case scenario posited by Morgan Stanley, shipments of NVIDIA’s GB200 NVL 72 could plunge below 20, 000 units. Such a decline would have significant ramifications across the entire semiconductor supply chain, possibly leading to economic repercussions estimated between $30 billion and $35 billion.

Macroeconomic Influences and TSMC’s Challenges

The semiconductor industry isn’t just grappling with intra-industry competition; it is also facing disruptive macroeconomic policies. For instance, TSMC may soon feel the sting of former President Trump’s tariff policies, with new chip tariffs expected to be implemented around February 18.

This move, announced at the end of January, involves tariffs on all semiconductor and pharmaceutical products originating from Taiwan. The strategic aim is to encourage TSMC to localize more of its production within the United States.

Reports from Taiwan suggest that these tariffs may compel TSMC to raise its pricing for advanced manufacturing processes, altering original projections from a 5% – 10% increase to over 15%.

As we observe these shifts, the landscape of the semiconductor industry is undoubtedly evolving, with both competitive and policy-driven factors at play impacting major players like NVIDIA and TSMC.

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