Lambda secures $500m loan using Nvidia chips as collateral

On Thursday, Lambda, the forte artificial intelligence cloud provider, said it had booked a $500 million loan from lenders, including Macquarie Group’s much-coveted chips as collateral.

Investor Interest in AI Startups Rises Amid Chip Shortage

Startups addressing the surging demand for chips and software to support AI’s complex computing needs are attracting significant interest from private investors.

Competition for AI Market Share

Companies across various sectors are racing to develop their own generative AI (genAI) solutions, intensifying the competition in the AI market.

Shortage of Fast AI Chips

The scarcity of fast AI chips, with millions of transistors, has heightened their appeal, contributing to the shortage of graphics processing units (GPUs) like those offered by industry leader Nvidia.

Special Purpose GPU Financing

Lambda, a prominent player in the AI sector, has secured funds through a unique financing arrangement known as the “special purpose GPU financing vehicle.” This structure is backed by GPUs and supported by their cash flow generation.

Scaling GPU Cloud

Lambda intends to utilize the funding to significantly expand its GPU Cloud, featuring Nvidia’s H100s. Additionally, the financing will facilitate the acquisition of Nvidia’s latest AI chips, including the B200 and GB200.

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Price and Availability

Nvidia CEO Jensen Huang disclosed that the B200 AI chip is expected to be priced between $30,000 to $40,000. Lambda will be among the first cloud service providers to offer access to Nvidia’s H200 chips, as announced by Nvidia last year.

Investment Partnerships

Lambda’s financing round involved investment advisor Industrial Development Funding, following a $320 million funding round led by US Innovative Technology in February. Lazard served as the exclusive financial advisor and placement agent to Lambda for this transaction.

Conclusion

With investor interest in AI startups on the rise, coupled with the ongoing chip shortage, companies like Lambda are poised to capitalize on the growing demand for AI solutions. 

This strategic financing initiative underscores Lambda’s commitment to expanding its GPU Cloud infrastructure and staying at the forefront of AI innovation.