There was a time when the S&P 500 reaching record highs without any help from Apple Inc. was almost unthinkable. But those days are over, at least for now.
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Microchip and Nvidia logo displayed on a phone screen are seen in this multiple exposure illustration photo taken in Krakow, Poland on April 10, 2023. (Photo by Jakub Porzycki/NurPhoto via Getty Images)
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As Nvidia posted stellar third-quarter results last week, industry observers pointed out that a substantial amount of the U.S. chip giant’s revenue came from one small country.
About 15% or $2.7 billion of Nvidia’s revenue for the quarter ended October came from Singapore, a U.S. Securities and Exchange Commission filing showed. Revenue coming from Singapore in the third quarter jumped 404.1% from the $562 million in revenue recorded in the same period a year ago. This outpaced Nvidia’s overall revenue growth of 205.5% from a year ago.
Singapore only trailed behind the U.S. (34.77%,) Taiwan (23.91%) and China including Hong Kong (22.24%) in Nvidia’s third-quarter sales rankings.
“I would highly think it’s due to data centers as Singapore has quite a lot of data centers and cloud service providers,” Maybank Securities analyst Jarick Seet told CNBC.
“The chips could also be sent to Singapore for final assembly with other products and then shipped out to other countries,” said Seet. They could also be used for artificial intelligence, computing and electric vehicles, he added.
“What’s a tiny city-state doing with all those chips? Building data centers, of course!,” said Sang Shin, an ex-Temasek and GIC executive, in a LinkedIn post. He previously served as director of digital innovation at Temasek and head of digital strategy and architecture at GIC.
“Because the nation is stable and secure, there is a lot of talent, the digital infrastructure is solid, and the government policies are conducive to digital and data services,” said Shin.
… Singapore is also a growing area of specialized cloud service providers standing up data centers in the region.
The same SEC filing revealed that 80% of Nvidia’s third-quarter sales came from the data center segment, while gaming, professional visualization, automotive and others make up the rest.
“Cloud service providers drove roughly half of data center revenue, while consumer internet companies and enterprises comprised approximately the other half,” said Nvidia in the filing.
Nvidia did not break down its Singapore revenue by business segment.
“Regarding Singapore, a certain consumer internet company purchased data center solutions in Q3 to be stood up in Singapore data centers. Lastly, Singapore is also a growing area of specialized CSPs standing up data centers in the region,” Citi analysts wrote in a Nov. 27 report.
In January 2022, Singapore lifted a moratorium issued in 2019 that temporarily paused the release of land for data center use and sought to moderate the growth of data centers. Singapore subsequently awarded rights in July to Equinix, Microsoft, Chinese data center solutions provider GDS and a tie-up between AirTrunk and ByteDance to develop new data center projects in Singapore.
There were more than 70 operational data centers in Singapore, as of January 2022. The city-state still accounts for 60% of Southeast Asia’s total data center capacity.
Singapore emerged third globally and first in Asia Pacific in terms of data center market rankings, according to a report by Cushman and Wakefield. Northern Virginia and Portland in the U.S. tied for first while Hong Kong comes in at fourth.
“Demand for data centers in Singapore will remain high with the rapid growth of digital apps, e-commerce, internet of things, artificial intelligence, crypto-trading, blockchain activities, online gaming, etc. The shift to hybrid working and business digitalization has also contributed to the demand for data center space,” said International Trade Administration in a report.
Prospective buyers are welcomed by real estate agents at an open house in West Hempstead, New York on April 18, 2021.
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PPP loan fraud affected home prices
U.S. home prices rose by 24% between November 2019 and November 2021, according to the Federal Reserve Bank of San Francisco, driven by factors such as shifting demand and regional moves.
However, government aid may have also contributed to that growth, including higher rates of fraudulent PPP loans in certain areas, according to the new research.
This is a very specific type of stimulus that injected cash into certain areas, and it seems to have played a pretty significant role.
Sam Kruger
Assistant professor of finance at the University of Texas at Austin
The paper found that certain markets had elevated rates of PPP loan fraud, and individuals who received fraudulent loans were more likely to have purchased property.
“This is a very specific type of stimulus that injected cash into certain areas, and it seems to have played a pretty significant role,” Kruger said.
ZIP codes with “high suspicious lending per capita” had home price growth that was 5.7% higher than ZIP codes in the same county with lower levels of fraud, the paper found. “This effect is large relative to other proposed factors explaining house price growth during the Covid period,” the authors wrote.
The findings were consistent after weighing factors such as land supply, previous home price growth, remote work access, population density, net migration, proximity to the central business district and prior rates of remote work.
“It’s not just that you’re stealing money from the government,” Kruger said. “There are potential distortions and spillover effects that are affecting other people in the community.”