Lambda secures $500 million loan with Nvidia chips as collateral

FILE PHOTO: Illustration shows NVIDIA logo

(Reuters) - Lambda has secured a $500 million loan from lenders including Macquarie Group with Nvidia's much-coveted chips as collateral, the specialty artificial intelligence cloud provider said on Thursday.

Startups addressing the towering need for chips and software that can support AI's complex computing requirements have been luring private investors.

Firms across the board have been vying to develop their own generative AI (genAI) offerings as they look to capture a share of the increasingly competitive AI market.

This has added to the allure of fast AI chips with millions of transistors and their subsequent shortage, making graphics processing units (GPUs) such as those offered by industry leader Nvidia a prized possession.

The so-called "special purpose GPU financing vehicle", under which Lambda has secured funds, is an asset-based structure secured by GPUs and supported by their cash flow generation, the company said. Asset-based financing involves lenders providing funds against a company's assets as collateral.

"Lambda will use the funding to dramatically scale its GPU Cloud, featuring NVIDIA H100s," the company said.

The financing will also be used to buy Nvidia's H200 chips as well as its latest Blackwell AI chips including B200 and GB200.

The B200 AI chip will be priced between $30,000 to $40,000, Nvidia CEO Jensen Huang had told CNBC in March.

Nvidia had said in November last year that Lambda will be among one of the first cloud service companies to provide access to its H200 chips.

The loan also involved investment adviser Industrial Development Funding and follows the $320 million funding round led by billionaire Thomas Tull's US Innovative Technology in February.

Lazard served as exclusive financial adviser and placement agent to Lambda on this transaction, the company said.

(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Maju Samuel)