Using NVIDIA Chips As Collateral, Lambda Secures a $500 Million Loan

(CTN News) – Nvidia chips were used as collateral for Lambda to obtain a $500 million loan from lenders such as Macquarie Group.

Several startups have been attracting the attention of private investors as they address the towering need for chips and software that can meet the demands of AI’s complex computing requirements.

There has been an onslaught of generative AI (generation AI) offerings being developed by a wide range of companies in order to capture a share of the AI market as it continues to become increasingly competitive.

Due to this, fast AI chips with millions of transistors have gained a great deal of popularity, thereby causing their subsequent shortage, and this in turn has made graphics processing units (GPUs) offered by industry leader Nvidia very valuable.

Apparently, Lambda has secured money under a special purpose GPU financing vehicle dubbed the “Special Purpose GPU Financing Vehicle” that relies on the assets of GPUs to produce cash flow, according to the company. Generally speaking, asset-based financing involves lenders providing funds against a company’s assets as collateral to secure the loan.

As part of the funding, Lambda will significantly scale its GPU Cloud, featuring NVIDIA H100s, according to the company.

It is also going to be used for the purchase of Nvidia’s latest Blackwell AI chips such as the B200 and GB200, as well as the H200 chip from the company.

According to Nvidia CEO Jensen Huang in March, the B200 AI chip will cost between $30,000 and $40,000, depending on the configuration.

In November of last year, Nvidia announced that Lambda would be among the first cloud service providers to provide access to its H200 processor to its customers in the near future.

There was also an investment adviser involved in this loan, Industrial Development Funding, and it follows the $320 million funding round led earlier this year by billionaire Thomas Tull’s US Innovative Technology.

The company said that Lazard served as the exclusive financial advisor and placement agent to Lambda on this transaction.

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