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increasing demand for compute has contributed to, and may continue to contribute to, increases in the cost of 
such  resources,  which  could  limit  our  ability  to  invest  in,  develop,  or  deploy  our  models,  platform,  and 
applications at the pace we anticipate.

Supply and Concentration of Chips, Memory, and Data Center Equipment

The  specialized  chips  required  for  AI  workloads,  particularly  high-performance  AI  accelerators  and  memory, 
are  produced  by  a  limited  number  of  manufacturers.  The  production  of  advanced  chips  is  extraordinarily 
complex, requiring manufacturing processes at the leading edge of technological capability. 

The majority of the world’s most advanced chip manufacturing capacity is concentrated in Taiwan, primarily at 
Taiwan  Semiconductor  Manufacturing  Company  (“TSMC”).  This  geographic  concentration  creates  significant 
risks,  including  exposure  to  natural  disasters  such  as  earthquakes  and  typhoons,  potential  disruption  from 
geopolitical tensions between Taiwan and China, vulnerability to any interruption in Taiwan’s power grid, water 
supply, or other critical infrastructure, and susceptibility to developing trade regulations and restrictions. Any 
military conflict, tariffs and trade restrictions, economic coercion, blockade, natural disaster, or other incident 
affecting Taiwan could severely disrupt the global supply of advanced chips, with effects that could persist for 
years  given  the  time  required  to  construct  and  qualify  alternative  fabrication  facilities.  Efforts  to  establish 
sufficient  advanced  chip  manufacturing  capacity  outside  of  Taiwan,  including  in  the  United  States,  remain  in 
early stages and may not produce adequate compute to materially reduce these concentration risks within the 
foreseeable future. In addition, due to the demand for advanced chip manufacturing, TSMC has, at times, been 
unable to fully satisfy market demand for chip manufacturing capacity, and as a result, we have not always been 
able  to  obtain  sufficient  quantities  of  chips  on  a  timely  basis.  Accordingly,  any  restrictions  or  delays  on  the 
supply of advanced chips out of Taiwan or TSMC would adversely affect our business, financial condition, and 
results of operations.

In addition, both high bandwidth memory, which is a key component in high performance AI accelerators, and 
other  high  performance  memory  products  used  in  compute  infrastructure,  are  largely  manufactured  by  SK 
hynix Inc., Samsung Electronics Co., and Micron Technology, Inc. Each of these manufacturers is working to 
expand its production capacity to meet demand. However, there is no guarantee that these efforts will result in 
adequate  supply  fast  enough  to  meet  demand,  particularly  if  large  customers  or  competitors  secure  exclusive 
supply commitments or otherwise reserve substantially all of a manufacturer’s available production capacity.

The concentration and constraints in manufacturing supply expose us to the risk that manufacturers may make 
allocation  decisions  or  strategic  shifts  that  adversely  affect  our  access  to  the  advanced  chips  needed  for  our 
business. We also face risks that specialized chips may contain defects, or that their production or delivery may 
be  delayed  or  disrupted,  which,  given  long  replacement  lead  times,  could  constrain  available  compute  and 
adversely  affect  our  operations  and  ability  to scale.  A  meaningful  portion  of  the  components  we  and  our 
partners  rely  on  is  sourced  from  or  manufactured  outside  of  the  United  States,  and  new  or  increased  tariffs, 
import  restrictions,  or  trade  disputes  could  delay  deliveries,  force  supply-chain  changes,  or  raise  our  costs, 
some of which we bear directly under pass-through arrangements. For more information, see the section titled 
“—Governmental  trade  controls,  including  export  and  import  controls,  sanctions,  customs  requirements,  and 
related regimes, could subject us to liability or loss of contracting privileges or limit our ability to compete in 
certain markets.”

We also depend on third-party chip design and services companies for the design, manufacture, and support of 
certain custom accelerator platforms, as well as for related infrastructure financing arrangements. Disruption to 
these  relationships,  or  any  failure  by  these  parties  to  deliver  hardware  or  services  on  expected  timelines  and 
specifications, could adversely affect the availability, performance, or cost of accelerator platforms on which we 
rely. 

Data  centers  also  require  electrical,  generation,  and  transmission  equipment,  cooling  systems,  backup 
generators, and networking hardware, some of which are made by only a few manufacturers, must be ordered 
years in advance, and require substantial pre-delivery payments that we may not recover if our plans change. In 
addition, certain equipment, such as high-voltage transformers, switchgear, turbines, generators, substations, 
and  transmission  components,  has  been  subject  to  extended  delivery  timelines,  price  increases,  tariffs  and 
national  security  requirements,  and  allocation  constraints  as  demand  from  data  center  operators  and  other 
large electricity consumers has grown. If such equipment is delayed or unavailable, we may be able to replace it 

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