On Wednesday, Nvidia Corp (NASDAQ:NVDA) CEO Jensen Huang reflected on the pivotal moment when a last-minute investment from Sega helped the struggling chipmaker survive long enough to become an AI powerhouse.
The Sega Deal That Saved Nvidia
Huang traveled to Tokyo this week. During that time, he personally thanked former Sega President Shoichiro Irimajiri for a decision made three decades ago that he said ultimately saved Nvidia from collapse.
Speaking during the meeting, Huang recalled how Sega’s support came after Nvidia’s first major setback.
“If not for what Sega did for Nvidia … Nvidia would not be here today,” Huang said.
He added, “To imagine that in 1995 Nvidia was nearly out of business. That we had chosen exactly the wrong technology, and that we will be here today, the largest company in the world, is unimaginable.”
In 1995, Nvidia launched its first graphics processor, the NV1, which used a graphics rendering approach based on curved surfaces rather than the triangle-based method that would soon become the industry standard.
After Microsoft Corp (NASDAQ:MSFT) adopted triangles for DirectX, the NV1 quickly lost relevance and a follow-up graphics chip Nvidia had been developing with Sega was canceled.
The failed bet left Nvidia with only about 30 days of cash remaining. Huang flew to Japan to meet Irimajiri in person and proposed converting the money Sega owed under an existing contract into a $5 million equity investment.
Huang reportedly warned that the investment would “most likely be lost,” but said it represented Nvidia’s only chance to survive.
Irimajiri convinced Sega’s board to approve the investment, giving Nvidia roughly six more months to stay afloat.
The Investment That Changed Nvidia’s Future
The additional funding allowed Nvidia to develop the RIVA 128, a triangle-based graphics chip that launched in 1997 and sold about 1 million units within four months, marking the company’s turnaround.
Nvidia went public in 1999, while Sega later sold its stake for roughly $15 million.
Today, Nvidia is the world’s most valuable company, with a market capitalization of about $5.14 trillion.
Price Action: Nvidia shares closed Wednesday at $212.50, up 0.33% and slipped 0.58% to $211.28 in after-hours trading, according to Benzinga Pro.
According to Benzinga Edge Rankings, Nvidia ranks in the 98th percentile for Growth, reflecting strong short, medium and long-term price trend.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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