Vendor financing[1] has a long and successful history. Here's a good WSJ article from 2001 about the practice and risks[2], written after the DotCom crash in March 2000.

There is nothing illicit or illegal in anyway about what NVidia is doing. It's reasonable business practice, and people on HN are simply ignorant to think otherwise.

NVidia is very aware of the risks it entails, but has the money to cover those risks.

[1] https://en.wikipedia.org/wiki/Vendor_finance

[2] https://archive.is/mOIfg

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ElProlactin 2 hours ago | parent | next [-]

A big problem in discussions about Nvidia is that people can't distinguish between:

1. The equity investments Nvidia has made in its customers.

2. The guarantees/backstops it has extended to some of its customers.

3. Vendor financing.

The vendor financing is the least interesting of the bunch. Nvidia has already disclosed that when it provides vendor financing, the average customer pays in less than 60 days. These are not long-term financing arrangements and virtually every big company sells on these type of terms (net-30, net-60, etc.).

The equity investments and guarantees are where there is room for legitimate debate.

	▲	JumpCrisscross 2 hours ago \| parent [-]
		> equity investments and guarantees are where there is room for legitimate debate The guarantees dwarf the equity investments. If there is a shenanigan, it's going to be there. A problem: the line between the guarantees and traditional vendor financing is blurry–one could argue use commitments are no different from repurchase commitments.

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stymaar 2 hours ago | parent | prev [-]

> There is nothing illicit or illegal

Which is exactly the point of the person you're responding to. What part of “but completely legal” isn't clear enough?

	▲	nl 2 hours ago \| parent \| next [-]
		Their implication ("A la Enron", "they can buy good lawyers to keep it completely legal") that there is something illicit or wrong in what NVidia is doing. The OP clearly is implying that it should be illegal for some reason. This is wrong - not only is it nothing like Enron (!?) but it's a great way for both NVidia and the companies building on them to build what they want.
	▲	JumpCrisscross 2 hours ago \| parent \| prev [-]
		Enron was illegal but also a sham. The point is we have no evidence Nvidia's financing is a sham. It could be. And if it is, it's a huge problem. But the shammiest parts of what Enron did do not apply to Nvidia, which makes the comparison a bit like saying OP is Hannibal Lecter but legal while glossing over the fact that OP never murdered anyone but once drank red wine. (Also note that illegal != illicit.)