Nvidia CEO Jensen Huang visited a Tokyo arcade this past Wednesday to meet with former Sega leadership, including former president Shoichiro Irimajiri, to celebrate a partnership that proved vital to the chipmaker’s early survival. During the visit, Huang reflected on the 1995 investment that prevented Nvidia from going out of business.
"If not for what Sega did for Nvidia and what Irimajiri-san did for Nvidia, Nvidia would not be here today," Huang said. He noted that in 1995, the company had chosen the wrong technology and was nearly bankrupt. While Nvidia ultimately failed to win the contract to manufacture the processor for the Sega Dreamcast, Irimajiri moved forward with the $5 million investment anyway. That capital allowed the startup to pivot, eventually leading to the launch of the GeForce 256 and a contract with Microsoft for the original Xbox.
The Cost of a Lost Opportunity
While the investment saved the company, the financial outcome for the publisher was modest compared to the current valuation of the tech giant. Sega reportedly sold its stake in Nvidia for $15 million. Had that stake been held until 2026, it would have been worth over a trillion dollars.
"I hope that everyone at Sega will be as proud as we are of the history of this collaboration between Nvidia and Sega that continues to this day," Huang stated during the visit.
AI Race and Hardware Costs
The nostalgic reunion comes at a time when Nvidia’s current operations are placing significant strain on the gaming industry. Nvidia is at the center of an AI arms race, supplying chips for LLM models and data center hyperscalers. This demand has created a massive shortage of RAM, a critical component for both PC hardware and gaming consoles.
The resulting supply crunch has caused the price of RAM to double, creating a difficult environment for console manufacturers. Leadership at Xbox has expressed concern over the feasibility of delivering affordable next-gen hardware, while Nintendo has already lowered its shipment forecasts for the upcoming year.
Sega, which exited the console hardware business following the Dreamcast, remains tied to the ecosystem that is currently grappling with these rising costs. As the industry faces a slow-burn reckoning due to the AI-fueled component shortage, the future of gaming hardware pricing remains uncertain for the next five years.