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Nvidia in financial strife as it confirms ‘significant quantities’ of defective chips
Stock price drops 25% as Nvidia takes a $200 million US hit to sort out support for weak chips
The seemingly unstoppable force that is Nvidia took a beating on the stock market yesterday as its stock price dropped by 25 per cent. While stocks and shares can often fluctuate in price, Nvidia’s
reasoning for its recent financial woes is particularly interesting, as
it involves ‘significant quantities’ of its laptop GPUs and media
control processors (MCPs) that have been found to have serious problems.
The giant of PC graphics has now had to adjust its revenue forecast for the period ending in July to be between $875 million and $950 million US, although 24/7 Wall St claims that Wall Street had expected $1.1 billion US. Nvidia says that this is partly because it will have to ‘take a $150 million to $200 million charge against cost of revenue to cover anticipated customer warranty, repair, return, replacement and other consequential costs and expenses’ that have arisen from the issue.
Nvidia wouldn’t name which chips specifically had the problems, but said that ‘certain notebook configurations of these MCP and GPU products are failing in the field at higher than normal rates.’ The company hasn’t yet discovered why the chips are failing, but said that ‘testing suggests a weak material set of die/package combination, system thermal management designs, and customer use patterns are contributing factors.’
Disturbingly, this issue may not be confined to just laptop chips, and may affect desktop GPUs as well. In its 8-K form, Nvidia states that ‘we are continuing to test and otherwise investigate other products,’ adding that ‘there can be no assurance that we will not discover defects in other MCP or GPU products.’
In the meantime, Nvidia says that it’s made a software driver available to ‘cause the system fan to begin operation at the powering up of the system and reduce the thermal stress on these chips,’ which we’re sure will be a great sound.
Nvidia also issued a further warning about the strength of the silicon market in general, adding that the fall in its stock price was also a result of ‘market weakness around the world.’ The company also admitted that ‘price adjustments’ of its GPUs needed to ‘respond to competitive products.’
Nvidia’s president and CEO Jen-Hsun Huang admitted that the problems have ‘been a challenging experience for us,’ but added that ‘the lessons we've learned will help us build far more robust products in the future, and become a more valuable system design partner to our customers.’ Huang was also keen to point out that Nvidia has now ‘switched production to a more robust die/package material set and are working proactively with our OEM partners to develop system management software that will provide better thermal management to the GPU.’
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Where have you been? For the past 2 years there have been ATi fanboys belching on how technically superior their hardware is - though what they didn't grasp was the fact the products were being made and shoved out onto the market without a care. NOW though, we have some really nice cards from AMD, what we want too see is the 55nm fabrications from NVIDIA.
Comment by C7ouD at 12:05pm 9th July 2008
Saying Nvidia is one of the world's most profitable companies is like saying Jade Goody is one of the world's richest people. We as consumers shouldn't decide a product is better on the value of ones share; that ridiculous. Dominant companies don't need defending in this manner, if anything, it's in our interests to favour the little man. That way, we hear things like 'The company also admitted that price adjustments of its GPUs needed to respond to competitive products.’ Bloody beautiful.
Comment by TKSnatch at 4:02am 9th July 2008
Finally we are no longer paying sh!t prices for crappy cards(9800GTX/GX2 GTX 260/280).
Comment by Zhaoman at 8:33pm 8th July 2008
the U S economy is ***MODERATED*** this is just BASH the foriegn competion from those cruddie U S ponces at Wall steet . dont fall for the Hype .
Comment by kingjohn721 at 10:40pm 4th July 2008
does it matter guys, nVidia took a little blow and suddenly a flurry of nVidia fans come to defend nVidia before anyone has said anything. forget shares, or losses or media hype, lets just let the cards speak for themselves; we didn't see this kind of reaction from ati fans when the 8 series came out...
Comment by Zhaoman at 10:18pm 4th July 2008
NVIDIA are massive. Typical of the media, overblowing everything they can. THIS | IS | NOTHING. NVIDIA still lead the market. They are still the bigger company and for a long time, they have produced some of the best products we have seen in the computer industry.
Comment by C7ouD at 1:17pm 4th July 2008
Yeah, right. I've never outrightly defended ATI or Nvidia. I'm not some crappy fanboy, I buy the best graphics card, I can afford, at the time. Currently I am with ATI, the x1900 to be exact, which I managed to grab for £70, which was a most excellent price long ago.
Comment by JoeLiles at 12:13pm 4th July 2008
Whilst most of the commentors on this particular topic talk complete nonsense coupled with the somehow ability to become an expert in numerous fields in a matter of seconds.. Lets take a look financially: Does nobody realise that 1 billion USD is simply monopoly money in comparison to any other currency? Its about £3.60 here in the UK ;) haha. Also, the reaction by shareholders is just silly to be honest. Its only because its 'the' leading graphical computing producer that anything bad that happens, where human error comes into play, that everyone suddenly thinks its the end of the world for nvidia. Its a minor setback if anything. Whats positive is that nvidia has raised the issue, and is investigating it thoroughly. Rather than do a DELL and let the laptops blow up numerous times before claiming a problem.
Comment by Lightning_Pete at 11:19am 4th July 2008
Sorry about the double post, I pressed refresh instead of home. As for JoeLiles, it's funny how the ATi fanboys always seem to talk about the Nvidia fanboys. Smell this rainbow, dips**t.
Comment by crazyceo at 10:28am 4th July 2008
It didn't say "THE" most profitable companies, it said "ONE" of. It wasn't me that linked the whole topic back to the ALL CONQUERING ATi 4XXX series. I'm just quoting the fact's that Nvidia at least have the financial clout to write off revenue, while AMD/ATi are out with their caps beggin. "Any spare change sir!"
Comment by crazyceo at 10:17am 4th July 2008
I'm pretty sure Nvidia cares about it's shares, so does any plc. or more accurately, the shareholders care about the share values, and the companies care about the shareholders, given its the shareholders who the company has to answer to and the shareholders who need to approve of major strategies, decisions and aquisitions.
Comment by NewParadigm at 12:44am 4th July 2008
no one cares about shares its all too stupid just look at AMDATi their crap . And the american backed wall street is not to be trusted anyway
Comment by kingjohn721 at 10:54pm 3rd July 2008
nVidia one of the most profitable in the world? I think you're confusing profit and turnover. Coca-cola, budweiser, intel, apple, microsoft, nike, misubishi, sony, samsung, vodaphone, bp, shell, general motors, general electric, any bank, any energy supplier, sky/newscorp, virgin, british airways, chinese international lets-sell-cheap-guns-to-despot-dictators-in-africa ltd....these are examples of the most profitable companies. nVidia will probably typically have net income (pre-tax profits) of $170m-ish - i got that figure from the their Q2 '07 turnover of $935.3m -> profit of $172.7m. Vodafone by comparison, made $20 billion in profit. Apple had a $5billion turnover and $700m profit. this is all in Q2 2007
Comment by EdArch at 10:05pm 3rd July 2008
nVidia don't actually know how many of their products are affected...and did I hear something about temperature? what's the operating temp of the 280 again? hmm this could be fun to sit back and watch. I doubt it would be "bye-bye nVidia" as some are saying, but at $200m it will be a hell of a dent, and it may be more if it turns out to be more widespread than anticipated - ie, they find out what's causing the problem then identify it across other product lines - I've never seen a PC component recall before :) I think the best thing about this is, we all know nVidia has made cock-ups in the past, but they've usually had a PR Gherkin to sprinkle icing sugar and raspberries over the issue but the gherkin's been loked in the back cupboard soaked in gin for this little drama! no PR crap, no "nvidia is committed to providing good service and products to all its customers..blah..blah" great!
Comment by EdArch at 9:52pm 3rd July 2008
crazyceo is an obvious fanboy and posts in all threads that have an inkling that ATI is pulling back. He'd tell you he could shoot rainbows out of his ass if it would help him defend his precious Nvidia. They effed up, they'll pay the price. But hopefully, we won't. Good news :)
Comment by JoeLiles at 9:41pm 3rd July 2008
I think it's fair to say that anyone is free to compare anything they want, be it profitable or non-profitable companies. Also nVidia are not suffering a loss, as some people may be inclined to believe, and indeed AMD are still clinging on for dear life. But it's still very valid to give them a pat on the back for hanging in there and genuinely producing something that outshines what is currently on the market.
Comment by Zhaoman at 9:38pm 3rd July 2008
I don't remember mentioning Intel or Microsoft? And nvidia are hardly one of the most profitable companies in the world! They probably generate profits of $150M from that $875M turnover. Compare that with the $4B profit that Tesco make!
Comment by wilding2004 at 8:51pm 3rd July 2008
How can you compare a Profitable company with a loss making one? Nvidia is one of the most profitable companies in the world. AMD has been running at a financial loss for quite a few years now. Those losses aren't small either, they run into the multi million dollar losses. Just for you who know and follow the markets, Intel took a hit today as well. Microsoft actually finished the day up, so there is life left in a few of these "small" companies.
Comment by crazyceo at 8:15pm 3rd July 2008
Nvidia, Amd/Ati, it doesn't matter who is currently king of the hill. Both companies are small enough to consider them one bad product away from financial trouble. But both companies are big enough to get away with it once. You couldn't find an Nvidia fan when their flagship product was the FX5800 and Ati were ruling the world with the 9800pro. As long as there are at least two companies in the enthusiast market, it's good news for everybody.
Comment by wilding2004 at 7:13pm 3rd July 2008
Ati have not dropped out of the 'high end' race; because of their new scalable GPU design, they have decided to release their mid-range offerings first. Their 'high end' card is due to be released next month and will consist of two 4870 cores on one card.
Comment by Zhaoman at 4:00pm 3rd July 2008
Have you read the news/reviews recently? Any of it?
Comment by NotFred at 3:41pm 3rd July 2008
I agree with you mate. nVidia is far from the trouble that many on here are screaming. The main point of this story is that they are cutting their expected profits for the year due to the expence of replacing 'FAULTY' goods. Most of their products will be fine and performing just as they should. As for ATi's product, forget their faults. Even when they perform as they should, they cannot compete with nVidia. ATi has dropped out of the 'High-End' market race. How long before they drop out of the mid range too?
Comment by PokerMuppet at 3:08pm 3rd July 2008
Nvidia admit problems about writing down $200 million on profits and other statements and it's big news that their shares go down in a falling market. AMD/ATi shares are as worthless as toilet paper and have been for sometime even with the release of the "Here to save us all" 4xxx series but somehow we don't get to hear about it. It's a nice little tax write off guys that's all. No sign of "Bricking it" at least they have profits to write off unlike AMD who haven't made a solid profit for some years now.
Comment by crazyceo at 2:39pm 3rd July 2008
You are talking rubbish my friend. You always pay a premium for the highest level products. Just look at the cost of Intel's EXTREME QX range of processors compared to the standard Q range. As for value for money I recently bought a 9600GT that is pre-overclocked (and I can over clock it much further myself) has better cooling fitted and every connection needed, all for under £100. This card kicks the *bottoms* of any equivelant ATi card and is £40 cheaper. Don't purchase high end componants and then sit here whinging about the cost of it. My whole PC cost around £500 and plays everything fine. ***MODERATED FOR COARSE LANGUAGE - please keep it clean***
Comment by PokerMuppet at 12:56pm 3rd July 2008
This is the first time I have ever thought my release week 8800GTX may have been a bad move. Damn the thing cost me £320 over 18 months ago (I think). But this is the first sign it could have negative point. Well I'll make sure to keeps the fans on it and pray is survives.
Comment by reashlin at 12:24pm 3rd July 2008
maybe they are, but with NVidia not being sure how far the problems go are the general public going to pay out cash until the size of the problem is known? Perhaps most worrying for a potential consumer is that as yet they haven't figured out what is wrong, so they don't know how to ensure the problem doesn't spread across the whole manufacturing process. if enough customer confidence is lost in a firms products it can destroy sales figures - I'm not saying it will and I agree that NVidia has been in an incredibly strong position, but it could knock them off the top of the pedestal
Comment by matt___ at 12:20pm 3rd July 2008
Lol what a strange statment - I bet nvidia don't think it's nothing - just because they have the fastest chips means absolutely nothing is they have reliabilty problems...
Comment by philheckler at 12:20pm 3rd July 2008
They maybe leading the industry at the moment but a few more mistakes like this and boom, bye bye Nvidia. Also their chips are not resonably priced... ATI have just released the 4870 and that costs a little as £184 and it has the capabilities are beating the GTX260 which costs £299 more than £100 more and then theres the GTX280 priced at £499+ an extra £199 for only a 25% increase in performance over the 260... I dont think many people will be buying into the GTX series anytime soon. Even if I had more money than sense right now I would pick up a bargin and get the 4870, overclock the memory which is insanley overclockable and the GPU core clock and watch it fly.
Comment by CPC_RedDawn at 12:20pm 3rd July 2008
Considering they are leading the market, this is nothing.
Comment by C7ouD at 11:59am 3rd July 2008
so reading between the lines it appears that the some nvidia gpu device package styles just can't take the heat - I work in semiconductor test so I understand the consequences of this sort of problems = very very expensive and loss of customer confidence = $$$ - nvidia must be bricking it...
Comment by philheckler at 11:52am 3rd July 2008
ATI must be laughing all the way to the bank over this one and the release of the HD 4870 is surely only going to give NVidia a bigger headache! I dont have any particular loyalty to NVidia or ATI, but it is nice to see that its not just ATI/AMD that's having a few problems... I especially enjoyed the quote about having to reduce prices to keep up with competitive products - the cheaper they both go the better card I'll be able to get!
Comment by matt___ at 11:39am 3rd July 2008
release a competitive GPU Nvidia Pretty please!!!, I dont want to see Nvidia become a defect itself :(
Comment by NikoBellic at 11:36am 3rd July 2008
Sorry, Custom PC comments are now closed.
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