Thursday, July 3rd 2008
NVIDIA Admits to Selling Faulty Mobile GPUs, Shares Plummet
NVIDIA Admits to Selling Faulty Mobile GPUs, Could Cost it up to $200 M
NVIDIA admits that some of its notebook graphics processors are failing at "higher than normal rates", in a filing with the Securities and Exchange Commission. These chip failures will cost NVIDIA anywhere between 150 and 200 million US Dollars this quarter financial year toward warranty, repair, return and replacement for laptops with such NVIDIA products incorporated.
Nvidia says that "significant quantities" of chips are experiencing thermal issues caused by possibly weak die and packaging - in essence the parts are overheating and failing, while not pointing out exactly which laptop models are affected by this. As an immediate response, NVIDIA prepared an emergency driver that maintains the fan cooling speed higher than original parameters. Expect the notebook to be noisier.
NVIDIA had announced yesterday that they were looking at a Q2 revenue falling more in the range of $875 million to $950 million contradicting analysts' speculation of a $1.1 billion figure. Repercussions soon followed at the Nasdaq, where the NVIDIA stock plunged 21.94 per cent or $3.95 to $14.08 a share.
Shareholders can get some respite from NVIDIA's recent press release which says that the company is seeking insurance to cover the costs incured with the issue of the failing notebook computer components. Says the press release:
Sources:
TG Daily, NVIDIA
NVIDIA admits that some of its notebook graphics processors are failing at "higher than normal rates", in a filing with the Securities and Exchange Commission. These chip failures will cost NVIDIA anywhere between 150 and 200 million US Dollars this quarter financial year toward warranty, repair, return and replacement for laptops with such NVIDIA products incorporated.
Nvidia says that "significant quantities" of chips are experiencing thermal issues caused by possibly weak die and packaging - in essence the parts are overheating and failing, while not pointing out exactly which laptop models are affected by this. As an immediate response, NVIDIA prepared an emergency driver that maintains the fan cooling speed higher than original parameters. Expect the notebook to be noisier.
NVIDIA had announced yesterday that they were looking at a Q2 revenue falling more in the range of $875 million to $950 million contradicting analysts' speculation of a $1.1 billion figure. Repercussions soon followed at the Nasdaq, where the NVIDIA stock plunged 21.94 per cent or $3.95 to $14.08 a share.
Shareholders can get some respite from NVIDIA's recent press release which says that the company is seeking insurance to cover the costs incured with the issue of the failing notebook computer components. Says the press release:
Separately, NVIDIA plans to take a one-time charge from $150 million to $200 million against cost of revenue for the second quarter to cover anticipated warranty, repair, return, replacement and other costs and expenses, arising from a weak die/packaging material set in certain versions of its previous generation GPU and MCP products used in notebook systems. Certain notebook configurations with GPUs and MCPs manufactured with a certain die/packaging material set are failing in the field at higher than normal rates. To date, abnormal failure rates with systems other than certain notebook systems have not been seen. NVIDIA has initiated discussions with its supply chain regarding this material set issue and the Company will also seek to access insurance coverage for this matter.You can read the complete press release by NVIDIA here.
68 Comments on NVIDIA Admits to Selling Faulty Mobile GPUs, Shares Plummet
"Nvidia's stock bloodbath - company admits faulty chips, shares plunge 22% "
Seems like they're making a bigger deal. But hey, there is something going wrong, else the stock won't crash 22%.
As for the Admits to selling part, yes, they sold faulty parts, else they wouldn't have launched a driver to jack up fan speeds.
This is something by the nature of the "Sony Faulty Laptop battery" fiasco.
LOL... the first thing i thought when i read the headline was "good time to buy nvidia." They've got alot going for them in the CUDA/ "we're gonna open a can of whoopass" department.
Share value depreciates with this news, but there is always an over-reaction. With good news the stock shoots up and then falls back to earth a bit later, and with bad news the stock goues through the ground, until people realize how undervalued it is.
Currently, it seems that both Nvidia and ATI are more concerned with low fan noise instead of a cool GPU. I really do not like this. I prefer to keep my expensive video card (or laptop) at a safe temperature, even if that means I can actually hear the fan running. According to the reviews I have been reading, the current ATI cards can idle near 70-80 celcius... and hit 100 on load!! :twitch: Those temperatures are not ideal for me... infact, they scare me. I wish they would try to keep the GPU in the 50 idle/70 load range and adjust the fan based on that. :(
I have a hunch that they would not have as many video cards fail if they just kept them running a touch cooler. That in turn would save them a lot of money and integrity. Hint, hint. ;)
The batteries Sony used to make for laptops. Remember the costs Sony had to shell out? What next? Some OEMs maintained an arm's distance with Sony and its batteries, brand value was lost.
With so many alternatives to NVIDIA in terms of system chipset and integrated/discrete graphics with both Intel and AMD processor platform, do you think this problem is just something which those $150-200M could pull NV out of? I'm not jumping to a conclusion but just telling, that the brand value of NV in affordable solutions for notebooks has definitely taken a beating today.
Another example specific to India...though I won't be surprised if it turns out to be global:
Back when AMD made hay with its then successful K8, Opteron became a great brand for server/WS processors, they sold cheaper and performed better than those Netburst laden Xeons. Even after Xeon was blessed with the Core Architecture, Opteron somehow maintained its brand value and kept ticking in the market. Come Barcelona, IT managers were all raved about it...come TLB erratum, AMD Epic Fail in the market here. Today, despite the TLB fix, nobody here with >two neurons between the ears chooses Opteron when planning for big setups.
Yeah, we really need a list of chips soon. I don't use the thing that much & it really hasn't gave me any problems but I would still like to know whether its safe or not.
At least Nvidia is doing something about it and willing to admit there are problems with these GPUs.
btarunr, you do have a point about OEMs being more cautious now about Nvidias Integrated GPUs but I think if Nvidia does a good job taking care of this they won't have a problem recovering.
Good news is its a good time to buy Nvidia stock ; )Thanks for the link. Funny it shows Nvidia down, Intel down, AMD down, but for some stupid reason MS is up . . .
and for those looking at AMD its just a little down todays its been going up since the HD4K release
kinda feel bad for em