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:
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.Sources: TG Daily, NVIDIA
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68 Comments on NVIDIA Admits to Selling Faulty Mobile GPUs, Shares Plummet

#1
lemonadesoda
WAIT

nVidia admits that it has discovered that some of the mobile GPUs it sold have a high failure rate.

That is very different from admitting to selling faulty GPUs.
Posted on Reply
#2
Easy Rhino
Linux Advocate
man i would hate to be the guy in charge of mobile gpus at nvidia! things just havnt been going their way lately.
Posted on Reply
#4
Easy Rhino
Linux Advocate
by: lemonadesoda
Bad luck comes in threes...
true. so what are the other two?
Posted on Reply
#5
xfire
ATI and Intel :)
Posted on Reply
#6
Easy Rhino
Linux Advocate
by: xfire
ATI and Intel :)
:laugh: nice :laugh: :slap:
Posted on Reply
#7
xfire
Mobile GPU unit :slap: -> Nvidia
Intel:laugh:
ATI rakes the money.
Posted on Reply
#8
Easy Rhino
Linux Advocate
by: xfire
Mobile GPU unit :slap: -> Nvidia
Intel:laugh:
ATI rakes the money.
yea, ATI is definately feeling :pimp: right now
Posted on Reply
#10
lemonadesoda
News is right. Price dropped to $14 after NASDAQ closed (so called after-hours trading). Just look at the opening prices when NASDAQ comes back on line.
Posted on Reply
#12
xfire
right time to buy Nvidia and ATI shares.
Posted on Reply
#15
Easy Rhino
Linux Advocate
good call, i didnt see that. check out the 5 year chart for nvidia. the highest they reached was during the announcement of their targetting of intel for intergrated graphics chips in october 07. since then it has been a steady decline.
Posted on Reply
#16
tigger
I'm the only one
Ati's has gone down by 0.3(5.8-5.44) tho' not 14 like nvidia.
Posted on Reply
#17
xfire
AMD's stock is falling even though they seem to have the upper hand:shadedshu
Posted on Reply
#18
Easy Rhino
Linux Advocate
by: tigger69
Ati's has gone down by 0.3(5.8-5.44) tho' not 14 like nvidia.
nvidia didnt go down 14 points, it dropped to 14 points. and with ati's stock price hovering around 5 any drop is a significant one.
Posted on Reply
#19
1c3d0g
I don't get it. Why is it that whenever defective packaging is detected, the chip designer is blamed instead of the foundry (TSMC, UMC etc.)? The foundry is the one which actually builds the chips (and packaging) for the designer so I believe it should be the one at fault here. Somehow they always slip through the cracks and get away with it. They must have some really good lawyers and bullet-proof contracts.
Posted on Reply
#20
Waldoinsc
Not really. This is the same as if you went to Wal Mart and bought a Vizio LCD TV that had a fault causing premature failure of the backlight. Vizio doesn't manufacture the light, they buy them from another manufacturer.

But when it fails, John Q. Public is upset with Wal-Mart and Vizio. The lawyers start putting together a class action lawsuit against these companies. You don't see them going after the smaller light manufacturer. (Go after the company with the deeper pockets)
Posted on Reply
#21
Easy Rhino
Linux Advocate
why wouldnt you be upset with nvidia if you were an investor. the blame falls on nvidia because they are responsible for selling the product.
Posted on Reply
#22
Silverel
It's not like nVidia is going to stop using TSMC. Not a whole lot of alternatives for them really. Unless they wanted to get their own fab. I hear AMD has one sitting around O.o

Seriously, how do you manage to nutkick yourself multiple times in such rapid succession?
Posted on Reply
#23
WhiteLotus
They will sack somebody expendable and then stock will increase. This happens all the time to other companies. And any, what goes up must come down!

They've been number one for so long they just got complacent and made mistakes. Also i think Ati have rubbed a magic lamp or something to get their prices so low.
Posted on Reply
#24
btarunr
Editor & Senior Moderator
by: lemonadesoda
WAIT

nVidia admits that it has discovered that some of the mobile GPUs it sold have a high failure rate.

That is very different from admitting to selling faulty GPUs.
There are laptops failing out there....with their GPUs / Integrated Graphics going kaput.
Posted on Reply
#25
newtekie1
Semi-Retired Folder
by: lemonadesoda
WAIT

nVidia admits that it has discovered that some of the mobile GPUs it sold have a high failure rate.

That is very different from admitting to selling faulty GPUs.
+1, the title makes it sound like they knew the GPU's were faulty before they shipped them. They didn't, they just had a bad batch that have higher than normal failure rates. It sucks, but it happens, and has happened to every CPU and GPU company to date.

At least they are admitting to the problem, and are willing to fix it, and provide a solution to fix the problem.
Posted on Reply
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