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
btarunr
Editor & Senior Moderator
The title TG Daily (source) used:
"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.
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#2
newtekie1
Semi-Retired Folder
Easy Rhino said:
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.
Everything has been on a steady decline, that is just the way it is right now. The economy sucks, and it is reflected in the stock market.

btarunr said:
The title TG Daily (source) used:
"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.
It is down roughly 27% now. Though that isn't really a big deal, things like that happen when a company anounces bad news. The prices will rebound, because when some people pull out because the company is doing bad, others take the opertunity to buy in at the low prices, which will drive the price back up.
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#3
Triprift
btarunr said:
There are laptops failing out there....with their GPUs / Integrated Graphics going kaput.
Lol not my one and thats all that matters better not put the mockers on it :p
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#4
btarunr
Editor & Senior Moderator
newtekie1 said:
It is down roughly 27% now. Though that isn't really a big deal, things like that happen when a company anounces bad news. The prices will rebound, because when some people pull out because the company is doing bad, others take the opertunity to buy in at the low prices, which will drive the price back up.
After it is known that the company could spend anywhere between $150~200 million on damage control? That's a whole lot of money, and can depreciate the share value. Investors make note of that. It's not just another bad news.
Posted on Reply
#5
phanbuey
newtekie1 said:

It is down roughly 27% now. Though that isn't really a big deal, things like that happen when a company anounces bad news. The prices will rebound, because when some people pull out because the company is doing bad, others take the opertunity to buy in at the low prices, which will drive the price back up.
+1
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.
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#6
newtekie1
Semi-Retired Folder
btarunr said:
After it is known that the company could spend anywhere between $150~200 million on damage control? That's a whole lot of money, and can depreciate the share value. Investors make note of that. It's not just another bad news.
I know, it is definitely the reason for the sell off, but they should recover pretty quickly. With the current economy it might take a little longer, but they should still recover, that is how things like this work.
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#7
jydie
Whew. Luckily my laptop uses ATI integrated graphics. :)

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. ;)
Posted on Reply
#8
Easy Rhino
Linux Advocate
newtekie1 said:
Everything has been on a steady decline, that is just the way it is right now. The economy sucks, and it is reflected in the stock market.
true, but not all stocks reflect the market.
Posted on Reply
#9
mlee49
Anyone have a link to the emergency drivers? Just curious if it makes a difference.
Posted on Reply
#10
btarunr
Editor & Senior Moderator
Some classic examples:

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.
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#11
PVTCaboose1337
Graphical Hacker
Poor Nvidia... another reason why I switched over to my 4850.
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#12
csplayer089
hmmm im not really worried since my 8800M GTS card idles and loads at a lower temp than my 8800GT in my desktop
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#13
FatForester
This information would be a lot more useful if they said what chips this affects. Now I'm just going to think my laptop is going to explode at any moment :laugh:
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#14
Triprift
Lol yeah got me abit worried cmon lets see a list :p
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#15
Megasty
Oh god, my last lappy has a NV chip...HIT THE DECK :p

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.
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#16
ShadowFold
Good thing mine has X1250.. This is not good nvidia. I hope this doesent set them back too much. But then again this is really good for AMD :laugh:
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#18
Darkrealms
I think the title is a little one sided. . .

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 ; )
Easy Rhino said:
yea i noticed that too. http://finance.google.com/finance?q=NASDAQ%3ANVDA
Thanks for the link. Funny it shows Nvidia down, Intel down, AMD down, but for some stupid reason MS is up . . .
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#19
tkpenalty
Nvidia are getting the limelight for the WRONG reasons, these few weeks...
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#20
ShadowFold
Why should microsoft be down? They are doin pretty good. Vista is starting to sell more because they are really working on fixing everything.
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#21
Megasty
I would wait on that stock. My advisor said it looked like it will fall some more for the next 2 weeks. They need to annouce a new project quick :(
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#22
btarunr
Editor & Senior Moderator
Darkrealms said:
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.
Yes, I agree with that.
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#23
Darkrealms
ShadowFold said:
Why should microsoft be down? They are doin pretty good. Vista is starting to sell more because they are really working on fixing everything.
I didn't say they should be down. I just saying there was irony in it. (I'm always a little negative on MS, they've had a lot of bad practices)
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#24
cdawall
where the hell are my stars
hey look NV is down to $12.70 this is the loewst there stock has been in years



and for those looking at AMD its just a little down todays its been going up since the HD4K release

Posted on Reply
#25
KainXS
man, since ati released the 4850, nothing has been going right for nvidia, their drivers got hacked, they're graphics cards are getting dominated by 3 cards from the looks and now, their notebook gpu's are failing

kinda feel bad for em
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