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Nvidia: GPU shipments down 20 percent in Q2
Author: Tim SmalleyPublished: 13th August 2008
Nvidia's CEO Jen-Hsun Huang said that GPU shipments were down 20 percent in Q2 because of the economic slowdown.
He also said that average selling prices (ASPs) of GPUs sold by the company has dropped by 25 percent as well, which isn’t doing much for Nvidia’s financial performance. Indeed, the company’s revenue decreased by five percent to $892.7 million, compared to $935.3 million a year earlier.
It was the first quarter in nearly six years where Nvidia posted a loss and the mood on the call was understandably sombre. The loss amounted to $120.9 million and compares to $172.7 million of profit recorded a year earlier – that’s quite a turnaround, but it wasn’t unexpected.
This comes following the announcement of higher-than-expected failure rates on some of its notebook GPUs last month, where Nvidia said it would take a $200 million charge to cover warranty repairs – the company also coughed up $196 million to cover this. When asked, Huang said that the situation is now under control and he believes there won’t be any more charges relating to this problem.
Huang blamed the drop in revenue on a number of factors, ranging from economic slowdown, a large inventory of 65nm chips to an over-priced product lineup that was put down to underestimating the competition from AMD.
“The desktop PC market around the world weakened during the quarter,” said Huang. “And our miscalculation of competitive price position further pressured our desktop GPU business. We have a great product line-up and, having taken the necessary pricing actions, we are strongly positioned again. Our focus now is to drive cost improvements and to further enhance our competitiveness through the many exciting initiatives we have planned for the rest of the year.”
He later added that the delays to the company’s first integrated graphics chipsets for Intel processors was hurting the company, but assured analysts that the products would be released during the third quarter. Despite this, Huang was bullish about the company’s performance in other areas of its business. “The notebook GPU, MCP, and Professional Solutions groups grew a combined 27 percent year-over year,” he said.
However, when asked about when he expects the market to recover and for desktop GPU shipments to grow again, he said “it’s hard to say when it will recover.” Huang mentioned that the company is ready to ship 55nm chips in volume, but because of a large inventory of 65nm products, 55nm products will not carpet bomb the market until later in the year – as soon as 65nm inventory has been worked through.
Do you think the outlook for Nvidia is good? Share your thoughts with us in the forums.
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Comments (20)
I want larrabee!
it's because people are scared that as soon as they buy a graphics card that they thought is good, a newer, better, cheaper one will come out. 9800GTX at launch vs 9800GTX+ now.
the amount of cards being pushed out by nVidia in the last year since 8800GT is ridiculous
Agreed.. there is far too much choice, I'm sure it gets very confusing for many people, especially people who aren't too technically minded.
I for one am holding out with my trusty 8800GTX until the cards drop down in price to atleast what our American friends can currently buy them at.
Fro what I understand (and i could be wrong) but the income of what people overseas make is higher than what it is here (on average, and again i could be wrong.) that being said when people make more money products are usually priced more. Also the cost of fuel (which directly affects everything) is higher for you so that will also drive up the cost of products.
Point is I think you are going to be waiting a long time for prices to come down to what we are paying over here.
They mentioned it a while ago... and took a $196 million charge to fix the problem. I talk about it in the article as Huang talked about it on the earnings call. :)
They'd be taken to the cleaners by SEC if the problem wasn't disclosed fully... I guess we'll have to wait and see how it plays out. :)
Rock On Intel!
The actual total cost to their brand may well be much higher. I for one would not consider a laptop with any Nvidia mobile solution in there currently as I dont have confidence they have resolved the problem... other than issuing a bios update to increase the fan speeds. Go vacuum cleaner...!
I would however consider a new laptop with an ATI mobile solution in it. My current mac book pro's ATI 1600 has served me well, and seems much more reliable than the Nvidia 8400 series in the new mac book pros (not to mention less hot)
I totally agree with what you say, as I am one of those people myself.
I am building a top of the range gaming rig, however, "top of the range" seemed to change a lot, almost every week, one day I was going to press the order button on the 9800 GTX, the next day, whats that? whats a GTX 280, whoops, I must get that one is I want it to be top of the range now, but wait, whats coming out next week, hmm, I think I will wait.
Those were my thought but I am going with the GTX 280 anyway, but I understand the situation is because of people "waiting" for the next thing and therefore never buying the current thing.