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Faulty GPUs Cost Nvidia $43.6 Million

By - Source: Tom's Hardware US | B 25 comments

Nobody likes to lose money in this economy, whether it's a dwindling IRA account due to falling stock values, or faulty GPUs sold using crappy packaging.

There's something to be said about today's financial times. Most of us are standing back, watching the dollar bills slide down the drain of recession, taking hopes, dreams and security away with each passing month. There's no question that the hardware industry is watching the declining economy with horrified eyes as well, especially when additional problems begin to surface; additional financial vortexes threatening to dwindle away the foundation.

Friday Nvidia announced that, during its last fiscal year, it spent $43.6 million to cover warranty and product replacement claims due to GPUs housed in weak packaging. No, we're not talking about the pretty little packages that make the graphics cards look uber-super cool on the retail rack, but rather the material housing the internal circuitry. Because the outer hull was weak, the GPUs began to overheat and damage themselves, thus rendered unusable. The problem made industry veterans and consumers wonder what was going on with the company, and the financial blow under the belt--especially during these economical dark times--surely made Nvidia wonder the same thing.

In the company's annual report, Nvidia said it originally took a one-time $196 million charge against its second quarter (cost of revenue) back in July 2008, specifically addressing the warranty and replacement costs stemming from the faulty housing issue. "The previous generation MCP and GPU products that are impacted were included in a number of notebook products that were shipped and sold in significant quantities," the company said in the report. "Certain notebook configurations of these MCP and GPU products are failing in the field at higher than normal rates. While we have not been able to determine a root cause for these failures, testing suggests a weak material set of die/package combination, system thermal management designs, and customer use patterns are contributing factors."

But with that huge wad of cash set aside, currently Nvidia has only spent 22 percent of the total amount thus far, meaning that it's likely that there are faulty GPUs still wandering about, waiting to bring notebooks down to a grinding halt. Then again, some of that amount may be set aside for current and potential lawsuits from investors and customers generated by the faulty GPUs, a legal issue the company is now facing, although that's highly doubtful.

Previously Nvidia tried to address the failure issue by releasing a software driver that kick-started the system fan during the boot process, reducing the thermal stress on the faulty chips. However their actions were a little too late, and now Nvidia not only faces punitive damages resulting from the GPUs, but from the way the company handled the situation in the first place. "We intend to fully support our customers in their repair and replacement of these impacted MCP and GPU products that fail, and their other efforts to mitigate the consequences of these failures," Nvidia said.

As of this writing, Nvidia has not increased the amount set aside for the GPU failures; the original amount, or rather the remaining $152.4 million, may very well cover whatever surfaces in the future.

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Top Comments
  • 14 Hide
    Tindytim , March 17, 2009 5:58 PM
    It's amazing how I can tell by the first paragraph if an article is written by Mr.Parrish.
Other Comments
  • 2 Hide
    bustapr , March 17, 2009 5:57 PM
    Looks like this wont affect them at all with that 152 mil for GPU failures. But this might affect them in the area of the consumer's trust in the company. There will surely be some people from now on doubting on quality of Nvidia products. And surely this will be a stone in the road in the race against AMD.
  • 14 Hide
    Tindytim , March 17, 2009 5:58 PM
    It's amazing how I can tell by the first paragraph if an article is written by Mr.Parrish.
  • Display all 25 comments.
  • 5 Hide
    A Stoner , March 17, 2009 6:09 PM
    What the hell is this crappy obsession about the economy in every single post. I am getting sick of it. Yeah, the economy sucks for some people. We do not need to have it sound like every single person on the planet is suffering from it, because the only part of the downturn that 90% or more of us are suffering from is the constant nagging from people, like you, who write stories and have some complex that requires them to make a point of how this is extraordinary simply because of the downturn in the economy.

    This story would have had a way better position/reception (at least from me) if it had simply stated some facts about the issue. nVidia screwed up some cards, they had to replace alot of them, it cost them 46 million dollars. Instead, the whole first part of it is about the economy. OMG the economy is going down, people lost jobs. yeah I get it, I get it in every single other story I read. I read about razor blades and I have to hear about the economy. I read about a video game, I have to read about the economy. How about some of you nimwits fucking writing stories try and be a bit different and stop griping about the fucking economy and do something that produces value.
  • 4 Hide
    Tindytim , March 17, 2009 6:15 PM
    A StonerHow about some of you nimwits fucking writing stories try and be a bit different and stop griping about the fucking economy and do something that produces value.

    Funny, I was about to write something similar.

    It's odd how so many news outlets make this recession sound like the great depression. It just furthers the problems by hurting moral.
  • 0 Hide
    bustapr , March 17, 2009 6:22 PM
    Quote:
    There's no question that the hardware industry is watching the declining economy with horrified eyes as well, especially when additional problems begin to surface; additional financial vortexes threatening to dwindle away the foundation.

    PARRISH!!! you should start worrying about your economy when they kick your bad editor butt goodbye!
  • 2 Hide
    tenor77 , March 17, 2009 6:45 PM
    bustaprPARRISH!!! you should start worrying about your economy when they kick your bad editor butt goodbye!


    I think this is why he's focusing on the economy.
  • 1 Hide
    jerreece , March 17, 2009 7:13 PM
    Kudos to A Stoner. I'm sick and tired of all the Media entities out there telling us repeatedly about how our economy is in the tank, and how we'd better run for the food shelter because nobody will have a job tomorrow.

    The reality is, the economy is NOT as bad as CNN and others suggest. Yes, I have a job still, and still receive paychecks. Yes I know that SOME people are in dire straits right now. I understand that.

    But, if the media never convinced the whole country that we were heading into a recession, it never would have gotten as bad as it is. And frankly, the Media now needs to turn things around. People need to ignore crap like this and simply go about normal life. Want a video card upgrade? Great, buy an upgrade. It will stimulate the economy where others refuse to spend a dime.
  • 1 Hide
    A Stoner , March 17, 2009 7:27 PM
    jerreecePeople need to ignore crap like this and simply go about normal life. Want a video card upgrade? Great, buy an upgrade. It will stimulate the economy where others refuse to spend a dime.

    Exactly. So far since Paulson set off the panic that laid off 5 million workers, I have bought a GTX 285, two new 1TB hard drives and a hot swap toaster for them, two laptops, 2 cell phones, 8 GB of DDR2 1066 memory, a full copper version of the thermaltake 120 CPU cooler, 5 video games, 2 peices of software, and that is just the technology stuff.

    By all means, put money away and save. Saved money is what banks use to lend to, hopefully, responsible borrowers who use the money for large purchases as well as businesses expanding. I certainly started saving, and have paid off every penny I owed on credit cards.
  • -1 Hide
    curnel_D , March 17, 2009 7:31 PM
    Damn kevin, I dont even have to say anything to this article. Seems everyone else has. It's about time Tuan fires your ass.
  • 0 Hide
    matt_b , March 17, 2009 7:47 PM
    Anyone know how to get some of this money to fix a laptop with one of the affected GPUs? I had a laptop blow it's whistle at the ripe old age of about 13 months (8 months ago). I keep hearing this thing being brought up constantly, but I cannot figure out if this thing is like a recall or not. Anyone had their laptop fixed yet (even when the OEM says tough luck)?
  • 0 Hide
    timaahhh , March 17, 2009 8:02 PM
    It's both disturbing and good to know that nVidia set aside so much cash to fix broken chips.
  • 0 Hide
    Tindytim , March 17, 2009 8:03 PM
    Matt_BAnyone know how to get some of this money to fix a laptop with one of the affected GPUs? I had a laptop blow it's whistle at the ripe old age of about 13 months (8 months ago). I keep hearing this thing being brought up constantly, but I cannot figure out if this thing is like a recall or not. Anyone had their laptop fixed yet (even when the OEM says tough luck)?

    These are Nvidia warranties, not recalls. So your warranty may have expired, 1 year sounds about right.
  • 1 Hide
    spanner_razor , March 17, 2009 8:07 PM
    I like the fact that customer use patterns are highlighted as a problem: damn those people thinking they might actually play a game or two. It's kinda like the old ADSL fair usage policy again.
  • 0 Hide
    Tindytim , March 17, 2009 8:20 PM
    spanner_razorI like the fact that customer use patterns are highlighted as a problem

    What the hell are you talking about? We were talking about Media irresponsibility with the constant stream of heavily exaggerated 'news' about the state of the economy.

    No one is blaming consumers for Nvidia's faulty chips.
  • 1 Hide
    SAL-e , March 17, 2009 8:39 PM
    Matt_BAnyone know how to get some of this money to fix a laptop with one of the affected GPUs? I had a laptop blow it's whistle at the ripe old age of about 13 months (8 months ago). I keep hearing this thing being brought up constantly, but I cannot figure out if this thing is like a recall or not. Anyone had their laptop fixed yet (even when the OEM says tough luck)?

    Talk to you lawyer, but don't hold your breath. If your warranty was 1 year you don't have a case, except if there is some kind of class action law sue and you meet the class requirements. Good luck.
  • 2 Hide
    spanner_razor , March 17, 2009 8:42 PM
    "While we have not been able to determine a root cause for these failures, testing suggests a weak material set of die/package combination, system thermal management designs, and customer use patterns are contributing factors."

    No apology needed, clearly bashing the media is more important than reading the article.
  • 0 Hide
    Tindytim , March 17, 2009 8:46 PM
    spanner_razorNo apology needed, clearly bashing the media is more important than reading the article.

    Fine, but I'm still not inviting you to my birthday party.

    In all seriousness, I mistakenly thought I saw a quote when I read your post.
  • 0 Hide
    pirateboy , March 18, 2009 12:48 AM
    The state of the economy is parrish's fault and he should be held accountable!

    jk ;) 
  • 0 Hide
    matt_b , March 18, 2009 1:36 AM
    SAL-eTalk to you lawyer, but don't hold your breath. If your warranty was 1 year you don't have a case, except if there is some kind of class action law sue and you meet the class requirements. Good luck.

    Naa, it's not worth all that effort. I was more or less getting at the high failure rate that notebooks are having (which obviously are not a commonly consumer-purchased GPU). I figured a possible recall was in order. I know for one that the company I work for took shipment of about 1000 new laptops in late 2007 shipped with the Geforce 8400m and 8600m chips. To date I was told somewhere in the neighborhood of 50 have failed. So I could imagine what this thing is like on a world-wide scale seeing as this was a predominant laptop GPU.
  • 1 Hide
    SAL-e , March 18, 2009 4:29 AM
    Matt_BNaa, it's not worth all that effort.

    I was thinking the same.
    Matt_BSo I could imagine what this thing is like on a world-wide scale seeing as this was a predominant laptop GPU.
    Yes it is big problem, but Nvidia is lucky that this problem surfaced during the recession. The consumer protection organizations will not go after Nvidia because the bad PR. The big customers (OEM) will not sue because for them, it is more important to receive good discounts from Nvidia during the downturn. Looks like only chance for you if one of those faulty GPU is into the laptop own by lawyer. Who is not very busy and he/she start personal action against Nvidia to build his/her reputation.

    P.S.
    Or if in your state there is small claim court. I have heard that it is some time the fastest way to get your money back.
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