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Nvidia's Stock Bloodbath - Company Admits Faulty Chips

By - Source: Tom's Hardware US | B 7 comments

Santa Clara (CA) - NVIDIA is admitting that some of its notebook chips are failing at "higher than normal rates" in a new filing with the Securities and Exchange Commission. The chip failures will cause Nvidia to take a $150 to $200 million charge this quarter to cover what it calls "warranty, repair and return and replacement" for laptops with unspecified NVIDIA graphics chips and chipsets. In after hours NASDAQ trading, NVIDIA (NVDA) plunged 21.94% or $3.95 to $14.08 a share. The stock had been down as much as 25% after the close of regular trading on Wednesday July 2nd 2008.

GeForce 280 GTXWhile it’s a bit too early for NVIDIA to do any conclusive finger pointing, NVIDIA does say that "significant quantities" of chips are experiencing thermal issues caused by possibly weak die and packaging - in essence, the parts are overheating and failing. NVIDIA isn’t publicly saying which laptop brands and models are affected by the faulty chips, but it has issued an emergency driver that increases cooling by powering up fans immediately after the system starts (boy, that’s going to be noisy).

Presumably, the bulk of the $150 to $200 million will go towards reimbursing laptop companies for any customer repairs and replacements and this is supported by NVIDIA’s words. "We intend to fully support our customers in their repair and replacement of these impacted MCP and GPU products that fail," NVIDIA stated in the filing.

NVIDIA is also predicting that its sales for the quarter ending July 27 will be approximately $875 million to $950 million, which is a bit lower than analysts’ expectations of nearly $1 billion. Who knows if the stock will continuing tanking in the morning, but it’s definitely going to be an interesting trading day.

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  • 2 Hide
    compy386 , July 3, 2008 12:13 PM
    Knew I should have shorted Nvidia when all the GTX reviews came out. Oh well.
  • 0 Hide
    Lozil , July 3, 2008 12:33 PM
    Now that is Bad For nVIDIA, Fight with Intel, Performance crown is in danger... What worse anyone can expect at this time...???

    http://free-and-useful.blogspot.com
  • 1 Hide
    LoboBrancoTimido , July 3, 2008 12:51 PM
    Nvidia needs to cool down a bit, sorry I coudn't resist the pun!
    Hope tom's hardware says what are the affected laptops!
  • 2 Hide
    hannibal , July 3, 2008 4:23 PM
    I hope that they manage to fix these problems... The situation in Nvidia is not too bad as this moment, but we don't need another "AMD" that is in real trouble against Intel...
    We need more than one good suplier in all areas...
  • 0 Hide
    uschxc , July 5, 2008 11:51 PM
    i have a dell m1330 with a nvidia 8400M GS and i've had my motherboard replaced once, now twice with the same problem. corrupted video at high temperatures and erratic behavior regardless of temp. now i finally have something to back my case with as far as dell support is concerned.
  • 0 Hide
    JonathanDeane , July 7, 2008 2:58 AM
    uschxci have a dell m1330 with a nvidia 8400M GS and i've had my motherboard replaced once, now twice with the same problem. corrupted video at high temperatures and erratic behavior regardless of temp. now i finally have something to back my case with as far as dell support is concerned.


    To be honest with you Dell technicians probably already know about the issues your notebook may or may not be having.... As soon as you give them your service tag they bring up your account and that has your model number, they then take that information and put it in another program that spits out all kinds of information from tear downs to known issues and sometimes links to patches or BIOS updates. Even if Dell does know about it, there will have to be some sort of class action law suit in order to make them replace your machine or an act of congress lol *they usually fix them but the fix is sometimes just to replace the main board with another just like the one they replaced...*
  • 0 Hide
    klemkas , August 13, 2008 6:16 AM
    well maybe it's not the GPU problem, but the cooling. because my dell xps laptop started to act strange, downclocking and laging games after half year of usage. i did my research, and found out that the CPU unit was overheating, not the GPU. i dissasembled the laptop and the thermal paste on cpu and gpu was all dry, so i replaced it with new paste, cooling problems solved, and all went ok again.