Nvidia Takes A Big Hit In The Second Quarter

Santa Clara (CA) - The replacement of faulty graphics chips as well as a much stronger than expected AMD/ATI pushed Nvidia deep into the red during the second quarter. The company reported a revenue decline of 23% sequentially and a triple-digit loss.

Nvidia said that its GPU replacement program had a price tag of $196 million. CEO Jen-Hsun Huang said that while the failures affected a relatively small percentage of its total GPU output, repairing an entire notebook "can be expensive". Huang also admitted that Nvidia underestimated the "price/performance" of AMD’s/ATI’s most recent graphics chip, resulting in a wrong position of its products and forcing the company to adjust its pricing during the quarter.

The desktop GPU segment apparently came under heavy pressure and declined 23% from Q1 overall, according to Mercury Research. Nvidia appears to have been especially exposed to this trend as the company said that unit shipments declined by 20% sequentially, while average selling prices dropped by 25%. Overall, Nvidia desktop GPU sales were down 40% from Q1 and down 25% from the second quarter of last year.

Huang believes that this trend is amplified by a market that is moving away from desktops and to notebooks as well as stronger demand of entry-level desktop PCs - a market that is currently underserved by Nvidia. The executive said that Nvidia will begin targeting the entry-level desktop segment with low-cost GPUs this quarter.

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Wolfgang Gruener
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Wolfgang Gruener is an experienced professional in digital strategy and content, specializing in web strategy, content architecture, user experience, and applying AI in content operations within the insurtech industry. His previous roles include Director, Digital Strategy and Content Experience at American Eagle, Managing Editor at TG Daily, and contributing to publications like Tom's Guide and Tom's Hardware.

  • NVIDIA rob people lots of bucks,It's time to payback!
    Reply
  • jeb1517
    Can't tell by looking at their stock. Opened at over 8% gain this morning. Very impressive. If only AMD's stock could go up after reporting a loss, it would be up 982375%!
    Reply
  • jeb1517
    Increase was due to Nvidia putting $1 billion into their stock buy back program. Good timing.
    Reply
  • blackened144
    This is just a little bump in the road for Nvidia.. If this happened to ATI, it would practically put them under.
    Reply
  • ok i just bought a 2700$ hp pavilion dv 9880ee. Am i screwed?
    Reply
  • jivdis1x
    wow $2700 OEM and not from a boutique builder!
    Reply