Graphics Cards Makers Reduce Graphics Chips Orders to Nvidia

Nvidia Loses Graphics Processor Orders from Largest Customers

by Anton Shilov
01/20/2009 | 11:22 PM

Nvidia Corp., one of the world’s two large suppliers of discrete graphics processing units (GPUs), has reportedly faced massive cancellation of product orders by its largest customers. This negatively impacts the company and also once again emphasizes that global demand towards high-technology is falling very rapidly.

 

Asustek Computer, MicroStar International, Gigabyte Technology, Palit Microsystems and PC Partner have reduced their orders to Nvidia, according to a news-story by DigiTimes web-site claims citing unnamed industry sources. It is estimated that Nvidia lost orders for about 1.5 million, of which 400 thousand were supposed to ship to Palit in Q1 2009, due to high inventory levels.

Nvidia recently said that revenue for the fourth quarter of fiscal 2009 is expected to be lower than guidance provided during its third quarter fiscal 2009 financial conference call held November 6, 2008. Total revenue for the fourth quarter of fiscal 2009 is now expected to decline 40% to 50% sequentially as a result of further weakness in end-user demand and inventory reductions by Nvidia’s channel partners in the global PC supply chain.

For the third quarter of Nvidia’s fiscal 2009 revenue was $897.7 million, which means that for the fourth quarter revenue will be in the range between $448.85 million to $538.62 million.

While Nvidia did not outline which product segments demonstrated largest declines during the quarter, it is not hard to make certain assumptions based on Nvidia’s Q3 FY2009 performance and revenue split. Considering that more than half of Nvidia's sales come from GPU business, whereas another 44% come from chipset and professional solutions businesses, it is evident that the company saw substantial declines in revenues virtually accross the board, perhaps, excluding professional segment.

Nvidia did not comment on the news-story.