Nvidia Blames TSMC's 28nm Process Technology for Slow Sales

Nvidia Does Not Expect 28nm Issues to Be Resolved Soon

by Anton Shilov
05/11/2012 | 06:08 PM

Although the yields of semiconductors made using 28nm fabrication process at Taiwan Semiconductor Manufacturing Company seem to be improving, their undersupplies is just becoming more evident. For Nvidia Corp., it just hurts.


Nvidia on Friday said that the problems with supply of chips made using 28nm process technology at TSMC persisted throughout its first quarter of fiscal 2013. Even though the company's better-than-expected margins signal that the costs are getting down, which is an indicator of improving yields for leading-edge products, the firm does not expect its supply issues to get resolved shortly.

"Demand is high for Kepler and although supply will continue to improve, we are not able to meet all our OEM and channel demand in Q2 FY2013. We do not expect the 28nm supply situation to resolve itself until later this year," said Chris Evenden, director of investor relations at Nvidia, during quarterly conference call with financial analysts.

For the Q1 FY2013 that ended on April, 29, 2012, Nvidia reported revenue of $924.9 million, net income of $60.4 and gross margin of 50.1%. The results were generally better than expected by many, primarily thanks to shipments increase of Tegra 3 system-on-chip.

Nvidia's operating expenses (to which the company usually attributes GPU/GPGPU implementation costs) were even higher than projected by around $7 million at $390.5 million. Nonetheless, the firm's gross margins was 50.1%, higher than predicted 49.2%. This happened primarily because of sound launches of the GeForce 6-series GTX "Kepler" products that are now sold in price ranges between $399 and $999.

Due to seasonally weak calendar first quarter, sales of Nvidia were down across both consumer and professional lines.