Nvidia Lowers Revenue Expectations Due to Hard Drives Shortages

Nvidia Suffers from Tight Supply of Hard Drives, Lowering Demand for Tegra 2

by Anton Shilov
01/24/2012 | 08:04 PM

Nvidia Corp. on Wednesday announced that it expects revenue for the fourth quarter ending January 29, 2012, to be lower than the company's previous outlook provided back in October. The developer of multimedia chips blames shortages of hard disk drives as well as lowering demand towards Tegra 2 system-on-chips for the lowering revenue.

 

The global disk-drive shortage caused by the flooding in Thailand had more impact on the mainstream GPU segment than anticipated. Shipments by some PC OEMs were reduced. And the higher prices of disk-drives constrained some PC OEMs' ability to include a discrete GPU in their systems.

Additionally, the Tegra 2 mobile business declined more rapidly than expected, ahead of devices based on the Tegra 3 processor ramping into production in the first quarter of calendar-year 2012.

Nvidia is not the first company to blame shortages of hard drives and their increased prices for lower-than-expected revenue. Intel Corp. also suffered as manufacturers of computers had to buy more affordable chips to compensate boosted HDD pricing. Dropping demand for Tegra 2 is rather surprising, but indicates that tablet makers are now gearing for a new breed of slates with four processing engines as well as advanced graphics adapter.

Nvidia's earnings are now expected to be $950 million, plus or minus 1% percent, compared with original expectations of $1066 million, plus or minus 2%, provided on November 10, 2011.