by Anton Shilov
07/03/2008 | 04:07 PM
Nvidia Corp., the world’s largest supplier of graphics processing units, has issued a warning regarding lower sales during the ongoing quarter. The company blamed issues with its chipsets as well as low prices of graphics processing units for its fiscal results.
<%BANNER[article]%>According to Nvidia, second quarter revenue and gross margin are expected to be lower than guidance provided during its first quarter financial conference call and be from $875 million to $950 million. The company said that the estimated decrease in revenue and gross margin is due to several reasons, including the delayed ramp of a next generation core-logic set, price adjustments of the graphics processors to respond to competitive products as well as “end-market weakness around the world”.
This is the first time in years when Nvidia admitted that it has to lower pricing of its graphics processing units to respond to a relatively successful product launch of its main rival, ATI, graphics product group of Advanced Micro Devices.
Separately, Nvidia plans to take a one-time charge from $150 million to $200 million against cost of revenue for the second quarter to cover anticipated warranty, repair, return, replacement and other costs and expenses, arising from a “weak” die/packaging material set in certain versions of its previous generation graphics chips and chipset products used in notebook systems. Certain notebook configurations with chips manufactured with a certain die/packaging material set are failing in the field at higher than normal rates. The company plans to seek to access insurance coverage for this matter.
“This has been a challenging experience for us. However, the lessons we've learned will help us build far more robust products in the future, and become a more valuable system design partner to our customers. As for the present, we have switched production to a more robust die/package material set and are working proactively with our OEM partners to develop system management software that will provide better thermal management to the GPU,” said Jen-Hsun Huang, chief executive officer of Nvidia.