Nvidia Loses $43 Million Due to Failure-Prone GPUs

Posted 03/18/2009 at 6:34am | by Paul Lilly

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According to Nvidia's Form 10-K filing for the fiscal year ended January 25, 2009, the graphics chip maker has spent $43.6 million to cover warranty and product replacement claims for GPUs suffering from a "weak die/packaging material set."

Nvidia had original set aside a one-time charge of $196 million when it was discovered some of its notebook graphics were failing at an "abnormal rate."

"The previous generation MCP and GPU products that are impacted were included in a number of notebook products that were shipped and sold in significant quantities," Nvidia said in the filing. "Certain notebook configurations of these MCP and GPU products are failing in the field at higher than normal rates. While we have not been able to determine a root cause for these failures, testing suggests a weak material set of die/package combination, system thermal management designs, and customer use patterns are contributing factors."

Given that only $43.6 million -- or 22 percent of the original amount -- has been spent so far, you can take this in one of two ways. Either the problem isn't as widespread as originally thought and the remaining $152.4 million will be more than enough to cover future claims, or there are a lot of mobile GPUs in the wild still to fail from the packaging defect.

(Image Credit: Nvidia)