Nvidia shares dropped by a fourth today after the company announced that it was setting aside a one-time hit of $150 to $200 million dollars to cover warranty and repair costs associated with an "abnormal failure rate" in its mobile graphics cards. The exact sources of the increased GPU problems are unknown at this time, although Nvidia believes the cards' increased thermal issues stem from weaker manufacturing and packing materials.
" 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," said Nvidia CEO Jen -Hsun Huang . "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."
According to an 8-K filling , Nvidia is fixing the issue (allegedly affecting its 8M-series cards, reports Gizmodo ) by giving OEM manufacturers a new driver to play with. The adjustment now kicks the cards' fan speeds up when the system powers up in hopes that the additional cooling will alleviate these thermal issues. Nvidia maintains that the failure rates only affect a specific number of undisclosed notebook configurations.
This news was double-teamed with a readjustment of Nvidia's second-quarter earnings estimates. Citing weaker demand for its chips, Nvidia predicted sales would fall to $875 to $950 million. That's a 24 percent loss against the 1.1 billion dollars of revenue Nvidia pulled in during the first quarter. It's also a bit of a ways away from the revenue estimation Nvidia was tossing around in May: 1.1 billion dollars in sales for the second-quarter, a mere 4.4 percent difference against its first-quarter revenue.
Investors punished the company in after-hours trading by sending Nvidia shares tumbling to $14.08. The 25 percent loss against the day's opening price of $18.66 is the lowest Nvidia's traded at this past year. Rivals AMD and Intel want to even the graphical playing field, and the last thing Nvidia needs is its products feeling green.