NVIDIA IS TANKING, we told you so. It just put out two pieces of very bad news, It's taking a $150-200 million charge in the quarter for what looks to be a product failure, and ATI is kicking its rear end.
If you look at the 8K form it just filed, there are two big pieces of bad news. The first is that some unnamed mobile and MCP products have big problems, hundreds of millions of dollars worth. It is said to be, "Arising from a weak die/packaging material set in certain versions of our previous generation MCP and GPU products used in notebook systems". That is bad, but to make matters funnier, "There can be no assurance that we will not discover defects in other MCP or GPU products."
To us, this says they used the same materials in other things, and it takes a while to show up, shown by the 'previous generation' bit. We'll bet money that this is the tip of the iceberg. Also, given how much mobos and mobile GPUs cost, this looks like a problem that is affecting a million or more units. Unrelated pricing of Dell notebooks today led us to see that, for most parts, NV mobile GPUs are either a $80 or $130 upgrade over integrated. $150-200 million divided by $130 is still well over a million, likely multiple millions of dead parts. Don't tread the future here lightly.
The bigger problem is what we have been saying for a long time, ATI is kicking Nvidia up and down the block. It sets quarterly guidance down to $875-950 million vs $1.1 billion for the quarter. Guess why? Nvidia isn't saying, but this, this, and this are good places to start, as is the partner exodus. More on that later, this is a start, but they are far from the only ones. Please note that this drop does not include the one-time charge from the dead parts.
Nvidia is going to lose gobs and gobs of market share this year. They are effectively out of notebooks, will lose the high end in days, don't have anything close to a competitive line-up, have higher costs than ATI, and have to shell out money to keep partners alive. If you think this is bad, wait a little.
NV's roadmap is empty, ATI's is not.
100 basis points my ass. µ