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Shipping dodgy chips cost Nvidia another $119.1 million

Future looks bright, says Huang
Fri Aug 07 2009, 10:05

GRAPHICS CHIPMAKER Nvidia has admitted that it cost $119.1 million over the last four months to fix a faulty die and weak packaging material which was used in its graphics chips.

It is the second time that Nvidia's has had to spend money on this particular problem. Last year it recorded a $196 million charge to cover warranty and product replacement costs.

The trouble kicked off last July when it was reported that some Nvidia graphics chips were overheating. Nvidia said it was all down to weak packaging materials then. Later the INQ discovered that there was a problem with the soldering on the chips, although Graphzilla denied it.

The chips had been used by Dell, Hewlett-Packard and Apple. They had to change BIOS settings to run laptop fans continuously and replace PCs that failed due to the faulty chips. The costs of those programmes were shared between Nvidia and the manufacturers.

Nvidia said that the costs were higher than originally anticipated, and would not estimate whether the company would incur further charges related to the flaws.

A company spokesman said that the costs were "a small distraction" and haven't impacted Nvidia's ability to launch new products.

The company recorded a net loss of $105.3 million, compared to a net loss of $120.9 million reported in the second quarter of last year. If it had not had the charges it would have made a slight profit.

Jen-Hsun Huang, president and chief executive officer of Nvidia, told Network World that Nvidia's business was recovering. Product demand was improving, and its strategic investments were leading to new growth.

He added that new products such as Tesla, a graphics processing unit for high-performance computing, and low-power Tegra chips for mobile devices should start contributing to the company soon and the outfit should be rolling in dosh. µ



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