Nvidia suffers Q1 profit drop

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Nvidia suffers Q1 profit drop

Nvidia's first-quarter earnings marked a hefty drop from last year's first-quarter results, despite surpassing Wall Street's expectations, as supply constraints continued to limit shipments of its new Kepler-based GPUs.

The chip maker's quarterly profit took a significant hit, with its reported net income of $US60.4 million ($A60.3 million) coming in at less than half of last year's $US135.2 million.

Nvidia attributed the drop to low production levels of its new Kepler-based 28nm GPUs that launched in May. Nvidia CEO Jen-Hsun Huang said that the company and its foundry partner, Taiwan Semiconductor Manufacturing Company, underestimated demand for the new product and, as a result, were simply unable to fulfill all orders.

"We underplanned for the supply of 28nm and we need to fix that in the future," Huang told investors in a conference call Friday. "Last quarter was not a typical quarter for us. I would characterise last quarter as a difficult quarter and it was completely supply-constrained," he said.

Huang predicted inventory will ramp up over the coming quarters, but warned that supplies are still too low to fully meet demands.

The silver lining is that demand for Kepler-based chips is strong. Nvidia said its GPU notebook business, in particular, brought in record revenue last quarter. The chip maker debuted its notebook range of GeForce 600M GPUs in March, which are found in both traditional notebook PCs and ultrabooks, including the Acer Aspire Timeline M3.

Nvidia's flagship mobile processor, Tegra 3, also drove overall revenue for the company’s Consumer Products segment by 20 percent, quarter-on-quarter, to $US132.6 million.

The quad-core chip, which is optimised for use in smartphones and tablets, is said to deliver up to three times the graphics performance of its predecessor, Tegra 2, and up to 61 percent lower power consumption. Handset maker HTC launched the first Tegra 3-fueled smartphone, the HTC One X, in February.

Huang said more Tegra 3 smartphones are slated to hit shelves by the end of the year.

"There are many other Tegra 3 phones that are teed up and expected to come to market," he told investors.

The chip maker also is placing its bets on Tegra 3-based tablets and already has partnered with Microsoft to collaborate on new Windows 8 devices for later this year.

In February, Nvidia joined forces with the software giant to ship Windows 8 test tablets to developers in an effort to spur creation of new apps for the platform. Huang said the two companies have shipped about 1,000 tablets.

This article originally appeared at crn.com

Copyright © 2017 The Channel Company, LLC. All rights reserved.

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