NVIDIA's Huang admits to underestimating ATI

Thursday 14th August 2008, 01:02:00 PM, written by Rys

NVIDIA CEO Jen-Hsun Huang has admitted to underestimating the strength of ATI's recent product launch lineup in its most recent financial conference call.

We quote, from Seeking Alpha:

"We underestimated the price performance of our competitor’s most recent GPU, which led us to mis-position our fall lineup. The first step of our response was to reset our price to reflect competitive realities. Our action put us again in a strong competitive position but we took hard hits with respect to our overall GPU ASPs and ultimately to our gross margins. The price action was particularly difficult since we are just ramping 55-nanometer and the weak market resulted in taking longer than expected to work through our 65-nanometer inventory."

The company's share price is at a long-time low following a string of fairly hefty blows recently, some of them their own doing.  Punching one's self in the face is rarely an enjoyable activity, extensive Beyond3D research has shown, and science proves us right with the per-share price down at $10 for a little while now.

RV770 is the company's biggest nemesis in recent times, though, with ATI finding hitherto unknown levels of performance per area, and performance per watt.  While the basic architecture of the chip is less efficient than recent NVIDIA designs, the sheer amount of raw compute it packs in to diminuitive silicon dimensions is fairly staggering, and NVIDIA must be wondering how they did it, and how to emulate it in their own products.

NVIDIA is putting some faith in the ramp of 55nm-based inventory going forward, in order to increase ASP, to reduce the financial hits they've taken recently, according to Huang and as reported by Seeking Alpha.

You can check out the Seeking Alpha piece on their website.



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nvidia ± financials, punching, in, the, face, jen, hsun, huang, seeking, alpha


Latest Thread Comments (2166 total)
Posted by Sxotty on Sunday, 21-Feb-10 01:40:42 UTC
Quoting v_rr
*Nvidia shares dip 9% on inventory buildup*
http://sanjose.bizjournals.com/sanjose/stories/2010/02/15/daily82.html?ana=yfcpc

So they increase inventory by almost 20% from the highest profit quarter of the year (Q4) to the lowest (Q1).
So they shipped the cards but the cards weren't sold to costumers because they don't want them but nvidia ship them anyway. They are building a bubble.

On the other side ATI didn't have enought cards to supply so much demand so let's see how is going to be next 2 quarters.
What are they shipping? And who are they shipping to?

Posted by Squilliam on Sunday, 21-Feb-10 02:30:27 UTC
Quoting Sxotty
What are they shipping? And who are they shipping to?
I wonder if its got something to do with the 40nm production they used late last year for their low end 40nm chips? They could have done this in order to deny ATI the wafers they needed for higher production last year without actually having orders for those chips to fulfill.

Posted by Kaotik on Sunday, 21-Feb-10 02:35:46 UTC
Quoting Sxotty
What are they shipping? And who are they shipping to?
They're shipping crapload of 40nm GT2xx lowend chips, which at the moment are nothing but filling countles shelves on countless stores
They sold a lot of them too, and they're the sole reason nV managed to raise their market share, but regardless of that there's tons of them just lying on the shelves - from nVidia's point of view they're sold products, but in the end they're not sold.

Posted by silent_guy on Sunday, 21-Feb-10 03:26:48 UTC
Quoting Kaotik
..., but regardless of that there's tons of them just lying on the shelves - from nVidia's point of view they're sold products, but in the end they're not sold.
Sold products that aren't in consumers hands? That's what's generally called the channel inventory.

It's amazing the things you can find out by reading conference call transcripts:
Quote
Inventory days on hand were 60 at the end of the quarter. Inventory in the channel remains low at around five weeks.
and
Quote
If you look at our channel inventory, which is where we sell a lot of our vast majority of our desktop GeForce business, that channel inventory has been roughly stable throughout the year. It has been teetering in the three to four week range. We had a one-week uptick in that in the fourth quarter. This is probably the first sign we have seen of any uptick in channel inventory now this year. But we still consider that pretty modest, you know, certainly well below where it has been historically and as a result of even those low levels, we continue to have stock-out situations, which we try to obviously avoid. So right now, I don't think we have got really any indicators that would tell us that we have got an inventory build going on, either in the channel or even at the OEM companies that we sell to.

Posted by Jawed on Sunday, 21-Feb-10 10:03:04 UTC
Quoting silent_guy
Sold products that aren't in consumers hands? That's what's generally called the channel inventory.
The channel ends once it leaves the AIB's hands (i.e. is purchased by a retailer), as NVidia doesn't sell consumer cards to the public. Jawed

Posted by silent_guy on Sunday, 21-Feb-10 10:36:14 UTC
Quoting Jawed
The channel ends once it leaves the AIB's hands (i.e. is purchased by a retailer), as NVidia doesn't sell consumer cards to the public.
No, the channel consists of all the parts that have not reached their final destination, the consumer, after they have been sold by the initial producer (i.e. Nvidia). That is, all the parts in the pipeline over which they have no control and limited visibility. A box with a GT250 on the shelf of Fry's is part of channel inventory. This doesn't affect the bottom line in anyway, but too much of it can result in excess inventory in the longer term if demand suddenly drops (due to the 3 month or so lead time in wafer starts.)

Posted by Jawed on Sunday, 21-Feb-10 13:07:48 UTC
OK, the channel inventory NVidia can discuss with analysts ends with what leaves its customers' hands. Someone's still selling FX5200s: http://www.google.com/products/catalog?q=geforce+fx5200&hl=en&cid=14852880162739718024&sa=title&os=sellers I wonder if NVidia is still selling those? Jawed

Posted by silent_guy on Sunday, 21-Feb-10 17:41:09 UTC
The danger about the channel is about sudden drops in channel velocity. A product like FX5200 already has a velocity of 0, so it doesn't matter.

Posted by trinibwoy on Wednesday, 24-Feb-10 00:00:52 UTC
Nvidia just can't catch a break.
Quote
Also this month, the Thai government said a similar device, the GT200, failed rigorous tests carried out by scientists and the army in Thailand. The government said it was looking into the possibility of legal action against its manufacturer.
http://www.cnn.com/2010/WORLD/meast/02/23/iraq.bomb.detectors/index.html?hpt=T2 *GT200 the bomb detector, not the GPU*

Posted by rjc Tegra and Ion on Wednesday, 17-Mar-10 23:25:20 UTC
Forgot to post this the other day, from Techeye (http://www.techeye.net/business/nvidia-merges-ion-and-tegra-teams):
Quote
*Nvidia merges Ion and Tegra teams*What has been kept rather quiet, however, is the fact Nvidia recently took the strategic decision to merge its entire MCP group with its Tegra development team, melding the two into one big, nay HUGE 650 person family. Or somewhere thereabouts.
The article goes on to speculate about the future of Ion and the prospects of some kind of tablet device.Would not like to be in above department at the moment, imagine it is chaos. People walking round everywhere with no idea, if they are lucky the new management positions are being decided by arm wrestles as opposed to the usual full blown fist fights the situation normally generates :wink:


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