Nvidia Hit With Securities Lawsuit Over Bad Graphics Chips

From PC World: A lawsuit filed in a California court on Tuesday alleged Nvidia violated U.S. securities laws and concealed the existence of a serious defect in its graphics-chip line for at least eight months "in a series of false and misleading statements made to the investing public."

The lawsuit charged that Nvidia CEO Jen-Hsun Huang and CFO Marvin Burkett knew as early as November 2007 about a flaw that exists in the packaging used with some of the company's graphics chips that caused them to fail at unusually high rates.

Nvidia publicly acknowledged the flaw on July 2, when it announced plans to take a one-time charge of up to US$200 million to cover warranty costs related to the problem. That announcement caused Nvidia's stock price to fall by 31 percent to $12.98 and reduced the company's market capitalization by $3 billion, the lawsuit said.

Highlighting the seriousness of the charges laid against Nvidia, the lawsuit said Hewlett-Packard issued a BIOS update to mitigate the chip problem eight months before Nvidia revealed its existence to investors. Nvidia and computer makers have used BIOS updates that cause system fans to run more often in an attempt to reduce heat stress on the affected chips and prevent them from failing.

View: Article @ Source Site