Nvidia Hit By Another Charge for Faulty Graphics Chips

From X-bit Labs: Nvidia Corp. last week recorded another $119.1 million charge because of the weak packaging of certain of its graphics processing units (GPUs) and core-logic sets for mobile personal computers. The new charge brings the total sum that Nvidia paid its partners for malfunction chips to $315.1 million.

Nvidia admitted last year that its GeForce graphics processing units (GPUs) and nForce chipsets (which the company calls MCPs, media and communication processors) designed for mobile computers could fail due to issues with high-lead packaging. The company took $196 million charge to help its partners to tackle the problem, however, it said that the issue only affected certain notebook configurations. Apparently, the chips continue to fail and last quarter Nvidia took another net charge of $119.1 million related to the weak die/packaging set used in certain previous-generation chips that the company had initially identified.

Jen-Hsun Huang, president and chief executive officer of Nvidia, said during a conference call with financial analysts that the company is now better informed about the repair costs. While he did not exclude possibilities of future charges, it seems like Nvidia has situation under control.

“If you go back a year ago when the company first recognized this issue and we recorded a charge in the second quarter same time a year ago, that was based upon an estimate at that time, it included a number of factors that the company had to estimate and did not have a lot of data on it at that point. At that point, we only had one OEM customer that we entered into negotiations with, but here we stand a year later and we have substantially negotiated agreements with almost all of the affected OEMs. We have more specific information as it relates to what the repair costs will be. […] Today we feel much more confident about our estimate, the range around that estimate. It is still an estimate, I will not say it will never change,” said Mr. Huang.

Nvidia officially admitted that its GeForce 8400M and 8600M were affected by the issues with non-eutectic packaging, however, there is information that certain nForce chipsets as well as GeForce 8800/9800-series solutions were also affected.

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