NVIDIA taken to court over bad mobile GPUs
Thrax
🐌Austin, TX Icrontian
<p>As 2008's second fiscal quarter drew to a close, the quarterly filings with the United States SEC had begun to roll in from US technology firms. Of particular interest this year was NVIDIA and their July 2nd filing as excerpted below:</p>
<blockquote>On July 2, 2008, NVIDIA Corporation stated that it would take a $150 million to $200 million charge against cost of revenue to cover anticipated customer warranty, repair, return, replacement and other consequential costs and expenses arising from a weak die/packaging material set in certain versions of our previous generation MCP and GPU products used in notebook systems. All newly manufactured products and all products currently shipping in volume have a different and more robust material set. </blockquote>
<p>The crippling admission of error stated that any profit made in the third fiscal quarter of 2008 would be hamstrung by a 150-200 million burden of reimbursement to vendors.</p>
<p>Later revelations indicated that the 8400M and 8600M mobile GPUs were manufactured with poor packaging or had improper thermal characteristics ascribed to them. The result was a "higher than normal" failure rate on products that shipped in "significant quantities." Global laptop vendors turned to NVIDIA to foot the bill for a substantially increased volume of RMAs and repairs.</p>
<p>As the violin played on, NVIDIA (NASDAQ: NVDA) made precipitous declines on the stock market. NVIDIA wound down the week following their SEC filing with a numbing 30% drop in stock value.</p>
<p>The situation has worsened from there with allegations that virtually every GPU manufactured since the release of the 8000-series was rife with fault. While these claims remain unsubstantiated, New York law firm Shalov, Stone, Bonner & Rocco has filed a suit in the US District Court for the Northern District of California. The suit requests class-action status for an untold sum and alleges that NVIDIA deliberately withheld vital information from investors regarding the mobile GPU crisis for more than eight months.</p>
<blockquote>On July 2, 2008, NVIDIA Corporation stated that it would take a $150 million to $200 million charge against cost of revenue to cover anticipated customer warranty, repair, return, replacement and other consequential costs and expenses arising from a weak die/packaging material set in certain versions of our previous generation MCP and GPU products used in notebook systems. All newly manufactured products and all products currently shipping in volume have a different and more robust material set. </blockquote>
<p>The crippling admission of error stated that any profit made in the third fiscal quarter of 2008 would be hamstrung by a 150-200 million burden of reimbursement to vendors.</p>
<p>Later revelations indicated that the 8400M and 8600M mobile GPUs were manufactured with poor packaging or had improper thermal characteristics ascribed to them. The result was a "higher than normal" failure rate on products that shipped in "significant quantities." Global laptop vendors turned to NVIDIA to foot the bill for a substantially increased volume of RMAs and repairs.</p>
<p>As the violin played on, NVIDIA (NASDAQ: NVDA) made precipitous declines on the stock market. NVIDIA wound down the week following their SEC filing with a numbing 30% drop in stock value.</p>
<p>The situation has worsened from there with allegations that virtually every GPU manufactured since the release of the 8000-series was rife with fault. While these claims remain unsubstantiated, New York law firm Shalov, Stone, Bonner & Rocco has filed a suit in the US District Court for the Northern District of California. The suit requests class-action status for an untold sum and alleges that NVIDIA deliberately withheld vital information from investors regarding the mobile GPU crisis for more than eight months.</p>
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