Nvidia losing money over defective GPUs
by Justin Mann on August 13, 2008, 12:00 PM
Nvidia’s recent struggles with GPU manufacturing are definitely taking its toll on the company. As a result of manufacturing defects and the inevitable fallout from it, it seems that Nvidia has gone from enjoying a few beautiful years on top to actually losing money recently. In particular, Nvidia saw a decrease in revenue for the second quarter of this year, resulting in a financial loss for the company.
In total, they lost over $120 million, and recent cuts in sales haven’t helped them out either. They outright admitted that they underestimated AMD, but nobody can really blame them for that.
Yesterday, it was speculated that there were manufacturing defects in the G92 and G94 chipsets, on top of the already known bad parts in the G84 and G86 series. Nvidia may have tried to avoid blame here and there, but ultimately it is coming down on them and they have been stuck with warranty replacements galore. Even if the newer chipsets are fine, it doesn't do anything to remedy the mass amounts of defective ones already sold.
Nvidia G92s and G94 reportedly failing
Desktop boards this time
By Charlie Demerjian: Tuesday, 12 August 2008, 9:35 AM
NVIDIA IS IN DEEP trouble over the defective parts problem, and from what we're being told, this is only the tip of the iceberg. NV still insists on stonewalling and spinning because the cost of owning up to the problem could very well sink the company.
If you haven't been following the story, the short version, up till now, is that all G84 and G86 chips are bad. Nvidia is blaming everyone under the sun, but denying they have any hand in the failures. While this may sound plausible, technical analyses by people intimately involved in the requisite semiconductor technologies tell The INQ that it is a bunch of bull: NV simply screwed up. Badly. If it was a problem with the suppliers, NV would not be paying out more than the chip cost, much less gagging OEMs: it would simply be passed along.
In any case, the official story is that there was a small batch of parts given only to HP that went bad. That was comprehensively proved wrong when Dell, Apple, Asus, Lenovo and everyone else under the sun also had problems. NV AR recalled the parts and recanted the story about it only being an EOL test run. Bad fibbers, no cookie. They still stuck to the story about it being only laptop parts, and that it was under control.
If you think it is under control now, the following is part of an email sent Monday by a very tech-savvy reader. "We just got our first casualty from the Nvidia mobile graphics [expletive deleted]. Laptop used by one of our senior engineers started acting up this past weekend. Won't boot except in SAFE mode. Called Dell, they tried a few things, gave up, stated it was the graphics module, and said that because they were SO swamped dealing with that issue, they were just going to send a completely new laptop!"
There are two messages here which have echoes in earlier emails received over the past few weeks. First is that Dell is replacing full laptops over this, contrary to what they claim (read the comments here and here for more). The second is that the small 'under control' problem is far from that. If they had a handle on it, they would not be so far behind and drowning in backorders. Anyone want to bet Dell isn't going to get stuck with the bill here?
To make matters more laughable, the fix that NV is forcing on Dell, HP and everyone else does not fix the problem, it simply makes it less likely to occur during the warranty period. With HP now offering an extended warranty period, and Dell looking likely to do the same, this will only multiply the cost. Add in the fact that Nvidia is sending out defective parts as replacements (there are no good ones), and you have a recipe for a long and expensive tale.
That is where we stand now - NV is simply stonewalling everyone and the costs are adding up. How adult of them. The question of why still remains though, and with another little tidbit of information, it becomes quite clear. There was a digitimes article on July 25, here if you are a subscriber, that said: "Due to Nvidia not clearly explaining the details of the faults reported in its notebook GPUs, some channel vendors have demanded graphics card makers issue a recall for desktop-based discrete graphics cards using the same GPU core, according to sources at graphics card makers."
Reading that, it sounds a mite odd: why would Nvidia keep the partners in the dark like that? They have to be told what the real story is for business reasons, right? When you see stories like these, it is very likely that they are not what they seem, and that the story is simply a nice face-saving Asian 'hello' applied with a backhand.
A little digging revealed what this, and more, is all about, and it's far uglier than just the 'notebook' version. It seems that four board partners are seeing G92 and G94 chips going bad in the field at high rates. If you know what failures look like statistically, they follow a Poisson distribution, aka a bell curve. The failures start out small, and ramp up quickly - very quickly. If you know what you are looking for, you can catch the signs early on. From the sound of the backchannel grumblings, the failures have been flagged already, and NV isn't playing nice with their partners.
Why wouldn't they? Well, the G92 chip is used in the 8800GT, 8800GTS, 8800GS, several mobile flavours of 8800, most of the 9800 suffixes, and a few 9600 variants just to confuse buyers. The G94 is basically only the 9600GT. Basically we are told all G92 and G94 variants are susceptible to the same problem - basically they are all defective. Any guesses as to how much this is going to cost?
From the look of it, all G8x variants other than the G80, and all G9x variants are defective, but we have only been able to get people to comment directly on the G84, G86, G92 and G94, and all variants thereof. Since Nvidia is not acknowledging the obvious G84 and G86 problems, don't look for much word on this new set either - if they can bury it, it will drop their costs.
In the end, what it comes down to is that the problem is far bigger than they are admitting, and crosses generational lines, process lines, and OEM lines. Nvidia is quick to point the finger at everyone but themselves, but after a while, the facts strain those cover stories well past breaking point. There is a common engineering failure here - this problem is far too widespread for it to be anything else. The stonewalling, denials and partner gagging is simply a last-ditch attempt at wallet covering.
With OEMs extending warranties, Nvidia is going to have to cover a lot of laptops for a long time. Desktop boards are going bad as well now, contrary to the statements of Nvidia PR and AR, and the hole keeps getting deeper and deeper. I wonder if they can ever come clean and survive.
by Justin Mann on August 13, 2008, 12:00 PM
Nvidia’s recent struggles with GPU manufacturing are definitely taking its toll on the company. As a result of manufacturing defects and the inevitable fallout from it, it seems that Nvidia has gone from enjoying a few beautiful years on top to actually losing money recently. In particular, Nvidia saw a decrease in revenue for the second quarter of this year, resulting in a financial loss for the company.
In total, they lost over $120 million, and recent cuts in sales haven’t helped them out either. They outright admitted that they underestimated AMD, but nobody can really blame them for that.
Yesterday, it was speculated that there were manufacturing defects in the G92 and G94 chipsets, on top of the already known bad parts in the G84 and G86 series. Nvidia may have tried to avoid blame here and there, but ultimately it is coming down on them and they have been stuck with warranty replacements galore. Even if the newer chipsets are fine, it doesn't do anything to remedy the mass amounts of defective ones already sold.
Nvidia G92s and G94 reportedly failing
Desktop boards this time
By Charlie Demerjian: Tuesday, 12 August 2008, 9:35 AM
NVIDIA IS IN DEEP trouble over the defective parts problem, and from what we're being told, this is only the tip of the iceberg. NV still insists on stonewalling and spinning because the cost of owning up to the problem could very well sink the company.
If you haven't been following the story, the short version, up till now, is that all G84 and G86 chips are bad. Nvidia is blaming everyone under the sun, but denying they have any hand in the failures. While this may sound plausible, technical analyses by people intimately involved in the requisite semiconductor technologies tell The INQ that it is a bunch of bull: NV simply screwed up. Badly. If it was a problem with the suppliers, NV would not be paying out more than the chip cost, much less gagging OEMs: it would simply be passed along.
In any case, the official story is that there was a small batch of parts given only to HP that went bad. That was comprehensively proved wrong when Dell, Apple, Asus, Lenovo and everyone else under the sun also had problems. NV AR recalled the parts and recanted the story about it only being an EOL test run. Bad fibbers, no cookie. They still stuck to the story about it being only laptop parts, and that it was under control.
If you think it is under control now, the following is part of an email sent Monday by a very tech-savvy reader. "We just got our first casualty from the Nvidia mobile graphics [expletive deleted]. Laptop used by one of our senior engineers started acting up this past weekend. Won't boot except in SAFE mode. Called Dell, they tried a few things, gave up, stated it was the graphics module, and said that because they were SO swamped dealing with that issue, they were just going to send a completely new laptop!"
There are two messages here which have echoes in earlier emails received over the past few weeks. First is that Dell is replacing full laptops over this, contrary to what they claim (read the comments here and here for more). The second is that the small 'under control' problem is far from that. If they had a handle on it, they would not be so far behind and drowning in backorders. Anyone want to bet Dell isn't going to get stuck with the bill here?
To make matters more laughable, the fix that NV is forcing on Dell, HP and everyone else does not fix the problem, it simply makes it less likely to occur during the warranty period. With HP now offering an extended warranty period, and Dell looking likely to do the same, this will only multiply the cost. Add in the fact that Nvidia is sending out defective parts as replacements (there are no good ones), and you have a recipe for a long and expensive tale.
That is where we stand now - NV is simply stonewalling everyone and the costs are adding up. How adult of them. The question of why still remains though, and with another little tidbit of information, it becomes quite clear. There was a digitimes article on July 25, here if you are a subscriber, that said: "Due to Nvidia not clearly explaining the details of the faults reported in its notebook GPUs, some channel vendors have demanded graphics card makers issue a recall for desktop-based discrete graphics cards using the same GPU core, according to sources at graphics card makers."
Reading that, it sounds a mite odd: why would Nvidia keep the partners in the dark like that? They have to be told what the real story is for business reasons, right? When you see stories like these, it is very likely that they are not what they seem, and that the story is simply a nice face-saving Asian 'hello' applied with a backhand.
A little digging revealed what this, and more, is all about, and it's far uglier than just the 'notebook' version. It seems that four board partners are seeing G92 and G94 chips going bad in the field at high rates. If you know what failures look like statistically, they follow a Poisson distribution, aka a bell curve. The failures start out small, and ramp up quickly - very quickly. If you know what you are looking for, you can catch the signs early on. From the sound of the backchannel grumblings, the failures have been flagged already, and NV isn't playing nice with their partners.
Why wouldn't they? Well, the G92 chip is used in the 8800GT, 8800GTS, 8800GS, several mobile flavours of 8800, most of the 9800 suffixes, and a few 9600 variants just to confuse buyers. The G94 is basically only the 9600GT. Basically we are told all G92 and G94 variants are susceptible to the same problem - basically they are all defective. Any guesses as to how much this is going to cost?
From the look of it, all G8x variants other than the G80, and all G9x variants are defective, but we have only been able to get people to comment directly on the G84, G86, G92 and G94, and all variants thereof. Since Nvidia is not acknowledging the obvious G84 and G86 problems, don't look for much word on this new set either - if they can bury it, it will drop their costs.
In the end, what it comes down to is that the problem is far bigger than they are admitting, and crosses generational lines, process lines, and OEM lines. Nvidia is quick to point the finger at everyone but themselves, but after a while, the facts strain those cover stories well past breaking point. There is a common engineering failure here - this problem is far too widespread for it to be anything else. The stonewalling, denials and partner gagging is simply a last-ditch attempt at wallet covering.
With OEMs extending warranties, Nvidia is going to have to cover a lot of laptops for a long time. Desktop boards are going bad as well now, contrary to the statements of Nvidia PR and AR, and the hole keeps getting deeper and deeper. I wonder if they can ever come clean and survive.
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