Nvidia reports a slump in profits and gives a weak forecast – the share falls

san francisco The world’s most valuable chip company, Nvidia, is feeling the effects of the slump in the global chip industry. Sales fell in the past three months compared to the previous quarter by 19 percent to 6.7 billion dollars, as CEO Jensen Huang said at the presentation of the figures on Wednesday. The company issued a profit warning two weeks ago. Nvidia reported net profit for the past quarter at around $1.3 billion. That was around 62 percent less than in the previous quarter.

Huang identified a slump in Nvidia’s important business with chips for the gaming industry as the most important reason for the difficult environment. Gaming revenue fell 33 percent year-on-year or 44 percent sequentially to $2.04 billion. Huang spoke of a “difficult environment”.

No improvement is in sight in the short term. For the current quarter, Huang expected a further slump in sales to $ 5.9 billion. Analysts had expected sales of $6.95 billion.

Nvidia shares fell by around five percent in the after-hours trading. Since the beginning of the year, the papers had already fallen by more than 40 percent. The whole industry suffers. The Philadelphia Semiconductor Index of the major US-listed semiconductor vendors has fallen nearly 30 percent since the beginning of the year.

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In the future, Huang wants to focus his company on stronger growth in other industries. Nvidia has high hopes for the automotive sector in particular. “The auto industry is evolving into the technology industry and is on track to become our next billion-dollar business,” Huang said.

Nvidia’s important partners also include car manufacturers in Germany. Nvidia has been working with Mercedes on solutions for self-driving cars for several years. Year-on-year, Nvidia’s automotive chip sales grew 45 percent. However, at $220 million in the past quarter, sales in this area accounted for only a small portion of the company’s overall business. The situation is different with the chip business for large data centers. There, Nvidia recorded annual growth of 61 percent to $3.8 billion.

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Like other companies in the chip industry, Nvidia had benefited greatly from a boom over the past two years. Chips are installed in almost all electronic devices today. Upheavals in the supply chains had forced automakers, among other things, to curtail or even stop their production in the meantime. In response, the prices for chips had risen sharply and a number of companies had placed large orders for chip purchases.

The situation is now relaxing. This affects the business of Nvidia and other chip companies. Nvidia said it had accumulated inventory totaling $3.9 billion at the end of last quarter. In the same period last year, inventories were worth $2.1 billion.

Huang announced that he wants to lower prices in individual areas in order to relieve the backlog between chip production and chip sales. “I think the situation will ease by the end of the year,” he said.

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At the same time, Huang was confident that new chip generations will boost demand for Nvidia products. “Our new hopper architecture will enable completely new applications in the field of artificial intelligence,” he promised.

Nvidia announced the computing accelerator in March. It is said to offer 80 billion transistors on more than eight square centimeters of silicon area, making it significantly more powerful than previous architectures. The accelerator is named after the American mathematician and computer scientist Grace Hopper.

Nvidia was founded in 1993 by Jensen Huang as a company with a focus on powerful graphics chips. In contrast to the computer chips that had dominated until then, which could be used for almost all applications, Huang optimized his company’s chips for special graphics applications and was thus able to offer significantly higher performance. Most recently, Nvidia has optimized its specialized chips for the performance of large data centers and, among other things, tailored them to solutions for artificial intelligence. Nvidia is considered a leader in this area.

In addition to Nvidia, the fourth largest semiconductor manufacturer in the world, Micron, also issued a profit warning two weeks ago. Chip giant Intel could also feel the effects. Analyst Stacy Rasgon of investment bank Bernstein predicted that the industry could suffer for an extended period.

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