Nvidia Revenue Falls With Tegra Dropoff Amid Windows RT Difficulties

11 Aug 2013

Mobile processor business Nvidia has experienced a setback after the company noted a steep fall in Tegra sales in Q2 of this year.

A 71 percent year-over-year drop in Tegra revenue for the quarter was seen by the Santa Clara, California-based chip maker, who commented that the decline was more than had been expected as the company phases out its Tegra 3 processor in order to replace it with Tegra 4.

The vice president and interim CFO of Nvidia, Karen Burns, stated: "We had expected a drop as discussed last quarter with the ramp-down of Tegra 3 products and ahead of Tegra 4 shipments. Nonetheless, we are disappointed with the size of the decline."

The Tegra 3 chips power a number of mobile Android and Windows devices, such as the original Google Nexus 7 tablet, Microsoft's Surface tablet with Windows RT, the Asus VivoTab RT and the Lenovo Yoga 11 with RT. The President and CEO at Nvidia, Jen-Hsun Huang, referred to a particular platform which had some harmful results for the company.

Huang said: "Because this particular platform just didn't do as well as we - or frankly anybody in the industry - had hoped, we don't expect as much returns on that investment as we originally hoped."

The particular type of platform was not revealed, but the continued failure of Windows RT is not unknown in the mobility world. The Yoga 11 with RT was withdrawn from Lenovo's line last month, and Asus pulled itself from the operating system completely. The price of the Surface tablets with RT have also been lowered by Microsoft itself in order to minimize damage and distribute all stock.

The overall revenue for 2013 may be down by between $200 million and $300 million from last year for Tegra.

Overall, $977.2 million in revenue was reported by Nvidia, which is a year-over-year 8 percent drop; the Tegra revenue fell 71 percent from last year, and GPU sales had risen by 8 percent.

According to Burns, Nvidia is expecting there to be a strong increase in Tegra revenue in Q3 of this year as Tegra 4 enters the market, and in particular, with Nvidia's new gaming portable console SHIELD. Additionally, Tegra 4 is anticipated to win in Q4 as more OEM products are made available. The Q3 revenue for Nvidia is expected to be around $1.05 billion. (CY) Link

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