nVidia's market value dropped $2.6 billion overnight after it admitted it has a big problem with faulty GPUs used in some notebook computers -- as well as weaker demand for its products and downward pressure on prices from archrival ATI.
After making $1.15 billion in Q1, the graphics board maker is expecting Q2 revenues to drop to $875-$950 million. In sympathy, its share price fell 30%. Larry Dignan of CNET reports:
Nvidia said that it will take a $150 million to $200 million charge in the quarter for warranty, repair, return and replacement costs for high failure rates for its previous generation chips. Nvidia blamed the faulty chips on “weak die/packaging material set in certain versions of its previous generation GPU and MCP products used in notebook systems.” These graphic chips are failing in systems already in the field.
We don't know yet which notebook computers are affected.