Nvidia sales plunge in PC industry slump

Nvidia Corp’s quarterly revenue exceeded its forecast by more than $1 billion, surprising investors and mounting evidence that demand for electronic components is rapidly drying up after a two-year boom.

Second-quarter revenue was about $6.7 billion, down from its previous guidance of $8.1 billion, the company said in a statement Monday.

Shares of the most valuable publicly traded chipmaker fell 6.3% to $177.93, their worst decline in nearly two months.

Nvidia’s report pointed to pressure rippling through the industry: Falling consumer spending, rising inflation and a push to return to offices have curtailed PC purchases. Intel Corp, Western Digital Corp and other companies that depend on PC sales have reported a sharp drop in demand for their products.

Nvidia’s graphics chips are a staple of high-end PCs used to achieve the most realistic gaming experience. Most major games companies have reported lower sales or a weaker outlook this year, from PlayStation maker Sony Group Corp to Microsoft Corp, which sells the Xbox console. Add-on cards made by Nvidia are also a key part of the systems used by currency miners, making the company’s revenue vulnerable to fluctuations in those markets.

“Our gaming product sales projections declined significantly during the quarter,” Nvidia CEO Jensen Huang (黃仁勳) said in the statement. “As we expect macroeconomic conditions affecting sales to continue, we have taken action with our gaming partners to adjust pricing and channel inventory.”

Nvidia had previously reported strain on its performance during its second quarter, which ended on July 31. The Santa Clara, Calif.-based company said in May that COVID-19 lockdowns in China had disrupted production and transportation lines, making it harder to capitalize on demand. for tokens. Russia’s invasion of Ukraine also weighed on its outlook, and together the issues are expected to cut sales by about $500 million in the fiscal second quarter, Nvidia said.

Gaming revenue in the fiscal second quarter fell 44% from the prior quarter and 33% from a year earlier to $2.04 billion, Nvidia said.

While revenue from its data center business rose 61% to $3.81 billion, it fell short of Nvidia’s forecast, the company said.

Performance was “affected by supply chain disruptions”, he said.

The quarterly results would also include approximately $1.32 billion in charges, “primarily for inventory and associated reserves, based on revised expectations of future demand,” Nvidia said.

“The significant charges incurred during the quarter reflect previous long-term purchase commitments we made during a period of severe component shortages and our current expectations of continued macroeconomic uncertainty,” said Chief Financial Officer Colette Kress.

Nvidia is due to give its full report and projections for the current period on August 24.

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