Word is spreading that chipmaker Nvidia may be in a pickle, and it’s mainly due to the waning appetite of miners to mine.
At issue is Nvidia’s graphics processing unit, or GPU, inventory. It seems it’s got more of these units than it has willing buyers, which are gamers and crypto miners.
Let’s discuss.
Supply and demand
Reports are that a major Taiwanese original equipment manufacturer, or OEM, has returned 300,000 GPU units to NVIDIA (NASDAQ:NVDA). The concern with this move is that it could delay Nvidia’s next-gen GeForce GPUs from getting to market.
In fact, Nvidia’s CEO, Jen-Hsun, has said those GPUs won’t be launched for a long time. He didn’t specify what “long time” means.
But we thought all was fine
We reported just last month that Nvidia had enjoyed a wonderful first quarter for its 2019 reporting season. One of the reasons for its blow out quarter was due to it raking in extremely healthy revenues from crypto miners buying its GPUs.
For the quarter ending April 29, the company reported selling $289 million worth of the cards that crypto miners thrive on using to do create their coins.
During the conference call to discuss the earnings report, Nvidia’s executive vice president and chief financial officer Colette Kress made the somewhat unusual move of pointing out how much crypto miners were contributing to the company’s top and bottom lines.
She said:
“Cryptocurrency demand was again stronger than expected, but we were able to fulfill most of it with crypto-specific GPUs, which are included in our OEM business at $289 million. Looking into Q2, we expect crypto-specific revenue to be about one-third of its Q1 level.”
Was that a hint?
Kress’s statement about being able to fulfill most of the GPU demand speaks volumes about how the chipmaker could have found itself in this overstock predicament. Nvidia officials may not have factored in just how much miners were losing interest in creating cryptos.
At least one pundit saw the writing on the wall, and doesn’t see things getting better. DigiTimes noted that the prospects of crypto mining are dim. The paid subscription site notes the situation is only aggravated by Taiwanese graphic cards’ suppliers who think shipments and profits will fall this quarter.
DigiTimes spoke to industry players about Nvidia’s situation, and reported the following.
“The sources said that the cryptocurrency mining heyday seen between April 2017 and March 2018 suffered an abrupt downturn in April due partly to the Bitcoin value plunging to under US $7,000 from a peak of nearly US $20,000 recorded in December 2017 and partly to governments of China, South Korea, the U..S and many European countries rushing to clamp down on digital-coin exchanges following exposures of scams, frauds and market manipulations.”
This article appeared first on Cryptovest
