The party is over for Nvidia as crypto and gaming GPU demand is down:
Nvidia on Wednesday announced its financial results for the second quarter of its fiscal year 2023. The results were a mixed bag as its client PC businesses suffered declines, but its automotive and data center businesses thrived.
Nvidia's gaming, professional graphics, mining, and OEM business segments were down significantly both sequentially and annually, which is why it had to warn investors that it expects slow sales of gaming and ProViz graphics products to persist for a while. Meanwhile, the company said that it plans to talk about its next-generation Ada Lovelace architecture next month but never revealed when actual GeForce RTX 40-series graphics boards will be available.
By contrast, Nvidia's data center and automotive hardware shipments were up significantly compared to the same quarter a year ago. They will be up again in Q3 FY2023 now that the company's Hopper H100 compute GPUs are in total production and ready to ship.
[...] During its second quarter of fiscal 2023, Nvidia encountered multiple challenges, including macroeconomic conditions (inflation and uncertainty among consumers), high inventory levels in the channel (as the company aggressively sold its graphics cards in prior quarters), softening demand from the end user (both because gamers are expecting Ada Lovelace to launch shortly and because of uncertainties), inventory corrections by partners, and lowering prices of graphics cards as a result of softening demand as well as increased supply by competition.
[...] It should be noted that Nvidia's gaming revenue in Q2 was still significantly higher when compared to $1.654 billion in the second quarter of the company's FY2021 (~calendar Q2 2020). It indicates that the chip designer benefited greatly from increased demand for discrete GPUs for gaming PCs, increased prices of standalone graphics cards, and the crypto mining craze.
Nvidia sold some $7 billion in graphics processors to partners in Q4 FY2022 and Q1 FY2023. However, it now has to ship fewer GPUs than market demands and lower prices as it prepares to launch its next-generation Ada Lovelace family (which it will describe next month at its GTC event) and needs to clear out existing GPUs.
[...] But while sales of PC components were down for Nvidia, sales of its parts for datacenters and automotive applications were up significantly.
[...] While Nvidia has been in the automotive business for quite a while, its automotive BU has never earned a lot as it focused on infotainment systems, so many called it the company's worst-performing business. But in Q2 FY2023, Nvidia's automotive earnings totaled $220 million (and exceeded $200 million for the first time), up 59% sequentially and a 45% increase compared to the same quarter last year. The company expects its automotive business to grow as automakers adopt its Nvidia Drive self-driving and AI cockpit solutions.
[...] But while sales of GPUs for PCs may not be impressive this year, Nvidia hopes that its data center and automotive revenues will be up. The company says its next-generation H100 (Hopper) compute GPU is now in full production. It will be able to ship its expensive SXM modules to its data center partners and pricey DGX systems to those who need an out-of-box supercomputer.
See also:
The GPU Shortage is Over. The GPU Surplus Has Arrived!
Crypto-Driven GPU Crash Makes Nvidia Miss Q2 Projections by $1.4 Billion
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Cheaper GPUs are good for gamers but bad for Nvidia's bottom line:
Nvidia doesn't officially announce its second-quarter financial results until the end of the month, but the company is trying to soften the blow by announcing preliminary results today. And as with so many other tech companies in the last month, the results are mixed at best. With $6.7 billion in revenue, Nvidia managed to eke out year-over-year growth, but the results are still bad news because that number is down from a previously forecasted $8.1 billion, a miss of $1.4 billion.
Nvidia blamed this shortfall on weaker-than-expected demand for its gaming products, including its GeForce graphics processors. Nvidia pointed to "a reduction in channel partner sales," meaning that partners like Evga, MSI, Asus, Zotac, Gigabyte, and others were selling fewer new GPUs than anticipated. This drop can be attributed partly to a crash in the value of mining-based cryptocurrencies like Bitcoin and Ethereum—fewer miners are buying these cards, and miners looking to unload their GPUs on the secondhand market are also giving gamers a cheaper source for graphics cards.
[...] Nvidia will supposedly launch its next-generation RTX 4000 series GPUs later this year. Based on the new Lovelace architecture, these GPUs may appeal to some gamers who originally sat out the RTX 3000 series due to shortages and inflated prices and are now avoiding the GPUs because they know a replacement is around the corner.
The GPU shortage is over. The GPU surplus has arrived!:
How quickly things change: A year ago, it was nearly impossible to buy a GeForce GPU for its intended retail price. Now, the company has the opposite problem. Nvidia CEO Jensen Huang said during the company's Q2 2023 earnings call yesterday that the company is dealing with "excess inventory" of RTX 3000-series GPUs ahead of its next-gen RTX 4000 series release later this year.
To deal with this, according to Huang, Nvidia will reduce the number of GPUs it sells to manufacturers of graphics cards and laptops so that those manufacturers can clear out their existing inventory. Huang also says Nvidia has "instituted programs to price position our current products to prepare for next-generation products." When translated from C-suite to English, this means the company will be cutting the prices of current-generation GPUs to make more room for next-generation ones. Those price cuts should theoretically be passed along to consumers somehow, though that will be up to Nvidia's partners.
[...] Nvidia announced earlier this month that it would be missing its quarterly projections by $1.4 billion, mainly due to decreased demand for its gaming GPUs. Huang said that "sell-through" of GPUs, or the number of cards being sold to users, had still "increased 70 percent since pre-COVID," though the company still expects year-over-year revenue from GPUs to decline next quarter.
(Score: 5, Insightful) by Anonymous Coward on Tuesday August 30 2022, @06:03PM (1 child)
Based on a limited sample of rentals and a few friends with new cars, I get the feeling that the actual need is for infotainment systems in cars that actually work and can be easily controlled/navigated.
Here's one data point:
My sister (slight memory/mental disability but with an excellent driving record) can operate the radio in her 2004 car just fine, it has knobs and buttons. Or perhaps in user-interface lingo, I could say that the radio is "mode less". She hasn't a clue how to deal with touch screens and sequential menus. And while she can afford to buy a new car, she's won't. She's going to keep fixing her old one, as long as it can be fixed. Or maybe replace with something similar with less miles, once used car prices come back to earth.
(Score: 2) by RamiK on Tuesday August 30 2022, @10:36PM
I believe the increased sales came from the SUVs of parents driving their kids to school instead of them taking the bus during/following COVID.
compiling...
(Score: 1, Insightful) by Anonymous Coward on Tuesday August 30 2022, @09:01PM
DO NOT WANT
(Score: 2) by bzipitidoo on Wednesday August 31 2022, @01:28AM (1 child)
I had planned to get discrete GPUs with my recent computer purchases, but the price of that was so insane, I decided integrated graphics would do. They were asking in the vicinity of $1000 for a mediocre GPU card.
This isn't the early 2000s, with Pentium III chips with such awfully slow integrated graphics, it set the standard for suckitude. A Pentium II running at 1/3 the MHz with a dedicated GPU was quite able to blow away those Pentium IIIs. Current integrated graphics is decent at running high end games. No idea how they do at crypto mining.
(Score: 1) by MonkeypoxBugChaser on Wednesday August 31 2022, @02:53AM
I mean keep telling yourself that if you want, but dGPU are way more powerful. You finally have a current iGPU so it feels decent compared to whatever old system you had before.
They also make games and drivers to cater to your integrated self because otherwise they wouldn't sell any. Quite a few powerful cards get killed by software; DX or GL version, driver support, os support, the video it can decode, etc
It happens both on windows and on linux and drives upgrades. Your iGPU will suffer the same fate as the many laptops and SFFs before it.
It's when you do any actual work like media, cad, or rendering where the difference exists like your PII/P3. Hence they're expensive.
(Score: 2) by hendrikboom on Thursday September 01 2022, @02:41AM
Is there any possibility that the reduced demand for nVidia graphics cards is because cryptocurrencies have crashed and it's no longer profitable to buy those cards to do mining?