If you've paid attention to quarterly earnings reports from the major computer OEMs, you've likely noticed that the hard drive shortage this fall had an impact, but not a disastrous one. Companies like Intel reported that manufacturer inventories were substantially affected as company's held off on restocking to see what prices would do, but net sales only fell modestly.
The GPU market, on the other hand, seems to have taken a hit. Nvidia has stated that its Q4 results were hurt by the hard drive shortage, something AMD also mentioned
in its Q4 results. We didn't break it out initially -- AMD's overall GPU results were fairly decent -- but in the wake of NV's statements it's worth revisiting.
The company has cut its profit forecast by ~12 percent, from $1.06B in sales for the quarter down to $950 million. The stated reasons are the aforementioned HDD shortage as well as "the Tegra 2 mobile business declined more rapidly than expected, ahead of devices based on the Tegra 3 processor ramping into production in the first quarter of calendar-year 2012."
Both impacts are a bit surprising given NV's previous guidance. During the company's last conference call, CEO Jen-Hsun Huang indicated that he thought the HDD shortage situation would be a non-issue, while talking up momentum for Tegra 3 and Tegra 2. One point the CEO hammered several times throughout the call is that Tegra 3 had more design wins going into this quarter than Tegra 2 ever had. If that's true, Tegra-related revenue will start to pick up again once more phones and tablets start shipping with the chip.
What Do Hard Drives And GPUs Have In Common?
The fact that an HDD shortage would impact NV's GPU sales is testament to just how much of the industry is driven by integrated graphics. Ten years ago, when only rock-bottom systems shipped with integrated graphics, a discrete GPU was still standard in the majority of configurations. Today, GPUs are a value-added component. As a result, manufacturers hurt by rising HDD prices, compensated by shipping systems with integrated graphics.
The long-term discrete GPU attach rate has been stable for years, but the trend is one reason why NV has pumped so much money into driving products like Tesla and Tegra. The slide below shows the company's changing revenue -- note that "Q3 2012" refers to Nvidia's fiscal
year. The calendar period referred to as the fourth quarter of 2011 is actually Nvidia's Q4 2012.
Integrated GPU sales in lime green, Tesla/Quadro in Teal, Tegra in "light urple" (bonus if you get the reference)
The good news is that both of the factors that've hit NV's revenue should ease off in the first quarter. We expect to see more Tegra 3 design wins announced at Mobile World Congress in late February, while the hard drive shortage will gradually improve throughout the year. We should also hear more about Kepler, and possibly NV's "Tegra 3+" solution (think Tegra 3 on 28nm) in the weeks ahead.