Graphics Chip 3rd Quarter Numbers

[rjc]

Excerpts from the jon peddie numbers for 3rd quarter this year appear to have been published here:
http://venturebeat.com/2008/10/26/graphics-chip-market-grows-a-surprising-225-percent-in-third-quarter/

Interestingly sales were up overall, mainly to do with notebooks where both nvidia and amd's market share seem to be decreasing ie both at now around 20% at the moment. Desktops were only up a little, all the cards introduced over the past quarter didnt seem to change the market share much, amd up a little from i think 18% to 20%. Nvidia still quite a bit ahead at 32%.

Using simplistic maths, nvidia overall was 27.8% and amd 20.6%, amd reported i think about $450million revenue for graphics a week or so ago so implying nvidia will report around $600milion in a few weeks...surely this is way too low?

 

[v_rr]

Nvidia droped almost 10% from Q3 2007 -> Q3 2008?
Thats a huge drop

 

[Arun]

Yeah, certainly not too pretty for NV:
3Q08: 30.93/27.8%
2Q08: 29.63/31.4%
3Q07: 33.04/36.4%

From a quarter-to-quarter basis, it could be worse, but given that their ASPs are likely to be down because of competitive pressures it's likely to be quite ugly anyway!

 

[rjc]

The full press release is up on the Jon Peddie site.

From looking at the yahoo finance page, nvidia had earnings last quarter of $892m from the jon peddie numbers it sold 30.93m units this quarter and 29.63m last quarter implying the earnings they will report in a couple of weeks will be around $930m if everything else has stayed the same. Interesting how much more income they get compared to ATI per sales volume, ASPs must be so much higher for them.

The growth of intel in the notebook market is quite striking, no wonder nvidia appears to have swapped form selling standalone GPUs there to pushing chipsets. I saw a nvidia representative say they were hoping for 20% of the notebook market with the 9300 chipset...surely that will be overlapping or perhaps replacing the market share they currently have in the add in gpus?

 

[Psycho]

AMD reported 50% increase in graphics revenue, while Peddie reports 33% increase in numbers, so AMD's ASP must have increased quite a bit. On the other hand I'm pretty sure nvidia's ASP has fallen (9800's massive drop etc) and Peddie only reports a 6% increase, so I guess their revenue is down a bit.

(hmm.. are these amd/peddie numbers even comparable - does amd include the IGP chipsets in the graphics sales?)

 

[Sinistar]

nVidia's conference call is on Nov 6th, should be interesting.

 

[3dcgi]

does amd include the IGP chipsets in the graphics sales?)

I don't know for sure, but I don't think IGP is counted as part of graphics.

 

[Razor1]

they are, thats why Intel is in there

 

[Dave Baumann]

Chipset is reported under CSG, not GPG.

 

[3dcgi]

they are, thats why Intel is in there

But I was talking about AMD's reported numbers.

Dave confirmed what I thought.

 

[Razor1]

ah sorry missed that

 

[rjc]

I couldnt find AMD's chipset numbers directly.

But from the jon peddie site can download a sample marketwatch from Q4 last year which has amd's IGP numbers around 2-2.5million units at an ASP of $20-$30. So multiplying gives an additional $40-$70million in income. Imagine they did better this year with the 780g chipset etc so maybe $100million income?

Which only gives them $550m versus nvidias $900m....hmm maybe maths is just too rough.

Also noted for nvidia something funny is going on with their stock:
http://www.schaeffersresearch.com/commentary/content/short+interest+report+nvidia+corporation+nvda+bulls+remain+unshaken/observations.aspx?ID=88958
A huge number of shorts seem to be out on the stock, which contradicts with all the buy recommendations.
http://www.fool.com/investing/general/2008/11/05/foolish-forecast-embattled-nvidia.aspx
Has some data on their margins over this year. MF generally seems much more positive than others on the stock, must of read 1/2 a dozen articles this year from them promoting it.

 

[rjc]

Following up my own post, nvidia has reported earnings of $897.7m according to bloomberg.

So quite a bit up compared to amd ie 60% greater earnings when jon peddie reckons only has about 40% more market share.

Interestingly they claimed higher gross margins at 41.9% up from from 39.1% last quarter. Which seems a strange thing as jon peddie shows their market share declining some. And they are now all at 55nm production, no info yet on how many 65nm products are still sitting in the warehouse

One analyst here prior to the call is concerned they have pulled in sales from the upcoming quarter.

 

[rjc]

Hmm, tried to edit my previous post to add this, but couldn't do it with beginner skills.

Nvidia's conference call transcript:
http://seekingalpha.com/article/104608-nvidia-corporation-f3q09-qtr-end-10-26-08-earnings-call-transcript?page=-1
Quotes:
"Total MCP79 revenue was more than $75 million in the quarter."

"We have 65nm inventory remaining, but everything we are ramping now is 55nm; and everything on the high-end that we are shipping now is 55nm."

"we were caught flat footed at 65nm and our chip and board solution was just too expensive"

Overall they seem to be saying there will roughly be a 5% decline in revenue over the next quarter. Hmm on a personal note i really wish Mr Huang wouldnt go on about the 3D stereoscopic glasses in a financial call, it's really hard to take seriously.

 

[Arun]

So quite a bit up compared to amd ie 60% greater earnings when jon peddie reckons only has about 40% more market share.

Well they've got more than their PC GPU business so not very surprising it doesn't match exactly. Also interesting is this: "Within desktop, the softness was unit-related as ASPs actually increased slightly from the second quarter."

I suspect think this is likely more due to weakness in the low-end than in real strength elsewhere, but who knows. Probably a combination of both compared to Q2... I'm not a big fan of Doug but this is very noteworthy IMO:

Doug Freedman – American Technology Research
Hi, guys. Thanks for taking my question. Last quarter you made a significant comment about the demand you were seeing in the marketplace regarding mix shift. Can you tell us if you’ve seen a continuation there, any changes and – just an update?

Marv Burkett
I don’t think I’ve seen any change. I think the – are you referring to, Doug, the – what we call the sort of disappearance of the low end of the discreet desktop?

Doug Freedman – American Technology Research
Correct.

Marv Burkett
Yes. I don’t think we’ve seen any change to that. That’s becoming in our view a mobile market. [presumably mobile means changing, not notebook?]

Interestingly they claimed higher gross margins at 41.9% up from from 39.1% last quarter. Which seems a strange thing as jon peddie shows their market share declining some. And they are now all at 55nm production, no info yet on how many 65nm products are still sitting in the warehouse

Increasing MCP gross margins and revenues thanks in good part to MCP79 which you might then expect to have maybe 45% gross margins (!!!) as well as relative strength in workstations both helped, I'm sure. However it is interesting indeed that PC GPU margins are also doing very well; I wouldn't be surprised if they managed to make those poor AIBs take more of the hit than they are, heh...

One analyst here prior to the call is concerned they have pulled in sales from the upcoming quarter.[/QUOTE]

"we were caught flat footed at 65nm and our chip and board solution was just too expensive"

As much as I think he's just BSing regarding some of his claims on architecture/55nm/..., that part makes some sense: the 9800GTX's PCB was definitely absurdly expensive for what it did, and the GTX 260/280 were hardly cheap either. Presumably that means G92b/GT200b now have new lower-cost PCBs.

 

[Jawed]

So NVidia's revenue is down 19.5% from the same quarter 1 year ago, while the overall market's shipments grew by 22.5%.

Separately, 5% serial decline for next quarter implies revenue of 853M for that quarter. 2008Q4 was 1203M, so implying 4th quarter revenue down by 29% over the same period the previous year.

That would make $3797M revenue for FY2009, versus $4098M for FY2008, a decline of 7.4%.

Jawed

 

[Arun]

So NVidia's revenue is down 19.5% from the same quarter 1 year ago, while the overall market's shipments grew by 22.5%.

Are you looking at discrete-only statistics? It is my impression discrete certainly did not grow by anywhere near 22.5%, but I could be wrong. Either way, yes, it's not exactly good to say the least!

 

[Jawed]

No, all GPUs:

The graphics chip market defied gravity in the third quarter, showing a 22.5 percent in unit shipments compared to a year ago. More than 111 million GPUs (graphics processing units) shipped in the quarter, up from 91 million a year ago [...]

---

Continuing with guesstimates, if Q4 net income is $120M, then FY2009 net income would be ~$238M, which is a fall of 70% in comparison with FY2008's $798M.

So, with the share price down ~70% year on year, it kinda neatly matches where the profit will be in 3 months' time

Jawed

 

[rjc]

Well they've got more than their PC GPU business so not very surprising it doesn't match exactly. Also interesting is this: "Within desktop, the softness was unit-related as ASPs actually increased slightly from the second quarter."

I suspect think this is likely more due to weakness in the low-end than in real strength elsewhere, but who knows.

Looking for Q407, the jon peddie sample report says:
Nvidia:
Segment Units ASP
Value 3.62m $8.80
Mainstream 10.71m $14.16
Performance 1.73m $26.70
Enthusiast 0.46m $149.65
Workstation 0.96m $167.64
Notebook 9.76m $12.82
(arrgh formatting...)

So the 3.62m in value sales have gone and are turning up to some extent in notebook?

I think the mobile referred to in the transcript is phone/pda/netbook/notebook markets, that is the context in the only other time that word is used. Does nvidia have anything in the netbook market? Something like the 9400m that will work with the atom?

Increasing MCP gross margins and revenues thanks in good part to MCP79 which you might then expect to have maybe 45% gross margins (!!!) as well as relative strength in workstations both helped, I'm sure. However it is interesting indeed that PC GPU margins are also doing very well; I wouldn't be surprised if they managed to make those poor AIBs take more of the hit than they are, heh...

One thing i didnt understand, mr huang stated ramping and shipping on 55nm, but there was a hint in the transcript that they still had some 65nm stock in inventory. "shipping" is sending out to customers isnt it? Not sending chips from the fab to the warehouse where at the moment they seem to be waiting for 90days.

I was just trying to figure if there was still enough space for the inquirer story about the 55nm high end chips being delayed till february to still be true. Also the inquirer had an article about job cuts which may be contradicted by Marv Burkett:
"We have some significant opportunities and we do not want to jeopardize those by doing something foolish in cutting operating expenses"

As much as I think he's just BSing regarding some of his claims on architecture/55nm/..., that part makes some sense: the 9800GTX's PCB was definitely absurdly expensive for what it did, and the GTX 260/280 were hardly cheap either. Presumably that means G92b/GT200b now have new lower-cost PCBs.

I remember reading the 8800gt had a 10 layer board then redesigned to a 6 layer and the GTX2XX boards were 14 layer. What was the 9800?

If the 55nm GT206 is currently present in the tesla cx and just released fx from the memory bandwidth seems to indicate that the GT206 is still 512bit, how will they save much in board costs?
ie cx used to be listed as having a 384bit bus and memory bandwidth of 76.8gb/s multiplying by 512/384 = 102.4gb/s which is listed in the specs as the fx's memory bandwidth.

 

[Sunrise]

One thing i didnt understand, mr huang stated ramping and shipping on 55nm, but there was a hint in the transcript that they still had some 65nm stock in inventory. "shipping" is sending out to customers isnt it?

I was just trying to figure if there was still enough space for the inquirer story about the 55nm high end chips being delayed till february to still be true.

NV sells the produced and packaged ASICs directly to their AIBs, effectively making them their customers. Since Jen-Hsun stated himself that on the high-end all they are shipping now is 55nm, we can all pretty much put those INQ rumours to rest.

I remember reading the 8800gt had a 10 layer board then redesigned to a 6 layer and the GTX2XX boards were 14 layer. What was the 9800?

The 9800 GTX and the 9800 GTX+ have a 12-layer PCB.

If the 55nm GT206 is currently present in the tesla cx and just released fx from the memory bandwidth seems to indicate that the GT206 is still 512bit, how will they save much in board costs?

They won´t save much, if any, since NV will also clock them higher and wants some headroom for that.