The IT Nerd

PC Magazine is reporting that Nvidia is putting it’s chipset business on hold due to legal issues between itself and Intel. Nvidia sock puppet PR person Robert Sherbin explains why:

“We have said that we will continue to innovate integrated solutions for Intel’s FSB architecture,” Sherbin said in an email. “We firmly believe that this market has a long healthy life ahead. But because of Intel’s improper claims to customers and the market that we aren’t licensed to the new DMI bus and its unfair business tactics, it is effectively impossible for us to market chipsets for future CPUs. So, until we resolve this matter in court next year, we’ll postpone further chipset investments.”

Intel claims that its four-year-old chipset license with Nvidia does not cover the “Nehalem,” or Core series of microprocessors. Nvidia disagrees, and the matter will be hashed out in court in 2010. Nvidia still sells chipsets specifically designed for AMD’s line of processors, but has halted further development as well.

So, anybody who wants a chipset to work with an AMD or and Intel process is not going to Nvidia. That may pose a problem for Apple who uses Nvidia chipsets in Macs because they offer a performance improvement of similar Intel chipsets.

The same report also claims that Nvidia is also exiting the mid- and high-end standalone graphics card market, although the company has apparently called the rumor “patently untrue”. Sure, I remember not to long ago that rumors that it was leaving the chipset business were “groundless” according to Nvidia and today we have them leaving the chipset business. So take that denial for what it’s worth.

If problems with their graphic chipsets followed by lawsuits from ticked off users isn’t enough to cause Nvidia pain, this will. Their own insurance company is now suing them. Why? Here’s a few reasons from National Union (Nvidia’s insurance company):

“Concurrently with, or prior to, placing National Union on notice of the chip claims, Nvidia has engaged in settlement negotiations with the chip claimants and, on information and belief, has agreed to settlements and/or the material terms of settlements with respect to some or all of the chip claims,” the filing says.

But, complains NUFI: “Nvidia has not permitted National Union to participate in Nvidia’s negotiations of the chip claims or the determination of any settlement or agreements.”

NUFI alleges that Nvidia won’t tell it about the chip claims, and instead has “flooded National Union with technical data” and provided it with details about the GPUs themselves.

It continues that Nvidia has “cloaked its refusals to provide information under the guise of preserving commercial relationships with the chip claimants.” But NUFI says it wants objective, material and non-proprietary information – for example the records of the repairs made.

That translates to something along the lines of  this: Nvidia been covering up essential information that NUFI is entitled to receive as Nvidia’s insurer by refusing to disclose even the most basic facts about the company’s GPU chip failures. But it gets better (or worse depending on if you’re Nvidia or not):

“The chip claims arise out of allegedly defectively designed Nvidia chips G86, G86A2, G84, C51, G72, G72M, G73, G72A3, MCP67 and NV42.”

If that’s true, then Nvidia is truly screwed, because that’s a much larger list of potentially defective hardware than Nvidia led people to believe. Some of the chipsets on that list are desktop chipsets. I should point out that this was raised as a possibility some time ago. But now that there’s more then just rumor, I can just see the lawyers prepping the class action lawsuits to serve up to Nvidia.

Oh, what does their insurance company want out of all of this? Simple:

So National Union doesn’t want to pay up. It wants the court to declare it has no duty to indemnify Nvidia because Nvidia has breached the terms of the agreement.

That means that if they win, their insurance company doesn’t have to pay a dime. I suspect that it would like cripple or kill Nvidia too. I guess that Nvidia should have taken my advice from this posting:

Nvidia has to step up to the table regardless of whether this is fact or not and clear this up once and for all. Users of their chipsets have the right to know if the Nvidia chipset they have in their computer is faulty or not. If they are, users of their products have the right to a speedy replacement with a part that works. If Nvidia doesn’t do that and these chips are faulty, then they deserve to be run out of business.

Looks like Nvidia’s days are numbered. It sucks to be them.

Many people think that reading the 10Q documents (AKA: their annual report) of major corporations is as dry as toast. But you can sometimes find some interesting tidbits in them. Take Nvidia for example. In their annual report, I note the following items. You might recall that Nvidia had set aside $150 – $200 million to deal with graphics chips that were failing at a obscene rate. Nvidia has spent $43.6 million so far according to their annual report. But the telling point is in this paragraph:

In September, October and November 2008, several putative class action lawsuits were filed against us, asserting various claims related to the impacted MCP and GPU products. Such lawsuits could result in the diversion of management’s time and attention away from business operations, which could harm our business. In addition, the costs of defense and any damages resulting from this litigation, a ruling against us, or a settlement of the litigation could adversely affect our cash flow and financial results.

Translation: If the people who filed these lawsuits win, we’re screwed.

That sort of implies that this whole graphics chips mess is a lot bigger than they are admitting to publicly. It’s hard to tell as the 10Q really dances around the issue to a great degree. But perhaps now is a good time for them to start repairing the damage that this circus has caused by manning up and dealing with it? It may be cheaper for them in the long run.