SiliconBeat

Nvidia shocked investors Wednesday when it said its profitability in the quarter just ended would be lower than it had previously forecast in early May. The company cited delays in a new multi-chip package product, pricing pressure for its graphics processing products and “end-market weakness around the world”. Investors were not pleased. Nvidia shares fell more than 20 percent in after hours-trading, making it the largest after-hours loser among U.S. stocks. Shares of AMD, which makes a competing product, also fell, as did shares of some other local chip makers, including Catalyst Semiconductor and Sigma Designs.

Adding to Nvidia’s woes was news that “it would take a $150 million to $200 million charge” to cover “anticipated customer warranty, repair, return, replacement and other consequential costs and expenses” related to defects in certain of its products used in notebook systems.

The problems are related to what the company calls the “extreme thermal environments” found in today’s notebook computers. Nvidia said it is “working proactively” with its computer manufacturing partners to develop system software to provide “better thermal managment” for its chips.