Nvidia Says Sales of Video Game Chips to Decline in Current Quarter Due to COVID-19

gadgets.ndtv.com:

Chip designer Nvidia forecast its sales of video game chips would decline in the current quarter, and startled some analysts by laying out new supply-chain issues resulting from China's COVID-19 lockdowns.

Chief executive Jensen Huang told Reuters that Nvidia's gaming business revenue will post a percentage drop in the mid-teens for the current quarter compared with the previous quarter.

"Overall the gaming market is slowing," Huang said. Based on the softer market demand, Nvidia has chosen to reduce what it sells into the China market, he said. Nvidia is also taking a hit from Russia and sees "slower sell-through" in Europe, he said.

Nvidia shares fell 6.7 percent in extended trading, even though the company's first-quarter revenues and earnings topped analyst estimates. The shares are down about 40 percent so far this year in tandem with a wider selloff in growth stocks over concerns of aggressive interest rate increases by the US Federal Reserve.

Concerns over inflation are spreading through the US economy, as consumers weigh purchases of items such as laptops and video game consoles.

Nvidia forecast second-quarter revenue of $8.10 billion (roughly Rs. 62,842 crore), plus or minus 2 percent. Analysts on average expected $8.45 billion (roughly Rs. 65,557 crore), according to IBES data from Refinitiv. The lower revenue forecast included an estimated reduction of about $500 million (roughly Rs. 3,879 crore) relating to Russia and the COVID lockdowns in China. Chief financial officer Colette Kress said the $500 million figure included about $400 million (roughly Rs. 3,103 crore) lost in gaming sales in China and Russia, and another $100 million lost in data center sales in Russia.

Kress told analysts on the earnings call