Nvidia Kepler GPUs Experiencing Low Yields

Nvidia CEO Jen-Hsun Huang revealed in a conference that the company is experiencing declining gross margins due to several factors that includes the lower than expected yields of its 28nm Kepler GPUs which are exclusively being manufactured by TSMC.

“Decline [of gross margin] in Q1 is expected to be due to the hard disk drive shortage continuing, as well as a shortage of 28nm wafers. We are ramping our Kepler generation very hard, and we could use more wafers. The gross margin decline is contributed almost entirely to the yields of 28nm being lower than expected. That is, I guess, unsurprising at this point,” said Jen-Hsun Huang during a conference call with financial analysts.

Despite the dilemma, Nvidia remains optimistic and said that the situation is actually looking better compared to the one they had with Fermi, the current generation 500-series GPUs of the company.

However due to the low yields, Nvidia’s chips will be priced higher than they normally would be.

“We use wafer-based pricing now, when the yield is lower, our cost is higher. We have transitioned to a wafer-based pricing for some time and our expectation, of course, is that the yields will improve as they have in the previous generation nodes, and as the yields improve, our output would increase and our costs will decline,” said Mr. Huang.

Nvidia is expecting a lot from its next generation GPUs even claiming that it is by far the best graphics processor ever designed by the company. It has even signed contracts to supply mobile version of its GPUs to every single PC OEM in the world.

News around the web indicate that the first Kepler GPUs are bound to be released this coming April and that the chips have significant performance advantage over their AMD Southern Island counterparts.

Source: X-bit Labs