Earlier today, Reuters reported that according to Nvidia’s forecast, sales of its game graphics cards would decline this quarter. That’s not difficult to guess that the decline is related to the new supply chain problems caused by China’s new coronavirus epidemic blockade.
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Particularly, the Nvidia executive said that their gaming business revenue will fall by about 15% this quarter from the previous quarter.
“The gaming market overall is slowing down,” Huang said. Based on soft market demand, Nvidia has chosen to reduce what it sells in the China market, he said. Nvidia is also taking a hit from Russia and sees “slow sell-throughs” in Europe, he said.
The economic situation in the world is getting worse with every new day. The inflation rate in April reached 8.3% in the US. So it’s logical that consumers weigh up purchases of items like laptops and video game consoles.
Nvidia’s first quarterly report for 2022 showed that the company’s profit in the first quarter of 2022 was US$1.618 billion, a year-on-year decrease of 15.38%; total operating income was US$8.288 billion, a year-on-year increase of 46.0%.
However, Nvidia expects second-quarter revenue to reach $8.1 billion, plus or minus 2%.
The lower revenue forecast includes about $500 million in losses related to coronavirus lockdowns in Russia and China. That included about $400 million in lost gaming sales in China and Russia and $100 million in lost data center sales in Russia.
According to experts, weak game graphics cards’ prices and lower discretionary spending amid high inflation will have a huge impact on Nvidia’s gaming business.
The collapse of the cryptocurrency market has also hurt demand for its graphics processing units. Nvidia’s “OEM and other revenue” category fell 52% year over year due to lower revenue from cryptocurrency mining processors.
Still, demand from data center customers remains strong as more companies turn to cloud computing and incorporate artificial intelligence into their businesses. The latter and car sales will help offset the decline in the gaming business. In the first quarter, Nvidia’s data center revenue hit a record $3.75 billion, up 83% year over year. Game business revenue also reached a record $3.62 billion in the same period, up 31% year-on-year.
