The pandemic peak is over. After two great years, the computer and gaming industry no longer benefits from home sitters who spend extra money on game consoles and accessories.
Last month Xbox maker Microsoft and PlayStation producer Sony already reported disappointing revenue from gaming, chip maker Nvidia also warned on Monday that revenue over the past quarter was much higher. will be lower than expected. Nvidia produces fast graphics cards with realistic picture quality: ideal for playing video games.
The company’s turnover fell to $6.7 billion in May, June and July, according to preliminary figures. That’s 19 percent less than the previous three months and 17 percent less than what the company had counted on. In the gaming branch, the turnover drop even amounted to 44 percent. Final figures will come at the end of August.
CEO Jensen Huang said the outlook “deteriorated as the quarter progressed.” In recent months, the company has made price cuts in hopes of keeping sales going.
Analysts still saw lower turnover coming. Still, Harsh Kumar of investment bank Piper Sandler was surprised by “the magnitude” of Nvidia’s loss, he said in a response. Investors were also shocked: they put the share more than 6 percent lower on Monday, followed by further price loss on Tuesday. The Dutch suppliers to the chip industry ASML and ASMI also declined.
Desktops and Laptops
The end of the corona tree is also felt by other chip makers. Intel surprised investors last month with a 22 percent drop in revenue due to declining spending on desktops and laptops. Demand for smartphones is also starting to disappoint, notes Qualcomm, a producer of smartphone chips that recently lowered its forecast for this year.
For two years, these companies benefited from increased consumer demand, thanks to being forced to sit at home during lockdowns. Now computers and games have to compete with sports, travel and dining out again. And additional uncertainties have been added: high inflation is making consumers reluctant to make large purchases, manufacturers fear.
Although consumers are not only cutting back on hardware. Activision Blizzard, a games publisher, also reported declining sales and profits last week. At competitor Electronic Arts (EA), the damage is limited to slower sales growth for the time being.
Cryptocurrency miners
The demand for Nvidia video cards has also died down from another angle: that of the miners (miners), of cryptocurrencies. In 2021, the exchange rate of coins such as bitcoin and ethereum peaked and it was lucrative to mine these coins. However, the activity does consume a lot of computer power, which means that miners bought up powerful video cards on a large scale.
Read more about mining cryptocurrencies here: Harvesting digital coins on the crypto farm in Iceland
In recent months, the exchange rate of cryptocurrencies has fallen sharply and experts see that the second-hand market is flooded with cheap, used video cards from miners.
The bright spot for Nvidia was the revenue from graphics cards for data centers. It increased by 61 percent compared to a year earlier, to 3.8 billion dollars. The Nvidia chips are especially popular for the use of artificial intelligence, which also requires a lot of computing power. But even this figure was not purely positive: analysts had expected a 6 percent increase in turnover from this division.