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Nvidia faces class action suit for GPU failures

Published on 10th September 2008 by Tim Smalley

An angry Nvidia shareholder has filed a class action lawsuit against the company. The plaintiffs allege that Nvidia covered up the issues for at eight months.

A disgruntled Nvidia shareholder has filed a class action lawsuit against the company in the Northern District of California.

The suit, filed by Lisa Miller, alleges that Nvidia knew about the mass GPU failures as early as last summer but kept things under wraps until July this year when it announced the bad news for both customers and shareholders alike.

"At least as early as November 2007, Nvidia and the other Defendants have known about these unprecedented failure rates, as well as their "root causes." Indeed, Michael Hara, the Company's Vice President for Investor Relations and Communications, conceded during a September 4, 2008, "Citigroup Technology Conference" that Nvidia began troubleshooting these problems with major computer manufacturers beginning in August of 2007," the filing says.

Because of this, the plaintiffs say that anyone who purchased or acquired Nvidia stock between 8th November 2007 and 2nd July 2008 inclusive have been misinformed by the defendants, who allegedly concealed information regarding the mass failure rates.

"Nevertheless, for at least eight months, Defendants concealed from Nvidia investors these defects and their obvious impact on the Company's financial condition and future business prospects," states the filing.

Later in the suit (PDF), the plaintiff claims that Nvidia is lying about the scale of the problem – some believe that the $200 million charge the company incurred to cover the cost of repairing machines affected by the faulty GPUs isn't enough. If the failures don't cause Nvidia to exceed the $200 million charge, there's every chance the lawsuit will – we've asked Nvidia for a comment and will update this story as soon as one arrives.

This could get pretty nasty, and one can understand why the shareholders are angry. What do you make of all of this? Discuss in the forums.

19 Comments

Discuss in the forums Reply

Haramzadeh 10th September 2008, 22:19

Looks like things are gonna get worse before they get better for Nvidia.

HourBeforeDawn 10th September 2008, 22:23

is anyone else smiling from ear to ear about this. I just cant help but be like HA serves them right. ^^

Haramzadeh 10th September 2008, 22:25

I've been a pretty much Nvidia exclusive customer for many years. Never had a single problem with any gpu I got from them (7600, 8400M, 8800, GTX280) and they have served me well. Can't say I have the same anti-Nvidia enthusiasm as many I'm sure will, but I can understand that Nvidia deserves this given the obvious scale of the failure. But I hope they survive through it the industry becomes more competitive because of it.

bowman 10th September 2008, 22:31

Sure hope they go under, and that a sensible company acquires their IP for small change.

Colt 45 J 10th September 2008, 22:41

I sure hope the DON'T go under... I own 4 shares... :S

Haramzadeh 10th September 2008, 22:45

Nvidia has way too strong of a presence in the GPU market to go under. Nvidia already took a huge financial loss this last quarter and this lawsuit is just a continuation of that. Besides, it's a very specific crop of GPUs on mobiles that had this defect. I don't think that alone can bring a giant like Nvidia down, it's just a severe blow to confidence and obviously a major shrinking of Nvidia's dominance of the market - especially given the latest crop of excellent ATI cards.

Firehed 10th September 2008, 22:50

Whoops.

I have trouble sympathizing much, seeing that their drivers appear to STILL cause issues for my video card under Vista. I can't be 100% sure that's the case, but everything works fine under XP and the bit of research I've done (and the symptoms) certainly suggest a video driver issue.

glaeken 10th September 2008, 23:16

Quote:

Originally Posted by bowman
Sure hope they go under, and that a sensible company acquires their IP for small change.

You'd better hope not.

Goty 11th September 2008, 02:54

Quote:

Originally Posted by Firehed
Whoops.

I have trouble sympathizing much, seeing that their drivers appear to STILL cause issues for my video card under Vista. I can't be 100% sure that's the case, but everything works fine under XP and the bit of research I've done (and the symptoms) certainly suggest a video driver issue.

Speaking of instability issues, a recent Windows update evidently addressed problems with NVIDIA cards under Vista.

Amon 11th September 2008, 03:20

They deserve it, methinks. No matter how profitable or how influential a company is in their market, you just don't f#ck around with other people's money.

I've been waiting to do this for a long, long time...

I told you.

Langer 11th September 2008, 04:24

I had MASSIVE problems with 3(three) sets of 3(three) 9800GTXssc cards from eVGA... I replaced every component in the system and over a couple months had narrowed it down to shoddy GFX cards. I bitched for a month+ to eVGA/nVidia to no avail. Finally I figured I'd contact the eVGA CEO, Andrew Han, and HOORAH! He replaced my cards with three GTX280ssc's (one was sold off to fund watercooling gear).

I say that they deserve this, I had massive headaches with their gear... no problems with the 280's though.

PhoneyVirus 11th September 2008, 04:52

They said there was a update to the driver that put the GPU at 100% to keep it cooled down an it was o k, $200 million charge the company incurred to cover the cost of repairing machines affected by the faulty GPUs isn't enough. So now where are they going with this, that the shareholders are angry. Nvidia got some Sand Bagging going on !!

themax 11th September 2008, 04:52

While it's good that someone is bringing action against the comany I think it's a bit extreme to desire that the whole company goes under. If ATI became the only graphics producer we'd surely see a sharp drop in the quality of their video cards as well because they've got noone to keep them in check.

[USRF]Obiwan 11th September 2008, 10:13

Quote:

Originally Posted by Langer
Finally I figured I'd contact the eVGA CEO, Andrew Han, and HOORAH! He replaced my cards with three GTX280ssc's

You have the luck to know this person or had his email (whatever) and a great deal. Many many customers do not have that kind of contacts. Most of them go back to the store and get a card swap, only to find out they have the same problem again but this time "thinking there must be something else wrong with their pc." So going through new motherboards, processors etc. And a year later they found out that it still was the videocard.

I would be mad as hell..

But i have to say I do not have any problems with the 8800GTX and the 8800GT in my two systems.

BlackMage23 11th September 2008, 10:24

If Nvidia go under that will be bad for the industry. I do think that Nvidia did need to be taken down a peg or two.
This will level the playing field a lot for ATI

mrb_no1 11th September 2008, 10:35

christ this wont be the end of nvidia, i'm not entirely sure how some of you have to reach this conclusion....but they have loads of money and even in todays climate, if they need to borrow to stay alive banks will throw money at them because they are such a monster of a company. Its nice to see that they are being brought to justice when trying to screw over their daddy.

peace

Whalemeister 11th September 2008, 13:10

I'm sure I remember something about them taking out insurance against exactly this about 3 - 4 months ago here on Bit-Tech. Was to do with the GPUs used in laptops or something like that

bahgger 13th September 2008, 18:39

I hope my 8800GTS doesn't crap on me when I go back to university.. else it's to the 4850HD for me!

Zero_UK 17th September 2008, 19:49

Even though every one goes on about they deserve it and crap.. just think, if they go.. then what competition is their going to be on the market? Cards like the bang for buck 4750 on realse would be so expensive.. =\