As people wait for COVID-19 vaccine rollouts around the
world, stay-at-home orders have kept demand high for chips that speed up video
games. But the Santa Clara, California-based company's gaming chips have also
regained popularity for mining cryptocurrency, a trend Nvidia is trying to
counter by offering special mining chips in order to free up graphics chip
supplies for gamers during a global chip shortage.
While Nvidia was long known for its gaming graphic chips,
its aggressive push into artificial intelligence chips that handle tasks such
as speech and image recognition in data centers has helped it become the most
valuable semiconductor maker by market capitalization.
It has eclipsed rivals Intel Corp and Advanced Micro
Devices.
Nvidia shares were up 3% at $597.50 in extended trading
after the results.
On a conference call with investors, Chief Financial Officer
Colette Kress said that a global chip crunch made it hard to keep the company's
flagship gaming chips introduced last fall in stock and that the chips would
likely remain in tight supply through the fiscal first quarter.
Kress said analysts have estimated that cryptocurrency
mining contributed between $100 million and $300 million to Nvidia's sales in
the fiscal fourth quarter. The company expects the new mining chips to generate
about $50 million revenue in its fiscal first quarter, Kress added.
To discourage miners from using gaming chips, Nvidia will
start shipping software with its gaming chips that slows down their ability to
mine some currencies and then separately release a mining-specific chip. Nvidia
Chief Executive Officer Jensen Huang told Reuters that the mining chips do not
need gaming features such as display outputs, which means that chips that might
not be suitable for gaming can be used for mining instead.
"The way the use the chips, they don't need a whole
bunch of functionality," Huang said of miners.
The company expects first-quarter revenue of $5.30 billion,
plus or minus 2%, above analysts' average estimate of $4.51 billion.
Revenue in the quarter ended on Jan. 31 rose to $5 billion
from $3.11 billion a year earlier. Analysts on average were expecting $4.82
billion, according to IBES data from Refinitiv.
Revenue in the company's gaming segment was $2.5 billion,
above analyst estimates of $2.36 billion, according to data from FactSet. Data
center revenue was $1.9 billion, above estimates of $1.84 billion according to
FactSet data.
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