After it reported a major revenue shortfall yesterday, chip designer NVIDIA Corporation's chief executive officer Mr. Jensen Huang has allegedly assured employees that they should not worry about their jobs. Mr. Huang's comments were made in an email scooped by Business Insider, in which the executive shared his take on the company's current operating environment and assured the recipients that NVIDIA remains one of the strongest chip companies in the industry courtesy of its prowess with designing and selling chips that are capable of artificial intelligence and other advanced computations.
NVIDIA CEO Confident In Demand For Company's GPUs
The preliminary earnings release made public yesterday was not completely surprising due to recent developments in several quarters that had cast doubt on NVIDIA's ability to sufficiently push inventory through its channel partners to its customers. Its products are known to be used by cryptocurrency miners, and with all major digital currencies crashing down to record lows earlier this year, fears of used GPUs flooding the market courtesy of miners that found them useless were present,
Additionally, the ongoing inflationary environment in the U.S. which has cut down purchasing power for everyday consumers presented another threat for NVIDIA, as the incentives to buy cheaper and used GPUs grew particularly as the company has been rumored to launch a new product lineup later this year.
Cumulatively, NVIDIA felt the heat on its income statement, as it revealed in the preliminary results that it expected its Gaming division to post a $1.4 billion sales drop over the guidance that the firm had released in its prior quarter. This led to a 33% annual drop in sales and a 44% sequential drop in one of the strongest drops in the company's history.
In response, the company's chief Mr. Jensen Huang has allegedly penned an email to employees in which he reiterated that NVIDIA's fundamentals remain strong and the demand for its products is high. In his comments that were part of the preliminary financial results, Mr. Huang had stressed that his company has a once in a lifetime opportunity to capture the artificial intelligence market and that it was confident in the demand for its products.
The executive wrote in his email that:
So what does this [THE REVENUE DROP] mean for us? Do we have a layoff? No. Instead, we have given raises to take care of your families as all of you are facing sky-high inflation.
He went on to add that:
We will exercise extreme collaboration, a hallmark of our culture, finding every opportunity to leverage and reuse. We will find and eliminate all wasted time, process, and material. Take this opportunity to make Nvidia even faster, leaner, and agile. So let's turn our alertness and agility to maximum, engines full-throttle, and fly through the challenges ahead while continuing to do our impactful work.
The drop in sales is the latest bit of bad news for the company that had only recently seen itself jump to the top of the semiconductor food chain and become the most valuable chip company in the world in terms of market capitalization. NVIDIA's multi billion dollar bid to acquire British design house Arm Ltd also failed to secure regulatory approval and the firm was forced to pay a hefty break up fee due to the failed attempt.
Huang's leaked email comes as layoffs have sped up in the technology industry, with large and small companies letting go of employees at a time when raging inflation has shattered purchasing power and luxury spending.