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GPU and system-on-chip maker Nvidia says that the ongoing shortages of disk drives that have stalled the PC industry took a chunk out of its fourth quarter business, as did a steeper than expected ramp to 28 nanometer processes at chip foundry partner Taiwan Semiconductor Manufacturing Corp.

The upshot is that Nvidia will turn in about $100m less in revenues in the forthcoming fiscal first quarter ending April than it might have otherwise, based on historical trends, explained Jen-Hsun Huang, president and CEO at the chip maker, in a conference call with Wall Street analysts going over the company's fourth quarter of fiscal 2012 ended in January.

Huang calmly explained that TSCM is "doing fabulously" with the 28 nanometer ramp, particularly compared to the 40 nanometer processes that were used on its prior "Fermi" generation of GPUs. The yields on 28 nanometer wafers are actually higher at the same point in the cycle than they were at TSMC for the 40 nanometer node, which had its share of issues, but the yields for 28 nanometer are nonetheless not as good as the company was anticipating three months ago.

Equally significantly for Nvidia, the number of design wins it has for its "Kepler" series of embedded and discrete GPUs is higher than the design wins for the previous generation Fermi chips, so there is larger demand bumping up against constrained supply.

"We're ramping our Kepler GPUs very hard, but we could use more wafers," Huang said on the call. "Our expectation is that yields will improve, and as output increases, our costs will go down.

In fiscal Q4, Nvidia had $953.2m in overall revenues, up 8 per cent. Costs were on the rise, as the company paid for future processor and GPU development, and this time last year the company had a $57m payment from rival Intel that was the result of a cross-licensing agreement. Add it all up, and net income fell by 32.4 per cent to $116m in the quarter. Had the PC market not shrunk thanks to disk drive shortages in the wake of flooding in Thailand, Nvidia might have pulled even.

In the quarter, GPU sales fell 3.6 per cent sequentially to $621.5m, and consumer product sales stomached a 42.5 per cent sequential decline to $109.8m. This was blamed on a seasonal decline in chip sales to game console makers and to the stalling of sales of the Tegra 2 SoCs as the Tegra 3 chips were getting ready for market. The penta-core Tegra 3 will be launched this quarter and will ship this quarter, Huang said on the call.

Huang added that the Tegra chips accounted for $360m in revenues in fiscal 2012, and that the company expected the line would push at least 50 per cent more revenues in fiscal 2013, as Tegra 3 chip get adopted into smartphones and tablets and dual-core Tegra 2 chips are paired with Icera baseband processors to allow for an iPhone 4 alternative that is more affordable to come to market. Nvidia is also expecting the Ice Cream Sandwich variant of Android Linux and Windows on ARM to help boost the Tegra business this fiscal year.

The Professional Solutions unit at Nvidia, which peddles discrete graphics cards for workstations as well as the Tesla GPU coprocessors for workstations and servers, had a 3.6 per cent sequential decline in fiscal Q4, to $221.9m. Quadro graphics card sales were down a smidgen from fiscal Q3, which was a record quarter for Nvidia. Tesla coprocessor revenues were up slightly sequentially, but Nvidia still does not break tesla sales out separately.

For the full fiscal 2012 year, Nvidia had just under $4bn in sales, up 12.8 per cent, and net income more than doubled to $581.1m. The company exited its fiscal year with $3.13bn in cash and no debts, and like sometime rival AMD, wishes its foundry partners could just make more of the chips it has designed so it could turn sand and smarts into money.

Looking ahead to fiscal Q1, Nvidia is anticipating for revenues to be in the range of $900m to $930m. Given the uncertainties of the PC business and the disk drive shortages, Nvidia did not provide revenue projections for fiscal 2013, and considering the uncertainty of the 28 nanometer ramp, it was sure not going to give out net earnings projections, either.

But Huang did say that given the shortage of 28 nanometer capacity for the entire industry – AMD and Nvidia both use TSMC as their GPU foundries – that GPU average selling prices will likely hold up rather than ride down the Moore's Law curve a little bit. ®

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