Nvidia reported Friday first-quarter earnings that beat Wall Street's expectations but still marked a hefty drop from last year's first-quarter results, as supply constraints continued to limit shipments of its new Kepler-based GPUs.
The Santa Clara, Calif.-based chip maker said revenue for the three-month period came in at $924 million, down compared to the $962 million it pulled in last year. But it was Nvidia's quarterly profit that especially took a hit last quarter; the company reported net income of $60.4 million, less than half of last year's $135.2 million.
Nvidia attributed the drop to low production levels of its new Kepler-based 28nm GPUs that launched in March. Nvidia CEO Jen-Hsun Huang said that the company and its foundry partner, Taiwan Semiconductor Manufacturing Company, underestimated demand for the new product and, as a result, were simply unable to fulfill all orders.
[Related: Nvidia Unveils New GTX 690 Kepler-Based GPUs]
"We underplanned for the supply of 28nm and we need to fix that in the future," Huang told investors in a conference call Friday. "Last quarter was not a typical quarter for us. I would characterize last quarter as a difficult quarter and it was completely supply-constrained," he said.
Huang predicted inventory will ramp up over the coming quarters, but warned that supplies are still too low to fully meet demands.
The silver lining, of course, is that demand for Kepler-based chips is obviously strong. Nvidia said its GPU notebook business, in particular, brought in record revenue last quarter. The chip maker debuted its notebook range of GeForce 600M GPUs in March, which are found in both traditional notebook PCs and Ultrabooks, including the Acer Aspire Timeline M3.
Nvidia's flagship mobile processor, Tegra 3, also drove overall revenue for the company’s Consumer Products segment by 20 percent, quarter-on-quarter, to $132.6 million. The quad-core chip, which is optimized for use in smartphones and tablets, is said to deliver up to three times the graphics performance of its predecessor, Tegra 2, and up to 61 percent lower power consumption. Handset maker HTC launched the first Tegra 3-fueled smartphone, the HTC One X, in February.
Today, the phone is only available in Europe, but Huang said Tegra 3 smartphones are slated to hit U.S. shelves by the end of the year.
"There are many other Tegra 3 phones that are teed up and expected to come to market," he told investors.
The chip maker also is placing its bets on Tegra 3-based tablets and already has partnered with Microsoft to collaborate on new Windows 8 devices for later this year.
In February, Nvidia joined forces with the software giant to ship Windows 8 test tablets to developers in an effort to spur creation of new apps for the platform. Huang said the two companies have shipped about 1,000 tablets.