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Nvidia, Dell, HP sued over defective chips

Post Date: 2008-10-02

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    Posted: 02 Oct 2008 at 1:48am
Nvidia, Dell, HP sued over defective chips

Two class actions were started against Nvidia. The first, filed against Nvidia, Dell and Hewlett Packard alleging that defective graphics chips were shipped in notebook PCs but the defendants have failed to start a programme to replace the controller chips.

The first action alleges that the defendants only offered a software program update which while it purportedly repaired the defective chip, causes damage by reducing battery life and reduction in the life span of the computer.

"Thus, despite these facts, consumers are stuck with the defective computers: no replacements, no refunds and no compensation from any defendant," the first filing made in a New York court by Louis Olivos alleges.

It's alleged the defendants failed to disclose the "unusually high failure rates of Nvidia's GPUs and MCPs, and only acknowledged the existence of problems in a July 2nd 2008 SEC form 8K. Nvidia said in that filing it would take a $150 million to $200 million charge to cover customer warranties. In July, HP admitted several models in its Pavilion and Compaq Presario used the defective chip. It is offering a BIOS update which the filing alleges is difficult and the fix "is no fix at all", causing the fan to run more.

At the end of July this year, Dell admitted a number of its notebooks suffered from the problem too. The problem causes multiple images, random characters on the screen, lines on the screen and no video. Dell also recommends a flash of system BIOSes, and it's alleged this doesn't fix the defective chips either.

The second class action, filed in a California district court, is made against Nvidia, its CEO Jen-Hsun Huang and Marvin Burkett. This alleges that the defendants disseminated false and misleading documents, statements and omissions about the defective graphics processor chips.

"Despite knowing of this defect and its inevitable and devastating consequences....since at least November 8, 2007, the defendants delayed disclosure to the investing public for at least eight monmths, until July 2008," the filing alleges.

On the news, Nvidia's market cap was cut by over $3 billion, said the filing. Plaintiffs in the class action "suffered substantial damages as a result of purchasing Nvidia securities which were artificially and falsely inflated by the defendants," says the filing. X

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