US-based graphics card manufacturer Visiontek has gone into liquidation, following a move by its creditors to foreclose on its significant debts. The surprise closure of the company will leave a major gap in the graphics card market – particularly in the USA, where Visiontek was the largest supplier of NVIDIA based graphics boards.
The move may well create problems for NVIDIA in North America, as no other manufacturer seems to be positioned to fill the gap left by Visiontek in this market. Companies which had previously been mainstays of NVIDIA support, such as Hercules and Creative, have sought chipset solutions elsewhere, while now-defunct German board builder ELSA had its top-end video cards manufactured by VisionTek.
The damage will be less significant here in Europe, where VisionTek’s sales were less impressive. The company has tried to extend its influence here in recent months, mostly through the expansion of its UK operation, but had failed to make significant headway, particularly in the face of competition from the much stronger Hercules brands.
For NVIDIA, this closure is likely to affect the roll out of its new NV28 and NV30 chipsets, which it would have hoped to move into retail in bulk for Christmas; although the dates are unlikely to be changed, without Visiontek the company’s ability to successfully mass-produce and market cards for Christmas may well be compromised. This is particularly worrying in light of the launch of ATI’s next generation Radeon cards, which are currently arriving at retail and seem poised to take significant market share away from NVIDIA-based boards.
NVIDIA had other bad news earlier this week, when the company announced that it had written off $21 million worth of stock – partially due to the slowing demand for PC components, but with $7 million of that accounted for by chips for the Xbox.
Some analysts have suggested that the $7m write-off represents proof that Xbox is performing well below expectations, but another spin to the story has emerged in the past week – the possibility that this write-off of older stock indicates that Microsoft has demanded design changes to the NV2X graphics unit in the Xbox, and is preparing to do an overhaul of the hardware in the system. The scale of such changes is not known, but is likely to involve minor internal changes in the interest of cost-cutting.
Despite the setbacks, which will no doubt put extra strain on the already fraught relationship between NVIDIA and Microsoft, the company’s figures for the second quarter show it maintaining its impressive growth rate, with revenues up 64.6 per cent to $427 million.