Gross margin also rose to 20.2% from 16.8%, and non-GAAP results (which exclude a number of write-offs) actually showed $74.5 million in net profits. However, Nvidia’s results were negatively affected by an additional net charge of approximately $119.1 million to cover costs related to a faulty die and weak packaging material “used in certain versions of its previous-generation chips.”
This was Nvidia's second charge related to the faulty chips. The company recorded a $196 million charge during last year’s second fiscal quarter to cover warranty and product replacement costs associated with the issue. Nevertheless, CEO Jen-Hsun Huang is optimistic that the business is recovering, product demand is improving, and strategic investments in technologies such as Tesla and Tegra are leading to new growth.