Chip manufacturing giant Nvidia Corp (NASDAQ: NVDA) reported a 66% quarterly revenue decline in its original equipment manufacturing (OEM) segment, which accounts for sales from its cryptocurrency mining processor (CMP) product line.
What Happened: Nvidia’s OEM revenue for the second quarter tumbled to $140 million from $409 million a year earlier, contributing to just 2% of its overall quarterly revenue.
Last quarter, Nvidia reported $158 million from OEM revenue, a 77% decline year-over-year. Although the company did not disclose specific numbers concerning CMP revenue, it attributed the decline in revenue to weaker sales from the product line.
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Why It Matters: The CMP product line was first introduced in January 2021 as an attempt to dissuade crypto miners from hoarding its existing chips like the GeForce RTX 3080 Ti, which was particularly popular among Ethereum (CRYPTO: ETH).
With Ethereum mining coming to an end as the Merge to Proof-of-Stake approaches, demand for ETH mining chips has been scarce.
“Our GPUs are capable of cryptocurrency mining, though we have limited visibility into how much this impacts our overall GPU demand,” said Nvidia CFO Colette Kressin in her Q2 earnings commentary.
“Volatility in the cryptocurrency market – such as declines in cryptocurrency prices or changes in method of verifying transactions, including proof of work or proof of stake – has in the past impacted, and can in the future impact, demand for our products and our ability to accurately estimate it.”
Price Action: NVDA shares were trading 4.57% lower at $164.34 in after-hours trading on Wednesday, as per data from Benzinga Pro.
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