1045810--3/16/2007--NVIDIA

related topics

{customer, product, revenue}

{product, market, service}

{financial, litigation, operation}

{acquisition, growth, future}

{regulation, change, law}

{condition, economic, financial}

{operation, international, foreign}

{property, intellectual, protect}

{product, candidate, development}

{stock, price, operating}

{product, liability, claim}

{provision, law, control}

{cost, regulation, environmental}

{control, financial, internal}

{personnel, key, retain}

{loan, real, estate}

Risks Related to Our Operations The matters relating to the Audit Committee of the Board of Directors, or the Board, review of our historical stock option granting practices and the restatement of our consolidated financial statements have resulted in litigation, which could harm our financial results. Because our gross margin for any period depends on a number of factors, our failure to forecast any change in such factors could adversely affect our gross margin. We are dependent on key personnel and the loss of these employees could negatively impact our business. Failure to achieve expected manufacturing yields for existing and/or new products could reduce our gross margin and could adversely affect our ability to compete effectively. To stay competitive we may have to invest more resources in research and development than anticipated, which could increase our operating expenses and negatively impact our operating results. Our operating expenses are relatively fixed and we may not be able to reduce operating expenses quickly in response to any revenue shortfalls. Failure to transition to new manufacturing process technologies could adversely affect our operating results and gross margin. Our failure to estimate customer demand properly may result in excess or obsolete inventory or, conversely, may result in inadequate inventory levels, either of which could adversely affect our financial results. Because we order materials in advance of anticipated customer demand our ability to reduce our inventory purchase commitments quickly in response to any revenue shortfalls is limited. Our operating results are unpredictable and may fluctuate, and if our operating results are below the expectations of securities analysts or investors, the trading price of our stock could decline. Risks Related to Our Products If we are unable to achieve design wins, our products may not be adopted by our target markets or customers either of which could negatively impact our financial results. Achievement of design wins may not result in the success of our products and could result in a loss of market share. Our business results could be adversely affected if our product development efforts are unsuccessful. Our failure to identify new market or product opportunities, or develop new products could harm our business. We could suffer a loss of market share if our products contain significant defects. Risks Related to Our Partners and Customers We may not be able to realize the potential financial or strategic benefits of business acquisitions, which could hurt our ability to grow our business, develop new products or sell our products. We depend on foundries and independent contractors to manufacture our products and these third parties may not be able to satisfy our manufacturing requirements, which would harm our business. We are dependent on third parties for assembly, testing and packaging of our products, which reduces our control over the delivery and quantity of our products. There can be no assurance that the PlayStation3 will achieve long term commercial success. As we continue to work directly with more foreign customers, any difficulties in collecting accounts receivable could harm our operating results and financial condition. We rely on third-party vendors to supply software development tools to us for the development of our new products and we may be unable to obtain the tools necessary to develop or enhance new or existing products. We sell our products to a small number of customers and our business could suffer by the loss of any of these customers. Risks Related to Our Competition As Intel and AMD continue to pursue platform solutions, we may not be able to successfully compete and our business would be negatively impacted. The market for GPU, MCP, Handheld GPUs and application processors is highly competitive and we may be unable to compete. Risks Related to Market Conditions We are subject to risks associated with international operations which may harm our business. We are dependent on the PC market and the rate of its growth has and may in the future have a negative impact on our business. If our products do not continue to be adopted by the consumer and enterprise desktop PC, notebook PC, workstation, PDA, cellular phone, and video game console markets or if the demand in these markets for new and innovative products decreases, our business and operating results would suffer. Our failure to comply with any applicable environmental regulations could result in a range of consequences, including fines, suspension of production, excess inventory, sales limitations, and criminal and civil liabilities. We are exposed to fluctuations in the market values of our portfolio investments and in interest rates. Our business is cyclical in nature and an industry downturn could harm our financial results. Political instability in Taiwan and in The People s Republic of China or elsewhere could harm our business. Risks Related to Government Action, Regulatory Action, Intellectual Property, and Litigation The pending investigation by the United States Department of Justice regarding investigation into the market for Graphics Processors could adversely affect our business. Expensing employee stock options materially and aversely affects our reported operating results and could also adversely affect our competitive position. We are a party to litigation, which, if determined adversely to us, could harm our business and financial condition. Our ability to compete will be harmed if we are unable to adequately protect our intellectual property. Litigation to defend against alleged infringement of intellectual property rights or to enforce our intellectual property rights and the outcome of such litigation could result in substantial costs to us. Our operating results may be adversely affected if we are subject to unexpected tax liabilities. While we believe that we currently have adequate internal control over financial reporting, we are exposed to risks from legislation requiring companies to evaluate those internal controls. Changes in financial accounting standards or interpretations of existing standards could affect our reported results of operations Risks Related to our Common Stock Provisions in our certificate of incorporation, our bylaws and our agreement with Microsoft could delay or prevent a change in control.

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1045810--3/16/2007--NVIDIA_CORP