GPU chip leader Nvidia has managed to score better than expected revenues of US$3.123 billion for the second quarter ending July 29 of fiscal 2019 despite a significant shrinkage in demand for crypto mining graphic cards, partly bolstered by massive contracted shipments to more than 10 makers of graphic cards, according to industry sources.

After suffering thick inventory of mining graphic cards amid sustained mining chill seen since April 2018, graphic card suppliers including Asustek Computer, Micro-Star International (MSI) and Gigabyte Technology still have to absorb massive contracted shipments from Nvidia before the chipmaker releases its new-generation GPU chips in the near future. This has allowed Nvidia to score slightly higher revenues than US$3.10 billion projected for the May-July quarter, the sources said.

The quarter's revenues of US$3.123 billion surged 40% on year but declined 3% sequentially, with gross margins up 4.9pp on year to 63.3% and down 1.2pp on quarter. Nvidia's net earnings for the quarter shot up 89% on year to US$1.101 billion, which represented a sequential drop of 11%.

Nvidia saw May-July revenues from the segments of AI, gaming, datacenter, professional visualization, and automotive electronics all higher than the February-April quarter, significantly offsetting the declines in demand for mining GPU chips, industry sources indicated.

Nvidia now dominates nearly 70% of the global graphic card market, boasting strong supply and price bargaining capabilities. Accordingly more than 10 graphic card makers have no other choice but to swallow contracted shipments released by Nvidia to deplete its inventories, in order to secure that they can be among the first batch of customers to get sufficient supply quotas of new-generation GPUs.

Nvidia estimated its revenues for the ongoing August-October quarter at US$3.25 billion, up 3% sequentially, with revenues for the fourth quarter to surge further on expected ramp-up in shipments of new-generation GPU chips.