Nvidia Cuts 6.5 Percent of Its Workforce

Nvidia, a leading maker of graphics chips, added to its recent woes by announcing Thursday afternoon that it will lay off about 6.5 percent of the company’s workforce, or close to 360 people.

The layoffs will hit all of Nvidia’s global offices and departments, said Hector Marinez, Nvidia spokesman, and should be completed by October. Nvidia plans to take a $7 million to $10 million charge in its third quarter to cover the restructuring.

Nvidia is best known as a graphics chip supplier for gaming enthusiasts. Its business, however, extends to graphics chips sold to a wide variety of customers for handling intense video jobs, such as designing airplanes or creating animations.

Over the past couple of years, Nvidia has worked to push its silicon even deeper into corporate accounts by opening up some programming interfaces on the graphics chips. This has allowed oil and gas firms, manufacturers and biotech firms, among others, to run certain applications on the graphics processors. In the past, those applications were typically run on more mainstream chips from Intel and Advanced Micro Devices. While this could one day result in a large, new business for Nvidia, the company has been distracted by these efforts, according to some analysts.

As a result, A.M.D., which acquired Nvidia’s major rival ATI Technologies, has managed to make gains.

“Nvidia took their eye off the ball, which is their current business,” said Hans Mosesmann, a semiconductor analyst at Raymond James. “They underestimated A.M.D., and A.M.D. came out with products much better than expected at very aggressive price points.”

Even worse in the near term, Nvidia announced in August that a product defect would cause it to take a $196 million charge. That news, coupled with a 5 percent drop in second quarter revenue to $893 million, has concerned the company’s investors.

Thursday’s announcement did not boost investor confidence. Nvidia’s shares dropped more than 8 percent to about $10 in after-hours trading, although they were rebounding in very late trading.