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Nvidia escapes 'bumpgate' class action

A class action suit against Nvidia has been dismissed by a judge in the US Court for the Northern District of California.

The graphics chip firm was accused of conspiring to hide its knowledge of defects in a line of graphics chips in order that its stock price wouldn't be hit.

Judge Richard Seeborg said the plaintiffs had not managed to establish that Nvidia knew its chips were defective and said testimony it had received had not proven what Nvidia could have known when. He gave the plaintiffs 30 days to file an amended complaint, or give up and go home.

The lawsuit was originally filed in 2008, by one Lisa Miller, and was granted class action after two union pension funds and the retirement fund of the city of Pontiac, Michigan stepped up on behalf of investors. The suit alleged that Nvidia's refusal to acknowledge defects in its chips in what became known as Bumpgate cost those who had invested in Nvidian stock between from November 2, 2007 and July 2, 2008 real money.

July 2nd 2008 was the date on which Nvidia finally acknowledged its GPUs were defective and announced that it would set aside a $150-200 million charge against revenue to cover the cost of fixing the chips.

Nvidia's first fix had the software simply turn on the fan full-time in an attempt to cool down the dodgy chips. Nvidia eventually had to replace chips in machines made for such customers as Apple, HP and Dell.

Nvidia' stock price dropped 31 per cent when it announced the charge and fell by over 70 per cent over the coming weeks.

Both Nvidia chief executive officer Jen-Hsun Huang, and chief financial officer, Marvin Burkett, were named in the suit as having a financial incentive to keep their heads in the sand and the stock price artificially high. But the judge threw out those charges.