On May 21, 2007, we announced a stock repurchase program under which we may purchase up to an additional $1.0 billion of our common stock over a three year period through May 2010. As a result of this increase, we have an ongoing authorization from the Board, subject to certain specifications, to repurchase shares of our common stock up to an aggregate maximum amount of $1.7 billion.

The repurchases will be made from time to time in the open market, in privately negotiated transactions, or in structured stock repurchase programs, and may be made in one or more larger repurchases, in compliance with the Securities Exchange Act of 1934, or the Exchange Act, Rule 10b-18, subject to market conditions, applicable legal requirements, and other factors. The program does not obligate NVIDIA to acquire any particular amount of common stock and the program may be suspended at any time at our discretion. As part of our share repurchase program, we have entered into, and we may continue to enter into, structured share repurchase transactions with financial institutions. These agreements generally require that we make an up-front payment in exchange for the right to receive a fixed number of shares of our common stock upon execution of the agreement, and a potential incremental number of shares of our common stock, within a pre-determined range, at the end of the term of the agreement.

During the three months ended ~~April~~July 29, 2007, we entered into a structured share repurchase transaction to repurchase ~~4.0~~3.3 million shares ~~of our common stock~~ for ~~$125.0~~$124.4 million which we recorded on the trade date of ~~each~~the transaction. Through ~~April~~July 29, 2007, we have repurchased ~~31.4~~34.7 million shares under our stock repurchase program for a total cost of ~~$613.1~~$737.5 million.

Subsequent to July 29, 2007, we entered into a structured share repurchase transaction to repurchase shares of our common stock for $125.0 million that we expect to settle prior to the end of our third quarter of fiscal year 2008 ending on October 28, 2007.

Convertible Preferred Stock

As of July 29, 2007 and July 30, 2006, no shares of preferred stock were outstanding.

Note 15 - Segment Information

Our Chief Executive Officer, who is considered to be our chief operating decision maker, or CODM, reviews financial information presented on an operating segment basis for purposes of making operating decisions and assessing financial performance.

During the first quarter of fiscal 2008, we reorganized our operating segments. We now report financial information for four operating segments to our CODM: the graphics processing unit, or GPU, business, which is comprised primarily of our GeForce products that support desktop and notebook PCs, plus memory products; the professional solutions business, or PSB, which is comprised of our NVIDIA Quadro professional workstation products and other professional graphics products, including our NVIDIA Tesla high-performance computing products; the media and communications processor, or MCP, business, which is comprised of NVIDIA nForce core logic and motherboard GPU products; and our consumer products business, or CPB, which is comprised of our GoForce brand mobile and consumer products that support handheld personal digital assistants, or PDAs, cellular phones and other handheld devices. CPB also includes license, royalty, other revenue and associated costs related to video game consoles and other digital consumer electronics devices.

In addition to these operating segments, we have the “All Other” category that includes human resources, legal, finance, general administration and corporate marketing expenses, which total $62.9 million and $58.4 million for second quarter of fiscal years 2008 and 2007, respectively, and total $130.8 million and $108.5 million for the first half of fiscal years 2008 and 2007, respectively, that we do not allocate to our other operating segments. “All Other” also includes the results of operations of other miscellaneous operating segments that are neither individually reportable, nor aggregated with another operating segment. Revenue in the “All Other” category is primarily derived from sales of components. All relevant prior period amounts have been revised to conform to the presentation of our current fiscal quarter.

2021

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Our CODM does not review any information regarding total assets on an operating segment basis. Operating segments do not record intersegment revenue, and, accordingly, there is none to be reported. The accounting policies for segment reporting are the same as for NVIDIA as a whole.

	GPU		PSB		MCP		CPB		All Other			Consolidated
	(In thousands)
Three Months Ended July 29, 2007:
Revenue	$	579,034	$	127,321	$	161,058	$	62,182	$	5,658		$	935,253
Depreciation and amortization expense	$	8,932	$	1,960	$	6,844	$	5,004	$	9,710		$	32,450
Operating income (loss)	$	167,828	$	66,363	$	12,401	$	2,767	$	(64,599	)	$	184,760
Six Months Ended July 29, 2007:
Revenue	$	1,062,529	$	268,194	$	309,808	$	129,408	$	9,594		$	1,779,533
Depreciation and amortization expense	$	17,217	$	4,147	$	13,437	$	11,099	$	18,872		$	64,772
Operating income (loss)	$	292,245	$	135,670	$	20,240	$	12,935	$	(135,084	)	$	326,006
Three Months Ended July 30, 2006:
Revenue	$	373,107	$	117,126	$	139,141	$	55,693	$	2,452		$	687,519
Depreciation and amortization expense	$	5,588	$	1,659	$	4,407	$	5,787	$	8,153		$	25,594
Operating income (loss)	$	75,330	$	54,517	$	7,863	$	16,597	$	(58,491	)	$	95,816
Six Months Ended July 30, 2006:
Revenue	$	777,914	$	217,168	$	257,525	$	113,078	$	3,641		$	1,369,326
Depreciation and amortization expense	$	12,458	$	3,487	$	8,685	$	9,573	$	16,262		$	50,465
Operating income (loss)	$	162,569	$	99,581	$	10,846	$	33,762	$	(109,433	)	$	197,325

Revenue by geographic region is allocated to individual countries based on the location to which the products are initially billed even if our customers’ revenue is attributable to end customers that are located in a different location. The following tables summarize information pertaining to our revenue from customers based on invoicing address in different geographic regions:

	Three Months Ended				Six Months Ended
	July 29, 2007		July 30, 2006		July 29, 2007		July 30, 2006
	(In thousands)
Revenue:
United States	$	72,524	$	79,155	$	174,390	$	156,527
Other Americas		36,592		36,910		91,136		64,500
China		297,458		91,459		535,743		271,179
Taiwan		316,974		289,406		589,957		516,980
Other Asia Pacific		122,387		113,738		217,439		224,956
Europe		89,318		76,851		170,868		135,184
Total revenue	$	935,253	$	687,519	$	1,779,533	$	1,369,326

NVIDIA CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Revenue from significant customers, those representing approximately 10% or more of total revenue for the respective periods, is summarized as follows:

	Three Months Ended						Six Months Ended
	July 29, 2007			July 30, 2006			July 29, 2007			July 30, 2006
Revenue:
Customer A		12	%		15	%		11	%		12	%

Accounts receivable from a significant customer that represented approximately 10% or more of total accounts receivable for the respective periods, is summarized as follows:

	July 29, 2007			January 28, 2007
Accounts Receivable:
Customer A		14	%		5	%
Customer B		10	%		18	%

Note 16 - Subsequent Event

Stock Split

On August 9, 2007, we announced that our Board approved a three-for-two stock split of our outstanding shares of common stock to be effected in the form of a stock dividend. The stock split will be effective on or about Monday, September 10, 2007 for stockholders of record at the close of business on Monday, August 20, 2007 and will entitle each stockholder of record to receive one additional share for every two outstanding shares of common stock held and cash in lieu of fractional shares. Upon the completion of the stock split, we expect to have approximately 550 million shares of common stock outstanding. If the stock split had been given retroactive effect in our Condensed Consolidated Statements of Income, our basic net income per share would have been $0.32 and $0.56 for the three and six months ended July 29, 2007, respectively, and $0.17 and $0.34 for the three and six months ended July 30, 2006, respectively. The diluted net income per share would have been $0.29 and $0.51 for the three and six months ended July 29, 2007, respectively, and $0.15 and $0.31 for the three and six months ended July 30, 2006, respectively.

ITEM 2. 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

When used in this Quarterly Report on Form 10-Q, the words “believes,” “plans,” “estimates,” “anticipates,” “expects,” “intends,” “allows,” “can,” “will” and similar expressions are intended to identify forward-looking statements. These statements relate to future periods and include, but are not limited to, statements as to: the features, benefits, capabilities, performance, impact, production and availability of our technologies and products; seasonality; ~~past or future acquisitions;~~ our strategies and objectives; ~~product cycles;~~ gross margin; product mix; inventories; average selling prices; design wins; taxes; growth and factors contributing to growth; stock-based compensation expense; revenue; our expenditures; our capital expenditures; our cash flow and cash balances; our liquidity; uses of cash; dividends; investments and marketable securities; our stock repurchase program; our results of operations; competition; our intellectual property; our strategic relationships; customer demand; reliance on a limited number of customers, manufacturers, subcontractors and suppliers; our internal control over financial reporting; our disclosure controls and procedures; recent accounting pronouncements; our international operations; our ability to attract and retain qualified personnel; past or future acquisitions; our foreign currency risk strategy; compliance with environmental laws and regulations; litigation or regulatory action arising from the review of our stock option grant practices and financial restatements; the Department of Justice subpoena and investigation; litigation, including the class action lawsuits; and the Securities and Exchange Commission inquiry. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to, the risks discussed below as well as difficulties associated with conducting international operations; slower than anticipated growth; unanticipated decreases in average selling prices of a particular product; increased sales of lower margin products; difficulty in collecting accounts receivable; our inability to ~~decrease~~adjust inventory purchase commitments; difficulties in entering new markets; the write-down of the value of inventory; entry of new competitors in our established markets; reduction in demand for our products; market acceptance of our competitors’ products; defects in our products; the impact of competitive pricing pressures; disruptions in our relationships with our key suppliers; fluctuations in general economic conditions; ~~failure to achieve design wins;~~ changes in customers’ purchasing behaviors; international and political conditions; the concentration of sales of our products to a limited number of customers; decreases in demand for our products; delays in the development of new products by us or our partners; delays in volume production of our products; developments in and expenses related to litigation; our inability to realize the benefits of acquisitions; the outcome of litigation or regulatory actions; and the matters set forth under Item 1A. - Risk Factors. These forward-looking statements speak only as of the date hereof. Except as required by law, we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

All references to “NVIDIA,” “we,” “us,” “our” or the “Company” mean NVIDIA Corporation and its subsidiaries, except where it is made clear that the term means only the parent company.

NVIDIA, GeForce, SLI, GoForce, NVIDIA Quadro, Quadro, NVIDIA nForce, NVIDIA Tesla and the NVIDIA logo are our trademarks or registered trademarks in the United States and other countries that are used in this document. We may also refer to trademarks of other corporations and organizations in this document.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Item 1A. Risk Factors”, our Condensed Consolidated Financial Statements and related Notes thereto, as well as other cautionary statements and risks described elsewhere in this quarterly report on Form 10-Q, before deciding to purchase, hold or sell shares of our common stock.

Overview

Our Company

NVIDIA Corporation is the worldwide leader in programmable graphics processor technologies. Our products are designed to enhance the end-user experience on consumer and professional computing devices. We have four major product-line operating segments: the graphics processing unit, or GPU, ~~Business,~~business, the professional solutions business, or PSB, the media and communications processor, or MCP, ~~Business,~~business, and the consumer products business, or CPB.

Our GPU ~~Business~~business is comprised primarily of our GeForce products that support desktop and notebook PCs, plus memory products. Our PSB is comprised of our NVIDIA Quadro professional workstation products and other professional graphics ~~and~~products, including our NVIDIA Tesla high-performance computing products. Our MCP ~~Business~~business is comprised of NVIDIA nForce core logic and motherboard GPU products. Our CPB is comprised ~~primarily~~ of our GoForce brand mobile and consumer products that support handheld personal digital assistants, or PDAs, cellular phones and other handheld ~~devices, plus~~devices. CPB also includes license, royalty, ~~and~~ other revenue and associated costs related to video game consoles and other digital consumer electronics devices.

We were incorporated in California in April 1993 and reincorporated in Delaware in April 1998. Our headquarter facilities are in Santa Clara, California. Our Internet address is www.nvidia.com. The contents of our website are not part of this Form 10-Q.~~www.nvidia.com~~.

Recent Developments, Future Objectives and Challenges

GPU Business

During the first half of our fiscal year 2008, our GeForce product was the share leader in the Standalone Desktop and Standalone Notebook segments as reported in the latest PC Graphics 2007 Report from Mercury Research for the first half of calendar year 2007.

During the first half of fiscal year 2008, we launched several new DirectX10 GPUs, adding the GeForce 8800 Ultra, GeForce 8600, GeForce 8500, and GeForce 8300 to our GeForce 8 series of GPUs, which previously included the NVIDIA GeForce 8800 GTX and GeForce 8800 GTS.

During the second quarter of fiscal ~~2008:~~year 2008, we maintained our leading share in both the DirectX9 and DirectX10 generation of desktop GPUs.

·	our GeForce product was the market leader in the Total Desktop, Standalone Desktop and Standalone Notebook segments in the first quarter of calendar year 2007, based on the latest PC Graphics 2007 Report from Mercury Research.

·	in April 2007, we launched several new DirectX10 GPUs, adding the GeForce 8600, GeForce 8500, and GeForce 8300 to our GeForce 8 series of GPUs, which previously included the NVIDIA GeForce 8800 GTX and GeForce 8800 GTS.

During the second quarter of fiscal year 2008, we launched a new family of GeForce 8M Series notebook GPUs. We also supported the production ramp of top notebook PC OEMs, including Acer, Apple, ASUS, Dell, HP, Lenovo, Samsung, Sony and Toshiba.

Professional Solutions Business

During the first quarter of fiscal ~~2008:~~year 2008, we launched the NVIDIA Quadro FX 4600 and NVIDIA Quadro FX 5600 products, which are professional solutions based on our GeForce 80 unified architecture.

·	~~we launched the NVIDIA Quadro FX 4600 and NVIDIA Quadro FX 5600 products, which are professional solutions based on our G80 unified architecture.~~

During the first quarter of fiscal year 2008, we expanded our NVIDIA Quadro Plex family with the introduction of the NVIDIA Quadro Plex VCS IV, a new version of the NVIDIA Quadro Plex visual computing system, or VCS, which provides enhanced performance for a wide range of high-performance, graphics-intensive styling and design, oil and gas, and scientific applications.

we expanded our NVIDIA Quadro Plex family with the introduction of the NVIDIA Quadro Plex VCS IV, a new version of the NVIDIA Quadro Plex visual computing system, or VCS, which provides enhanced performance for a wide range of high-performance, graphics-intensive styling and design, oil and gas, and scientific applications.

During the second quarter of fiscal year 2008, we announced Tesla, our entry into the high-performance computing industry. The Tesla family consists of the C870 GPU Computing processor, the D870 Deskside Supercomputer and the S870 1U Computing Server.

During the second quarter of fiscal year 2008, we introduced a new line of notebook workstation GPUs based on our GeForce 8 series architecture. The new line consists of the NVIDIA Quadro FX 1600M, 570M and 360M.

MCP Business

During the first half of our fiscal year 2008, our NVIDIA nForce products held the leadership position for the AMD segment as reported in the latest PC Processor and Chipsets report from Mercury Research for the first half of calendar year 2007.

During the first quarter of fiscal ~~2008:~~year 2008, we shipped the GeForce 7050 motherboard GPU, which targets the lower cost segments of the market.

During the first quarter of fiscal year 2008, we extended the reach of Scalable Link Interface, or SLI, technology into the performance segments with the launch of our NVIDIA nForce 650i SLI, 680i LT SLI and 680i Ultra MCP products ~~held the leadership position for the AMD segment based on the latest PC Processor and Chipsets report from Mercury Research.~~

·	~~we shipped the GeForce 7050 motherboard GPU, which targets the lowest cost segments of the market.~~

·	~~we expanded the reach of Scalable Link Interface, or SLI, technology into the performance segments with the launch of the our NVIDIA nForce 650i SLI MCP product~~ for Intel.

Consumer Products Business

During the first quarter of fiscal 2008, we unveiled our first applications processor - the GoForce 6100. The GoForce 6100 is designed for next generation personal media players, or PMPs, and multimedia smart phones. We expect that designs based on the GoForce 6100 will ship later this fiscal year.

Gross Margin Improvement

We continue to remain focused on improving our gross margin. During the ~~first~~second quarter of fiscal 2008, our gross margin was ~~a record 45.0%~~45.3%, an increase of ~~270~~280 basis points from our gross margin of ~~42.3%~~42.5% for the ~~first~~second quarter of fiscal year 2007.

Our gross margin is significantly impacted by the mix of products that we earn revenue from during each of our fiscal quarters. Product mix is often difficult to estimate with accuracy and, thus, if we achieve significant revenue growth in our lower margin product lines, ~~it may negatively impact~~or if we are unable to earn as much revenue as we expect from higher margin product lines, our gross ~~margin.~~margin may be negatively impacted. We expect to continue to focus on improving our gross margin during the remainder of fiscal 2008.

Seasonality

Our industry is largely focused on the consumer products market. Due to the seasonality in this market, we typically expect to see stronger revenue performance in the second half of the calendar year related to the back-to-school and holiday seasons.

Subsequent Event

Stock Split

On August 9, 2007, we announced that our Board of Directors, or the Board, approved a three-for-two stock split of our outstanding shares of common stock to be effected in the form of a stock dividend. The stock split will be effective on or about Monday, September 10, 2007 for stockholders of record at the close of business on Monday, August 20, 2007 and will entitle each stockholder of record to receive one additional share for every two outstanding shares of common stock held and cash in lieu of fractional shares. Upon the completion of the stock split, we expect to have approximately 550 million shares of common stock outstanding. If the stock split had been given retroactive effect in our Condensed Consolidated Statements of Income, our basic net income per share would have been $0.32 and $0.56 for the three and six months ended July 29, 2007, respectively, and $0.17 and $0.34 for the three and six months ended July 30, 2006, respectively. The diluted net income per share would have been $0.29 and $0.51 for the three and six months ended July 29, 2007, respectively, and $0.15 and $0.31 for the three and six months ended July 30, 2006, respectively.

Financial Information by Business Segment and Geographic Data

During the first quarter of fiscal 2008, we reorganized our operating segments. We now report financial information for four operating segments to our CODM: the graphics processing unit, or GPU, business, which is comprised primarily of our GeForce products that support desktop and notebook PCs, plus memory products, the professional solutions business, or PSB, which is comprised of our NVIDIA Quadro professional workstation products and other professional graphics products, including our NVIDIA Tesla high-performance computing products, the media and communications processor, or MCP, business, which is comprised of NVIDIA nForce core logic and motherboard GPU products, and our consumer products business, or CPB, which is comprised of mobile and consumer products that support handheld personal digital assistants, or PDAs, cellular phones and other handheld devices and license, royalty, other revenue and associated costs related to video game consoles and other digital consumer electronics devices.

Results of Operations

The following table sets forth, for the periods indicated, certain items in our Condensed Consolidated Statements of Income expressed as a percentage of revenue.

	Three Months Ended						Six Months Ended
	July 29, 2007			July 30, 2006			July 29, 2007			July 30, 2006
Revenue		100.0	%		100.0	%		100.0	%		100.0	%
Cost of revenue		54.7			57.5			54.8			57.6
Gross profit		45.3			42.5			45.2			42.4
Operating expenses:
Research and development		16.9			18.6			17.8			18.3
Sales, general and administrative		8.7			10.0			9.1			9.7
Total operating expenses		25.6			28.6			26.9			28.0
Operating income		19.7			13.9			18.3			14.4
Interest and other income, net		1.7			1.3			1.6			1.3
Income before income tax expense		21.4			15.2			19.9			15.7
Income tax expense		3.0			2.6			2.8			2.7
Cumulative effect of change in accounting principle		—			—			—			0.1
Net income		18.4	%		12.6	%		17.1	%		13.1	%

Three and Six months Ended July 29, 2007 and July 30, 2006

Revenue

Revenue was $935.3 million for our second quarter of fiscal year 2008, compared to $687.5 million for our second quarter of fiscal year 2007, which represents an increase of 36.0%. Revenue was $1.78 billion for the first half of fiscal 2008 and $1.37 billion for the first half of fiscal 2007, which represented an increase of 30.0%. A discussion of our revenue results for each of our operating segments is as follows:

GPU Business. GPU Business revenue increased by 55.2% to $579.0 million in the second quarter of fiscal year 2008, compared to $373.1 million for the second quarter of fiscal year 2007. This increase was primarily due to increased sales of our desktop GPU products and notebook GPU products. Sales of our desktop GPU products increased by approximately 37% compared to the second quarter of fiscal year 2007. This increase was for the most part due to share gains we experienced in the Standalone Desktop segment as reported in the latest PC Graphics 2007 Report from Mercury Research which was driven by the leadership position of our top to bottom GeForce 8-based family. Sales of our NVIDIA notebook GPU products increased by approximately 129% compared to the second quarter of fiscal year 2007. Notebook GPU revenue growth was mostly due to share gains in the Standalone Notebook segment as reported in the latest PC Graphics 2007 Report from Mercury Research. Our share gains in the Standalone Notebook segment were primarily as a result of shipments of products used in notebook PC design wins related to Intel’s new Santa Rosa platform.

GPU Business revenue increased by 36.6% to $1.06 billion for the first half of fiscal 2008, compared to $777.9 million for the first half of fiscal 2007. This increase was primarily the result of increased sales across all GPU categories. Sales of our desktop GPU products increased approximately 25% and notebook GPU products increased by approximately 101% as compared to the first half of fiscal year 2007. This increase for the most part was due to share gains in the Standalone Desktop and the Standalone Notebook segments as reported in the latest PC Graphics 2007 Report from Mercury Research. Our share gains in the Standalone Desktop segment were primarily driven by the leadership position of our GeForce 8-based products and our share gains in the Standalone Notebook segment were primarily the result of shipments of products used in notebook PC design wins related to Intel’s new Santa Rosa platform.

PSB. PSB revenue increased by 8.7% to $127.3 million in the second quarter of fiscal year 2008, compared to $117.1 million for the second quarter of fiscal year 2007. PSB revenue increased by 23.5% to $268.2 million for the first half of fiscal 2008 as compared to $217.2 million for the first half of fiscal 2007. Our NVIDIA professional workstation product sales increased due to an overall increase in shipments of boards and chips as compared to the second quarter and first half of fiscal year 2007. This increase was primarily driven by our transition from previous generation of NVIDIA Quadro professional workstation products to GeForce 7-based and GeForce 8-based products.

MCP Business. MCP Business revenue increased by 15.8% to $161.1 million in the second quarter of fiscal year 2008, compared to $139.1 million for the second quarter of fiscal year 2007. The increase was a result of an approximately 17% increase in sales of our AMD-based platform products and over an 100% increase in sales of our Intel-based platform products as compared to the second quarter of fiscal year 2007. The increase in our AMD-based platform products was led by sales of notebook graphics products and by our ramping up shipments of our Intel-based platform products after the third quarter of fiscal year 2007. These increases were offset by a decline in sales of products related to our acquisition of ULi Electronics, Inc.

MCP business revenue increased by 20.3% to $309.8 million for the first half of fiscal 2008 as compared to $257.5 million for the first half of fiscal 2007. The increase was a result of an approximately 15% increase in sales of our AMD-based platform products and over a 200% increase in sales of our Intel-based platform products as compared to the first half of fiscal year 2007. The increase in our AMD-based platform products was led by sales of notebook graphics products and by our ramping up shipments of our Intel-based platform products after the third quarter of fiscal year 2007. These increases were offset by a decline in sales of products related to our acquisition of ULi Electronics, Inc.

CPB. CPB revenue increased by 11.7% to $62.2 million for the second quarter of fiscal year 2008, compared to $55.7 million for the second quarter of fiscal year 2007. CPB revenue increased by 14.4% to $129.4 million for the first half of fiscal 2008 as compared to $113.1 million for the first half of fiscal 2007. The overall increase in CPB revenue is primarily due to increased revenue from our digital consumer electronics devices and sales related to our acquisition of PortalPlayer Inc., or PortalPlayer, in January 2007. These increases were offset by a decrease in revenue from our cell phone products and contractual development arrangements with Sony Computer Entertainment, or SCE.

Concentration of Revenue

Revenue from sales to customers outside of the United States and other Americas accounted for 88.3% and 83.1% of total revenue for the second quarter of fiscal years 2008 and 2007, respectively, and 85.1% and 83.9% for the first half of fiscal years 2008 and 2007, respectively. Revenue by geographic region is allocated to individual countries based on the location to which the products are initially billed even if the foreign contract equipment manufacturers, or CEMs’, add-in board and motherboard manufacturers’ revenue is attributable to end customers in a different location.

In the second quarter of fiscal years 2008 and 2007, sales to one significant customer, in excess of 10% of our total revenue, accounted for approximately 12% and 15%, respectively, of our total revenue. Sales to our largest customer accounted for approximately 11% and approximately 12% of our total revenue for the first half of fiscal years 2008 and 2007, respectively.

Gross Profit and Gross Margin

Gross margin is the percentage of gross profit to revenue. Our gross margin can vary in any period depending on the mix of types of products sold. Our gross margin was 45.3% and 42.5% for the second quarter of fiscal year 2008 and 2007, respectively. The improvement in our gross margin reflects our continuing focus on delivering cost effective product architectures, enhancing business processes and delivering profitable growth. Our gross margin is significantly impacted by the mix of products we sell. Product mix is often difficult to estimate with accuracy and, thus, if we achieve significant revenue growth in our lower margin product lines, or if we are unable to earn as much revenue as we expect from higher margin product lines, our gross margin may be negatively impacted. We expect gross margin to remain relatively flat, or improve slightly, during the third quarter of fiscal year 2008. A discussion of our gross margin results for each of our operating segments is as follows:

GPU Business. The gross margin of our GPU Business increased during the second quarter of fiscal year 2008 as compared to the second quarter of fiscal year 2007, as well as during the first half of fiscal year 2008 as compared to the first half of fiscal year 2007. This increase was primarily due to increased sales of our GeForce 8 series GPUs, which began selling in the third quarter of fiscal year 2007. Our GeForce 8 series and our GeForce 7 series GPUs generally have higher gross margins than our previous generations of GPUs. Additionally, the costs of memory purchases were more favorable during the second quarter of fiscal year 2008.

PSB. The gross margin of our PSB increased during the second quarter of fiscal year 2008 as compared to the second quarter fiscal year 2007, as well as during the first half of fiscal year 2008 as compared to the first half of fiscal year 2007. This increase was primarily due to increased sales of our GeForce 8-based NVIDIA Quadro products, which began selling in the fourth quarter of fiscal year 2007, and GeForce 7-based NVIDIA Quadro products, which generally have higher gross margins than our previous generations of NVIDIA Quadro products.

MCP Business. The gross margin of our MCP Business increased during the second quarter of fiscal year 2008 as compared to the second quarter fiscal year 2007, as well as during the first half of fiscal year 2008 as compared to the first half of fiscal year 2007. This increase was primarily due to a shift in product mix towards Intel-based platform products, of which we began to ramp up shipment after the third quarter of fiscal year 2007, and inventory reserves that we recorded as a charge to cost of revenue during the first quarter of fiscal 2007 of approximately $4.1 million related to certain NVIDIA nForce purchase commitments that we believed had exceeded future demand.

CPB. The gross margin of our CPB decreased during the second quarter of fiscal year 2008 as compared to the second quarter fiscal year 2007, as well as during the first half of fiscal year 2008 as compared to the first half of fiscal year 2007. This decrease was primarily due to a drop in gross profit realized from sales of our high-end feature cellular phone and other handheld devices.

Operating Expenses

Research and Development

	Three Months Ended												Six Months Ended
	July 29, 2007			July 30, 2006			$ Change			% Change			July 29, 2007			July 30, 2006			$ Change			% Change
	(in millions)												(in millions)
Research and Development:
Salaries and benefits	$	89.8		$	67.0		$	22.8			34	%	$	177.5		$	135.0		$	42.5			31	%
Depreciation and amortization		17.2			15.1			2.1			14	%		33.7			30.1			3.6			12	%
Stock-based compensation		16.4			16.6			(0.2	)		(1	)%		38.8			31.0			7.8			25	%
Computer software and lab equipment		15.6			13.4			2.2			16	%		30.5			26.3			4.2			16	%
Facility expense		12.7			8.8			3.9			44	%		24.4			16.9			7.5			44	%
New product development		2.6			7.3			(4.7	)		(64	)%		6.8			14.8			(8.0	)		(54	)%
License and development project costs		(1.5	)		(4.9	)		3.4			(69	)%		(3.9	)		(10.7	)		6.8			(64	)%
Other		5.2			4.0			1.2			30	%		8.5			7.1			1.4			20	%
Total	$	158.0		$	127.3		$	30.7			24	%	$	316.3		$	250.5		$	65.8			26	%

Research and development as a percentage of net revenue		17	%		19	%								18	%		18	%

Research and development expenses were $158.0 million and $127.3 million in the second quarter of fiscal years 2008 and 2007, respectively, an increase of $30.7 million, or 24%. The increase was primarily due to a $22.8 million increase in salaries and benefits, which was related to hiring of approximately 710 additional personnel in research and development. Despite an increase in headcount, stock-based compensation expense remained comparable between the second quarters of fiscal years 2008 and 2007, primarily because the increase in compensation expense related to stock options granted since the second quarter of fiscal year 2007 was offset by a combination of the reduction in compensation expense related to older awards that were almost completely vested and amortized by the end of the first quarter of fiscal 2008 and the transition from the Black-Scholes model to the binomial valuation model. Facilities increased $3.9 million due to increased facilities expense allocation, and computer software and equipment increased $2.2 million primarily due to increased allocation of information technology expenses, both of which were based on the growth in headcount in departments related to research and development functions when compared to the growth in headcount related to sales, general and administrative functions. License and development project costs increased by $3.4 million primarily related to decreased development costs related to our collaboration with SCE and other engineering costs related to a different development contract. Certain of our personnel who usually devote their time to research and development efforts have spent time working on these development projects. The cost associated with the time these individuals spend working on development projects is allocated from research and development to cost of revenue or is capitalized on our balance sheet. During the second quarter of fiscal year 2008, less time was spent working on development projects, so less cost was allocated to cost of revenue or capitalized and, therefore, more cost remained in research and development. Depreciation and amortization expense increased $2.1 million due to emulation hardware and software programs that were purchased during fiscal year 2007, resulting in a full period of depreciation in the second quarter of fiscal year 2008 compared to a partial period of depreciation in fiscal year 2007. These increases were offset by a decrease of $4.7 million in new product development costs as a result of decreases in costs related to product tape-outs during the second quarter of fiscal year 2008.

Research and development expenses were $316.3 million and $250.5 million in the first half of fiscal years 2008 and 2007, respectively, an increase of $65.8 million, or 26%. The increase was primarily due to a $42.5 million increase in salaries and benefits which was related to hiring of approximately 710 additional personnel. Stock-based compensation expense increased by $7.8 million primarily due to an increase in headcount, offset by a combination of the reduction in compensation expense related to older awards that were almost completely vested and amortized by the end of the first quarter of fiscal 2008 and the transition from the Black-Scholes model to the binomial valuation model. Facilities increased $7.5 million due to increased facilities expense allocation, and computer software and equipment increased $4.2 million primarily due to increased allocation of information technology expenses, both of which were based on the growth in headcount in departments related to research and development functions when compared to the growth in headcount related to sales, general and administrative functions. License and development project costs increased by $6.8 million primarily related to decreased development costs related to our collaboration with SCE and other engineering costs related to a different development contract. Certain of our personnel who usually devote their time to research and development efforts have spent time working on these development projects. The cost associated with the time these individuals spend working on development projects is allocated from research and development to cost of revenue or is capitalized on our balance sheet. During the first half of fiscal year 2008, less time was spent working on development projects, so less cost was allocated to cost of revenue or capitalized and, therefore, more cost remained in research and development. Depreciation and amortization expense increased $3.6 million due to emulation hardware and software programs that were purchased during fiscal year 2007, resulting in a full period of depreciation in the first half of fiscal year 2008 compared to a partial period of depreciation in the first half of fiscal year 2007. These increases were offset by a decrease of $8.0 million in new product development costs as a result of decreases in costs of product tape-outs and in prototype materials during the first half of fiscal year 2008.

We anticipate that we will continue to devote substantial resources to research and development, and we expect these expenses to increase in absolute dollars in the foreseeable future due to the increased complexity and the greater number of products under development. However, research and development expenses are likely to fluctuate from time to time to the extent we make periodic incremental investments in research and development and these investments may be independent of our level of revenue.

Sales, General and Administrative

	Three Months Ended												Six Months Ended
	July 29, 2007			July 30, 2006			$ Change			% Change			July 29, 2007			July 30, 2006			$ Change			% Change
	(in millions)												(in millions)
Sales, General and Administrative:
Salaries and benefits	$	39.2		$	32.4		$	6.8			21	%	$	81.1		$	65.2		$	15.9			24	%
Advertising and promotions		14.2			15.0			(0.8	)		(5	)%		28.0			29.6			(1.6	)		(5	)%
Legal and accounting fees		10.4			3.8			6.6			174	%		16.4			6.6			9.8			148	%
Stock-based compensation		10.3			10.5			(0.2	)		(2	)%		22.5			17.1			5.4			32	%
Depreciation and amortization		2.9			2.5			0.4			16	%		5.6			4.6			1.0			22	%
Facility expense		2.7			4.3			(1.6	)		(37	)%		5.5			8.3			(2.8	)		(34	)%
Other		1.6			0.6			1.0			167	%		2.8			1.6			1.2			75	%
Total	$	81.3		$	69.1		$	12.2			18	%	$	161.9		$	133.0		$	28.9			22	%

Sales, general and administrative as a percentage of net revenue		9	%		10	%								9	%		10	%

Sales, general and administrative expenses were $81.3 million and $69.1 million in the second quarter of fiscal years 2008 and 2007, respectively, an increase of $12.2 million, or 18%, primarily due to a $6.8 million increase in salaries and benefits related to our hiring of approximately 140 additional personnel. Despite an increase in headcount, stock-based compensation expense remained comparable between the second quarters of fiscal years 2008 and 2007, primarily because the increase in compensation expense related to stock options granted since the second quarter of fiscal year 2007 was offset by a combination of the reduction in compensation expense related to older awards that were almost completely vested and amortized by the end of the first quarter of fiscal 2008 and the transition from the Black-Scholes model to the binomial valuation model. Legal and accounting fees increased by $6.6 million primarily due to legal fees related to the 3dfx and Department of Justice, or DOJ, matters described in Note 13 of the Notes to Condensed Consolidated Financial Statements. In addition, we received an insurance reimbursement which reduced our legal costs in the second quarter of fiscal year 2007. These increases were offset by a decrease of $1.6 million in facilities due to decreased facilities expense allocation to sales, general and administrative functions, which was driven by greater incremental headcount growth in departments that are included within the research and development functions.

Sales, general and administrative expenses were $161.9 million and $133.0 million for the first half of fiscal years 2008 and 2007, respectively, an increase of $28.9 million, or 22%. The increase was primarily due to a $15.9 million increase in salaries and benefits which related to our having added approximately 140 additional personnel. Stock-based compensation expense increased by $5.4 million primarily due to an increase in headcount, offset by a combination of the reduction in compensation expense related to older awards that were almost completely vested and amortized by the end of the first quarter of fiscal 2008 and the transition from the Black-Scholes model to the binomial valuation model. Legal and accounting fees increased by $9.8 million primarily due to legal fees related to the 3dfx and DOJ matters described in Note 13 of the Notes to Condensed Consolidated Financial Statements. These increases in sales, general and administrative expenses were offset by a decrease of $2.8 million in facilities due to decreased facilities expense allocation to sales, general and administrative functions, which was driven by greater incremental headcount growth in departments that are included within the research and development functions.

Operating Expenses

We expect operating expenses to increase by 5% to 7% from the second quarter to the third quarter of fiscal year 2008 as a result of continued hiring and salary increases.

Interest Income and Interest Expense

Interest income consists of interest earned on cash, cash equivalents and marketable securities. Interest income was $15.6 million and $8.8 million in the second quarter of fiscal years 2008 and 2007, respectively, an increase of $6.8 million. Interest income was $28.8 million and $17.6 million for the first half of fiscal 2008 and fiscal 2007, respectively, an increase of $11.2 million. These increases were primarily the result of higher average balances of cash, cash equivalents, and marketable securities during the first half of fiscal year 2008 when compared to the first half of fiscal year 2007.

Income Taxes

We recognized income tax expense of $28.1 million and $17.8 million for the second quarter of fiscal years 2008 and 2007, respectively, and $49.6 million and $36.5 million for the first half of fiscal years 2008 and 2007, respectively. Income tax expense as a percentage of income before taxes, or our annual effective tax rate, was 14% and 17% for the second quarter and first half of fiscal years 2008 and 2007, respectively. Our effective tax rate is lower than the United States Federal Statutory rate of 35% due primarily to income earned in lower tax jurisdictions.

Please refer to Note 3 of the Notes to Condensed Consolidated Financial Statements for additional information regarding income taxes.

Liquidity and Capital Resources

	As of July 29, 2007		As of January 28, 2007
	(In millions)
Cash and cash equivalents	$	914.7	$	544.4
Marketable securities		656.8		573.4
Cash, cash equivalents, and marketable securities	$	1,571.5	$	1,117.8

	Six Months Ended
	July 29, 2007			July 30, 2006
	(In millions)
Net cash provided by operating activities	$	637.6		$	67.4
Net cash used in investing activities	$	(149.0	)	$	(172.5	)
Net cash provided by (used in) financing activities	$	(118.3	)	$	(58.2	)

As of July 29, 2007, we had $1.57 billion in cash, cash equivalents and marketable securities, an increase of $453.7 million from the end of fiscal year 2007. Our portfolio of cash equivalents and marketable securities is managed by several financial institutions. Our investment policy requires the purchase of top-tier investment grade securities, the diversification of asset type and certain limits on our portfolio duration.

Operating activities generated cash of $637.6 million during the first half of fiscal year 2008. The cash provided by operating activities has increased due to an increase in our net income during the comparable periods. Additionally, operating activities have generated cash in amounts greater than net income primarily due to non-cash charges such as stock-based compensation expense, depreciation and amortization. The improvement we experienced in days sales in inventory, correlates to the incremental inflow from inventory sell through in excess of purchases. In addition, improved days sales outstanding was due to increased linearity of sales during the period which contributed to inflows of collections from accounts receivable.

Investing activities have consisted primarily of purchases and sales of marketable securities, purchases of property and equipment and purchases of intangible assets. Investing activities used cash of $149.0 million during the first half of fiscal year 2008, primarily due to $67.7 million for capital expenditures, including purchases of new research and development equipment, hardware equipment, technology licenses, software and intangible assets and $81.2 million of net purchases of marketable securities. We expect to spend approximately $50.0 million to $70.0 million for capital expenditures unrelated to acquisitions during the remainder of fiscal year 2008. In addition, we may continue to use cash in connection with the acquisition of businesses or assets.

Financing activities used cash of $249.4 million towards our stock repurchase program for the first half of fiscal 2008 and provided cash of $131.1 million from common stock issued under employee stock plans during the first half of fiscal year 2008.

Stock Repurchase Program

OnDuring fiscal year 2005, we announced that our Board had authorized a stock repurchase program to repurchase shares of our common stock, subject to certain specifications, up to an aggregate maximum amount of $300 million. During fiscal year 2007, the Board further approved an increase of $400 million to the original stock repurchase program. In fiscal 2008, on May 21, 2007, we announced a stock repurchase program under which we may purchase up to an additional $1.0 billion of our common stock over a three year period through May 2010. As a result of ~~this increase,~~these increases, we have an ongoing authorization from the Board, subject to certain specifications, to repurchase shares of our common stock up to an aggregate maximum amount of $1.7 billion.

During the ~~three months ended April~~second quarter of fiscal 2007, we entered into a structured share repurchase transaction to repurchase 3.3 million shares for $124.4 million which we recorded on the trade date of the transaction. Through July 29, 2007, we have repurchased 34.7 million shares under our stock repurchase program for a total cost of $737.5 million.

Subsequent to July 29, 2007, we entered into a structured share repurchase transaction to repurchase ~~4.0 million~~ shares of our common stock for $125.0 million ~~which~~that we ~~recorded on~~expect to settle prior to the ~~trade date of each transaction. Through April 29, 2007, we have repurchased 31.4 million shares under our stock repurchase program for a total cost of $613.1 million.~~

~~Financial Information by Business Segment and Geographic Data~~

During the first quarter of fiscal 2008, we reorganized our operating segments. We now report financial information for four operating segments to our CODM: the Graphics Processing Unit, or GPU, Business, which is comprised primarilyend of our GeForce products that support desktop and notebook PCs, plus memory products; the Professional Solutions Business, or PSB, which is comprised of our NVIDIA Quadro professional workstation products and other professional graphics and high-performance computing products, the Media and Communications Processor, or MCP, Business, which is comprised of NVIDIA nForce core logic and motherboard GPU products, and our Consumer Products Business, or CPB, which is comprised primarily of mobile and consumer products that support handheld PDAs, cellular phones and other handheld devices, plus license, royalty and other revenue and associated costs related to video game consoles and other digital consumer electronics devices.

In addition to these operating segments, we have the “All Other” category that includes human resources, legal, finance, general administration and corporate marketing expenses, which total $68.0 million and $50.1 million for firstthird quarter of fiscal year 2008 and first quarter of fiscal year 2007, respectively, that we do not allocate to our other operating segments. “All Other” also includes the results of operations of other miscellaneous operating segments that are neither individually reportable, nor aggregated with another operating segment. Revenue in the “All Other” category is primarily derived from sales of components. All relevant prior period amounts have been restated to conform to the presentation of our current fiscal quarter.

~~Our CODM does not review any information regarding total assets~~ending on an operating segment basis. Operating segments do not record intersegment revenue, and, accordingly, there is none to be reported. The accounting policies for segment reporting are the same as for NVIDIA as a whole.

~~Results of Operations~~

~~The following table sets forth, for the periods indicated, certain items in our consolidated statements of income expressed as a percentage of revenue.~~

April 29,
2007

April 30,
2006

Revenue 100.0 % 100.0 %
Cost of revenue 55.0 57.7
Gross profit 45.0 42.3
Operating expenses:
Research and development 18.8 18.1
Sales, general and administrative 9.5 9.4
Total operating expenses 28.3 27.5
Income from operations 16.7 14.8
Interest and other income, net 1.5 1.3
Income before income tax expense 18.2 16.1
Income tax expense 2.6 2.7
Cumulative effect of change in accounting principle, net of tax - 0.1
Net income 15.6 % 13.5 %

~~First Quarters of Fiscal Years 2008 and 2007~~

~~Revenue~~

Revenue was $844.3 million for our first quarter of fiscal year 2008, compared to $681.8 million for our first quarter of fiscal year 2007, which represents an increase of 23.8%. A discussion of our revenue results for each of our operating segments is as follows:October 28, 2007.

~~GPU Business~~. GPU Business revenue increased by 19.4% to $483.5 million in the first quarter of fiscal year 2008, compared to $404.8 million for the first quarter of fiscal year 2007. The increase was a result of increased sales of our desktop GPU products, notebook products and memory product sales. The increase in sales of our desktop GPU products was led by our GeForce 8-based products that serve the high-end segment. This increase in the high-end segment was offset by a decrease of sales in our mainstream segment, as a result of decreases in unit shipments and average selling prices of our more mature mainstream segment products. Sales of our NVIDIA notebook GPU products improved due to an increased mix of GeForce 8-based and GeForce 7-based products, shipping for notebook PC design wins based on Intel’s Napa platform.

~~PSB~~. PSB revenue increased by 40.8% to $140.9 million in the first quarter of fiscal year 2008, compared to $100.0 million for the first quarter of fiscal year 2007. Our NVIDIA professional workstation product sales increased due to board sales as a result of increased unit shipments and average selling prices of GeForce 7-based products, offset by decreased sales of older products and a slight decrease in chip sales as a result of decreased average selling prices.

~~MCP Business~~. MCP Business revenue increased by 25.7% to $148.8 million in the first quarter of fiscal year 2008, compared to $118.4 million for the first quarter of fiscal year 2007. The overall increase in MCP business revenue is primarily due to sales of newer NVIDIA nForce4 products, NVIDIA nForce5 products, integrated AMD-based desktop products, and integrated Intel-based desktop products, which began shipping after the second quarter of fiscal year 2007.

~~CPB.~~ CPB revenue increased by 17.1% to $67.2 million for the first quarter of fiscal year 2008, compared to $57.4 million for the first quarter of fiscal year 2007. The overall increase in CPB revenue is primarily due to sales related to our acquisition of PortalPlayer Inc., or PortalPlayer, in January 2007. We also had increased revenue from our embedded products, and an increase in royalty revenue recognized from both our contractual arrangement with Microsoft related to their Xbox360 video game console and revenue from our contractual arrangements with Sony Computer Entertainment, or SCE, related to their PS3 video game console, and other digital consumer electronics devices. These increases were offset by a decrease in revenue from our contractual development arrangements with SCE.

~~Concentration of Revenue~~

Revenue from sales to customers outside of the United States and other Americas accounted for 81.5% and 84.6% of total revenue for the first quarter of fiscal years 2008 and 2007, respectively. Revenue by geographic region is allocated to individual countries based on the location to which the products are initially billed even if the foreign contract equipment manufacturers, or CEMs’, add-in board and motherboard manufacturers’ revenue is attributable to end customers in a different location.

In the first quarter of fiscal year 2008, there were no sales to any customers in excess of 10% of our total revenue. However, in the first quarter of fiscal year 2007, sales to one significant customer accounted for approximately 14% of our total revenue.

~~Gross Profit~~

Gross profit consists of total revenue, net of allowances, less cost of revenue. Cost of revenue consists primarily of the cost of semiconductors purchased from subcontractors, including wafer fabrication, assembly, testing and packaging, manufacturing support costs, including labor and overhead associated with such purchases, final test yield fallout, inventory provisions and shipping costs. Cost of revenue also includes development costs for license and service arrangements. Gross margin is the percentage of gross profit to revenue. Our gross margin can vary in any period depending on the mix of types of products sold. Our gross margin was 45.0% and 42.3% for the first quarter of fiscal year 2008 and 2007, respectively. A discussion of our gross margin results for each of our operating segments is as follows:

~~GPU Business~~. The gross margin of our GPU Business increased during the first quarter of fiscal year 2008 as compared to the first quarter of fiscal year 2007, primarily due to increased sales of our GeForce 8 series GPUs, which began selling in the third quarter of fiscal year 2007. Our GeForce 8 series and GeForce 7 series GPUs generally have higher gross margins than our previous generations of GPUs.

~~PSB~~. The gross margin of our PSB increased during the first quarter of fiscal year 2008 as compared to the first quarter of fiscal year 2007, primarily due to increased sales of our GeForce 8-based NVIDIA Quadro products, which began selling in the fourth quarter of fiscal year 2007, and GeForce 7-based NVIDIA Quadro products, which generally have higher gross margins than our previous generations of NVIDIA Quadro products.

~~MCP Business~~. The gross margin of our MCP Business increased during the first quarter of fiscal year 2008 as compared to the first quarter of fiscal year 2007, primarily due to increased sales of NVIDIA nForce integrated AMD-based desktop products and NVIDIA nForce integrated Intel-based desktop products, which began shipping after the second quarter of fiscal year 2007, both of which generally have experienced higher gross margins than our previous generations of NVIDIA nForce products.

~~CPB~~. The gross margin of our CPB increased during the first quarter of fiscal year 2008 as compared to the first quarter of fiscal year 2007, primarily due to gross profit realized from sales related to mobile products related to our acquisition of PortalPlayer in January 2007, gross profit realized from sales of our high-end feature cellular phone and other handheld devices, which generally have higher gross margins than our previous cellular handheld products, and increased gross profit from our contractual arrangements with Microsoft and SCE related to their video game consoles.

~~Gross Margin~~

~~The improvement in our gross margin reflects our continuing focus on delivering cost effective product architectures, enhancing business processes and delivering profitable growth.~~

Our gross margin is significantly impacted by the mix of products that we earn revenue from during each of our fiscal quarters. The improvement in our gross margin for the first quarter of fiscal year 2008 resulted from a number of factors, including:

·	~~a positive impact from our new GeForce 8 series products;~~

·	~~a reduction of revenue from our MCP Business, which historically has had a gross margin that is lower than our overall gross margin;~~

·	~~the increase in NVIDIA Quadro workstation product revenue, which historically has been higher than our overall gross margin; and~~

·	~~a reduction of revenue from the sale of memory products, which historically have been lower than our overall gross margin~~

Product mix is often difficult to estimate with accuracy and, thus, if we achieve significant revenue growth in our lower margin product lines, it may negatively impact our gross margin. We expect gross margin to remain relatively flat, or improve slightly, during the second quarter of fiscal year 2008.

~~Operating Expenses~~

~~Research and Development~~

Three Months Ended

Change

April 29, 2007

April 30, 2006

$

%

(In millions)
Research and Development:

Salaries and benefits $ 87.7 $ 68.0 $ 19.7 29%
Stock-based compensation 22.4 14.4 8.0 56%
Depreciation and amortization 16.5 15.0 1.5 10%
Computer software and lab equipment 14.9 12.9 2.0 16%
Facility expense 11.6 8.1 3.5 43%
New product development 4.2 7.5 (3.3) (44)%
In-process research and development
License and development project costs (2.4) (5.8 ) 3.4 (59)%
Other 3.4 3.1 0.3 10%
Total $ 158.3 $ 123.2 $ 35.1 29%

Research and development as a percentage of net revenue 19 % 18 %

Research and development expenses increased by $35.1 million, or 29%, in the first quarter of fiscal year 2008 compared to the first quarter of fiscal year 2007 primarily due to a $19.7 million increase in salaries and benefits and an $8.0 million increase in stock-based compensation, both of which were related to a combination of 660 additional personnel and merit increases to existing personnel. Facilities increased $3.5 million due to increased facilities expense allocation, and computer software and equipment increased $2.0 million primarily due to increased allocation of information technology expenses, both of which were based on the growth in headcount in departments related to research and development functions when compared to the growth in headcount related to sales, general and administrative functions. License and development project costs increased by $3.4 million primarily related to decreased development costs related to our collaboration with SCE and other engineering costs related to a different development contract. Certain of our personnel who usually devote their time to research and development efforts have spent time working on these development projects. The cost associated with the time these individuals spend working on development projects is allocated from research and development to cost of revenue or is capitalized on our balance sheet. During the first quarter of fiscal year 2008, less time was spent working on development projects so less cost was allocated to cost of revenue or capitalized and, therefore, more cost remained in research and development. Depreciation and amortization increased $1.5 million due to emulation hardware and software programs that were purchased during fiscal year 2007, resulting in a full year of depreciation in the first quarter of fiscal year 2008 compared to a partial year of depreciation in fiscal year 2007. These increases were offset by a decrease of $3.3 million in new product development costs as a result of costs related to an overall decrease we experienced during the first quarter of fiscal year 2008 in the number of product tape-outs and in prototype materials.

We anticipate that we will continue to devote substantial resources to research and development, and we expect these expenses to increase in absolute dollars in the foreseeable future due to the increased complexity and the greater number of products under development. Research and development expenses are likely to fluctuate from time to time to the extent we make periodic incremental investments in research and development and these investments may be independent of our level of revenue.

~~Sales, General and Administrative~~

Three Months Ended

Change

April 29, 2007

April 30, 2006

$

%

(In millions)

Sales, General and Administrative:

Salaries and benefits $ 41.9 $ 32.8 $ 9.1 28%
Advertising and promotions 13.7 14.5 (0.8) (6)%
Stock-based compensation 12.2 6.6 5.6 85%
Legal and accounting fees 6.0 2.9 3.1 107%
Facility expense 2.8 4.0 (1.2) (30)%
Depreciation and amortization 2.7 2.1 0.6 29%
Other 1.3 1.1 0.2 18%
Total $ 80.6 $ 64.0 $ 16.6 26%
Sales, general and administrative as a percentage of net revenue 10% 9 %

Sales, general and administrative expenses increased $16.6 million, or 26%, in the first quarter of fiscal year 2008 to year fiscal year 2007 primarily due to a $9.1 million increase in salaries and benefits and a $5.6 million increase in stock-based compensation, both of which related to a combination of 134 additional personnel and merit increases to existing personnel. Legal and accounting fees increased by $3.1 million primarily due to legal fees related to the 3dfx and Department of Justice, or DOJ, matters described in Note 13 of the Notes to Condensed Consolidated Financial Statements. These increases were offset by a decrease of $1.2 million in facilities due to decreased facilities expense allocation to sales, general and administrative functions, which was driven by greater incremental headcount growth in departments that are included within the research and development functions.

~~Operating Expenses~~

We expect to continue to focus on expense controls during fiscal year 2008. However, despite this expected focus, we anticipate that our operating expenses will increase slightly in the second quarter of fiscal year 2008.

~~Interest Income and Interest Expense~~

Interest income consists of interest earned on cash, cash equivalents and marketable securities. Interest income was $13.2 million and $8.8 million in the first quarter of fiscal years 2008 and 2007, respectively, an increase of $4.4 million. These increases were primarily the result of higher average balances of cash, cash equivalents, and marketable securities during the first three months of fiscal year 2008 when compared to the first quarter of fiscal year 2007.

~~Income Taxes~~

We recognized income tax expense of $21.5 million and $18.7 million in the first quarter of fiscal year 2008 and fiscal year 2007, respectively. Income tax expense as a percentage of income before taxes, or our annual effective tax rate, was 14% for the first quarter of fiscal year 2008 and 17% for the first quarter of fiscal year 2007. Our effective tax rate is lower than the United States Federal Statutory rate of 35% due primarily to income earned in lower tax jurisdictions.

~~Please refer to Note 3 of the Notes to Condensed Consolidated Financial Statements for additional information regarding income taxes.~~

~~Liquidity and Capital Resources~~

As of April 29, 2007

As of January 28, 2007

(In millions)

Cash and cash equivalents $ 678.9 $ 544.4
Marketable securities 628.1 573.4
Cash, cash equivalents, and marketable securities $ 1,307.0 $ 1,117.8

Three Months Ended

April 29, 2007

April 30, 2006

(In millions)

Net cash provided by operating activities $ 306.5 $ 49.5
Net cash used in investing activities $ (91.1 ) $ (157.5 )
Net cash provided by (used in) financing activities $ (80.9 ) $ 44.0

As of April 29, 2007, we had $1.3 billion in cash, cash equivalents and marketable securities, an increase of $189.2 million from the end of fiscal year 2007. Our portfolio of cash equivalents and marketable securities is managed by several financial institutions. Our investment policy requires the purchase of top-tier investment grade securities, the diversification of asset type and certain limits on our portfolio duration.

Operating activities generated cash of $306.5 and $49.5 million during the first quarter of fiscal year 2008 and fiscal year 2007, respectively. The cash provided by operating activities has increased due to increases in the net income during the comparable periods. Additionally, during the first quarter of fiscal year 2008, operating activities have generated cash in amounts greater than net income primarily due to non-cash charges such as stock-based compensation and depreciation and amortization. Improved days sales outstanding and days sales in inventory have contributed to inflows from accounts receivable and inventories.

Investing activities have consisted primarily of purchases and sales of marketable securities, acquisition of businesses and purchases of property and equipment, which include leasehold improvements for our facilities, and intangible assets. Investing activities used cash of $91.1 million and $157.5 million during the first quarter of fiscal year 2008 and fiscal 2007, respectively. Net cash used by investing activities during the first quarter of fiscal year 2008 was primarily due to $37.7 million for capital expenditures, including purchases of new research and development equipment, hardware equipment, technology licenses, software and intangible assets and $53.4 million of net purchases of marketable securities. We expect to spend approximately $90.0 million to $110.0 million for capital expenditures unrelated to acquisitions during the remainder of fiscal year 2008. In addition, we may continue to use cash in connection with the acquisition of businesses or assets.

Financing activities used cash of $80.9 million and provided cash of $44.0 million during the first quarter of fiscal year 2008 and fiscal 2007, respectively. Net cash used by financing activities in the first quarter of fiscal year 2008 was primarily due to $125.0 million paid towards our stock repurchase program, offset by cash proceeds of $44.1 million from common stock issued under employee stock plans.

~~Stock Repurchase Program~~

During fiscal year 2005, we announced that our Board of Directors, or Board, had authorized a stock repurchase program to repurchase shares of our common stock, subject to certain specifications, up to an aggregate maximum amount of $300 million. During fiscal year 2007, we announced that our Board had approved a $400 million increase to the original stock repurchase program. Subsequently, on May 21, 2007, we announced a stock repurchase program under which we may purchase up to an additional $1.0 billion of our common stock over a three year period through May 2010. As a result of these increases, we have an ongoing authorization from the Board, subject to certain specifications, to repurchase shares of our common stock up to an aggregate maximum amount of $1.7 billion.

During the first quarter of fiscal year 2008, we entered into a structured share repurchase transaction to repurchase 4.0 million shares of our common stock for $125.0 million, which we recorded on the trade date of each transaction. Through April 29, 2007, we have repurchased 31.4 million shares under our stock repurchase program for a total cost of $613.1 million.

Operating Capital and Capital Expenditure Requirements

We believe that our existing cash balances and anticipated cash flows from operations will be sufficient to meet our operating, acquisition and capital requirements for at least the next 12 months. However, there is no assurance that we will not need to raise additional equity or debt financing within this time frame. Additional financing may not be available on favorable terms or at all and may be dilutive to our then-current stockholders. We also may require additional capital for other purposes not presently contemplated. If we are unable to obtain sufficient capital, we could be required to curtail capital equipment purchases or research and development expenditures, which could harm our business. Factors that could affect our cash used or generated from operations and, as a result, our need to seek additional borrowings or capital include:

§·	decreased demand and market acceptance for our products and/or our ~~customers’ products;~~customers' products;

§·	inability to successfully develop and produce in volume production our next-generation products;

§·	competitive pressures resulting in lower than expected average selling prices; and

§·	new product announcements or product introductions by our competitors.

For additional factors see “Item 1A. Risk Factors - Risks Related to Our Operations - 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 ~~price~~ could decline.”

3dfx Asset Purchase

On December 15, 2000, NVIDIA Corporation and one of our indirect subsidiaries entered into the Asset Purchase Agreement, or the APA, which closed on April 18, 2001, to purchase certain graphics chip assets from 3dfx. Under the terms of the APA, the cash consideration due at the closing was $70.0 million, less $15.0 million that was loaned to 3dfx pursuant to a Credit Agreement dated December 15, 2000. The Asset Purchase Agreement also provided, subject to the other provisions thereof, that if 3dfx properly certified that all its debts and other liabilities had been provided for, then we would have been obligated to pay 3dfx one million shares, which due to subsequent stock splits now totals four million shares, of NVIDIA common stock. If 3dfx could not make such a certification, but instead properly certified that its debts and liabilities could be satisfied for less than $25.0 million, then 3dfx could have elected to receive a cash payment equal to the amount of such debts and liabilities and a reduced number of shares of our common stock, with such reduction calculated by dividing the cash payment by $25.00 per share. If 3dfx could not certify that all of its debts and liabilities had been provided for, or could not be satisfied, for less than $25.0 million, we would not be obligated under the agreement to pay any additional consideration for the assets.

In October 2002, 3dfx filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Northern District of California. In March 2003, we were served with a complaint filed by the Trustee appointed by the Bankruptcy Court ~~which sought,~~to represent the interests of the 3dfx bankruptcy estate. The Trustee’s complaint asserts claims for, among other things, successor liability and fraudulent transfer and seeks additional payments from ~~us as additional purchase price related~~us. On October 13, 2005, the Bankruptcy Court held a hearing on the Trustee’s motion for summary adjudication. On December 23, 2005, the Bankruptcy Court issued its ruling denying the Trustee’s Motion for Summary Adjudication in all material respects and holding that NVIDIA is prevented from disputing that the value of the 3dfx transaction to ~~our purchase~~NVIDIA was less than $108.0 million. The Bankruptcy Court expressly denied the Trustee’s request to find that the value of ~~certain~~the 3dfx assets ~~of 3dfx.~~conveyed to NVIDIA were at least $108.0 million. In early November 2005, after many months of mediation, NVIDIA and the Official Committee of Unsecured Creditors, or the Creditors’ Committee, reached a conditional settlement of the Trustee’s claims against NVIDIA. This conditional settlement, presented as the centerpiece of a proposed Plan of Liquidation in the bankruptcy case, was subject to a confirmation process through a vote of creditors and the review and approval of the Bankruptcy Court after notice and hearing. The Trustee advised that he intended to object to the settlement, which would have called for a payment by NVIDIA of approximately $30.6 million to the 3dfx estate. Under the settlement, $5.6 million related to various administrative expenses and Trustee fees, and $25.0 million related to the satisfaction of debts and liabilities owed to the general unsecured creditors of 3dfx. Accordingly, during the three month period ended October 30, 2005, we recorded $5.6 million as a charge to settlement costs and $25.0 million as additional purchase price for 3dfx.

Delaware	94-3177549
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

	PART I : FINANCIAL INFORMATION	Page
Item 1.	Financial Statements (Unaudited)
	a) Condensed Consolidated Statements of Income for the three and six months ended ~~April~~July 29, 2007 and ~~April~~July 30, 2006	3
	b) Condensed Consolidated Balance Sheets as of ~~April~~July 29, 2007 and January 28, 2007	4
	c) Condensed Consolidated Statements of Cash Flows for the ~~three~~six months ended ~~April~~July 29, 2007 and ~~April~~July 30, 2006	5
	d) Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2124
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3034
Item 4.	Controls and Procedures	3034

	PART II : OTHER INFORMATION
Item 1.	Legal Proceedings	3135
Item 1A.	Risk Factors	3135
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4549
Item 3.	Defaults Upon Senior Securities	4550
Item 4.	Submission of Matters to a Vote of Security Holders	4550
Item 5.	Other Information	4550
Item 6.	Exhibits	4651
Signature		4752

	Three Months Ended						Six Months Ended
	July 29, 2007			July 30, 2006			July 29, 2007			July 30, 2006

Revenue	$	935,253	$	687,519		$	1,779,533		$	1,369,326
Cost of revenue		511,261		395,391			975,403			788,525
Gross profit		423,992		292,128			804,130			580,801
Operating expenses:
Research and development		157,952		127,257			316,273			250,459
Sales, general and administrative		81,280		69,055			161,851			133,017
Total operating expenses		239,232		196,312			478,124			383,476
Operating income		184,760		95,816			326,006			197,325
Interest income		15,625		8,818			28,833			17,626
Interest expense		—		(6	)		—			(7	)
Other income (expense), net		466		(106	)		(199	)		(350	)
Income before income tax expense		200,851		104,522			354,640			214,594
Income tax expense		28,119		17,769			49,649			36,481
Income before change in accounting principle		172,732		86,753			304,991			178,113
Cumulative effect of change in accounting principle		—		—			—			704
Net income	$	172,732		86,753		$	304,991		$	178,817

Basic net income per share:
Prior to cumulative effect of change in accounting principle	$	0.47		0.25		$	0.84		$	0.51
Cumulative effect of change in accounting principle		—		—			—			—
Basic net income per share	$	0.47		0.25		$	0.84		$	0.51

Shares used in basic per share computation		364,870		350,244			362,850			349,090

Diluted net income per share:
Prior to cumulative effect of change in accounting principle	$	0.43		0.22		$	0.76		$	0.46
Cumulative effect of change in accounting principle		—		—			—			—
Diluted net income per share	$	0.43		0.22		$	0.76		$	0.46

Shares used in diluted per share computation		402,553		385,589			400,638			387,485

	Three Months Ended
	April 29, 2007			April 30, 2006
Revenue	$	844,280		$	681,807
Cost of revenue		464,142			393,134
Gross profit		380,138			288,673
Operating expenses:
Research and development		158,321			123,202
Sales, general and administrative		80,571			63,962
Total operating expenses		238,892			187,164
Income from operations		141,246			101,509
Interest income		13,208			8,808
Other expense, net		(665	)		(245	)
Income before income tax expense		153,789			110,072
Income tax expense		21,530			18,712
Income before change in accounting principle		132,259			91,360
Cumulative effect of change in accounting principle, net of tax		-			704
Net income	$	132,259		$	92,064

Basic income per share:
Income before change in accounting principle	$	0.37		$	0.26
Cumulative effect of change in accounting principle		-			-
Basic net income per share	$	0.37		$	0.26

Shares used in basic per share computation		360,831			347,937

Diluted income per share:
Income before change in accounting principle	$	0.33		$	0.23
Cumulative effect of change in accounting principle		-			0.01
Diluted net income per share	$	0.33		$	0.24

Shares used in diluted per share computation		398,866			389,428

	July 29, 2007			January 28, 2007
ASSETS
Current assets:
Cash and cash equivalents	$	914,745		$	544,414
Marketable securities		656,818			573,436
Accounts receivable, net		508,435			518,680
Inventories		276,305			354,680
Prepaid expenses and other current assets		41,102			40,560
Total current assets		2,397,405			2,031,770
Property and equipment, net		264,832			260,828
Goodwill		293,383			301,425
Intangible assets, net		54,735			45,511
Deposits and other assets		25,912			35,729
Total assets	$	3,036,267		$	2,675,263

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	323,381		$	272,075
Accrued liabilities		357,417			366,732
Total current liabilities		680,798			638,807
Deferred tax and other long-term liabilities		95,191			29,537
Commitments and contingencies - see Note 13
Stockholders’ equity:
Preferred stock		—			—
Common stock		402			388
Additional paid-in capital		1,493,240			1,295,650
Treasury stock, at cost		(736,506	)		(487,120	)
Accumulated other comprehensive income, net		1,586			1,436
Retained earnings		1,501,556			1,196,565
Total stockholders' equity		2,260,278			2,006,919
Total liabilities and stockholders' equity	$	3,036,267		$	2,675,263

	April 29, 2007			January 28, 2007
ASSETS
Current assets:
Cash and cash equivalents	$	678,951		$	544,414
Marketable securities		628,073			573,436
Accounts receivable, net		471,519			518,680
Inventories		332,635			354,680
Prepaid expenses and other current assets		43,055			40,560
Total current assets		2,154,233			2,031,770
Property and equipment, net		271,190			260,828
Goodwill		291,077			301,425
Intangible assets, net		50,914			45,511
Deposits and other assets		33,454			35,729
	$	2,800,868		$	2,675,263

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	334,046		$	272,075
Accrued liabilities		289,821			366,732
Total current liabilities		623,867			638,807
Other long-term liabilities		81,107			29,537
Commitments and contingencies - see Note 13
Stockholders’ equity:
Preferred stock		—			—
Common stock		393			388
Additional paid-in capital		1,377,513			1,295,650
Treasury stock, at cost		(612,120	)		(487,120	)
Accumulated other comprehensive income, net		1,284			1,436
Retained earnings		1,328,824			1,196,565
Total stockholders' equity		2,095,894			2,006,919
	$	2,800,868		$	2,675,263

	Three Months Ended
	April 29,		April 30,		Three Months Ended				Six Months Ended
	2007		2006		July 29, 2007		July 30, 2006		July 29, 2007		July 30, 2006
	(In thousands)				(In thousands)
Cost of revenue	$	2,809	$	1,227	$	2,702	$	1,746	$	5,511	$	2,973
Research and development		22,400		14,426	$	16,421	$	16,588	$	38,821	$	31,014
Sales, general and administrative		12,196		6,572	$	10,337	$	10,532	$	22,533	$	17,104
Total	$	37,405	$	22,225

	Three Months Ended						Stock Options						Employee Stock Purchase Plan
	April 29, 2007			April 30, 2006			Three Months Ended						Three Months Ended
	(Using a binomial model)			(Using a binomial model)			July 29, 2007			July 30, 2006			July 29, 2007			July 30, 2006
Weighted average expected life of stock options (in years)		3.9 - 5.8			3.6 - 5.1
							*(Using a binomial* *model)*			*(Using a binomial* *model)*			*(Using the Black-* *Scholes model)*			*(Using the Black-* *Scholes model)*
Expected life (in years)								3.8 - 5.2			3.6 - 5.1			0.5 - 2.0			0.5 - 2.0
Risk free interest rate		4.6	%		4.7	%		5.0	%		5.1	%		3.7%-5.1	%		2.3%-4.6	%
Volatility		39% - 45	%		39% - 41	%		37%-40	%		41%-51	%		38%-47	%		30%-41	%
Dividend yield		—			—			—			—			—			—

	~~Three~~Stock Options						Employee Stock Purchase Plan
	Six Months Ended						Six Months Ended
	~~April~~July 29, 2007			~~April~~July 30, 2006			July 29, 2007			July 30, 2006
	*(Using ~~the~~a binomial* *~~Black-Scholes~~model)* *~~Model)~~*			*(Using a binomial* *model)*			*(Using the Black-* *~~Black-Scholes~~Scholes model)*			*(Using the Black-* *Scholes model)*
~~Weighted average expected~~Expected life ~~of stock options~~ (in years)		3.8 - 5.8			3.6 - 5.1			0.5 - 2.0			0.5 - 2.0
Risk free interest rate	~~3.52% - 5.15~~	4.6%-5.0	%		4.7%-5.1	%		3.5%-5.2	%		1.6% ~~- 4.6~~-4.6	%
Volatility	~~38% - 47~~	37%-45	%		39%-51	%		38%-47	%		30% ~~- 45~~-45	%
Dividend yield		—			—			—			—

	Options Available for Grant			Options Outstanding			Weighted Average Exercise Price Per Share		Options Available for Grant			Options Outstanding			Weighted Average Exercise Price Per Share
Balances, January 28, 2007		21,780,284			73,994,662		$	13.29		21,780,284			73,994,662		$	13.29
Additional shares reserved										16,743,033			-			-
Granted		(4,833,408	)		4,833,408			28.79		(5,713,656	)		5,713,656		$	30.53
Exercised		-			(3,900,292	)		7.75					(13,809,392	)	$	8.49
Cancelled		739,335			(739,335	)		26.59		1,155,185			(1,155,185	)	$	27.27
Balances, April 29, 2007		17,686,211			74,188,443		$	14.47
Balances, July 29, 2007										33,964,846			64,743,741		$	15.60

	Fair Market Value		Straight-Line Amortization Period
	(In thousands)		(Years)
Property and equipment	$	2,433		1-2
Trademarks		11,310		5
Goodwill		85,418		--
Total	$	99,161

	ULi			Hybrid Graphics			PortalPlayer			ULi			Hybrid Graphics			PortalPlayer
	(In thousands)									(In thousands)
Fair Market Values
Cash and cash equivalents	$	21,551		$	1,180		$	10,174		$	21,551		$	1,180		$	10,174
Marketable Securities		-			-			176,492			-			-			176,492
Accounts receivable		8,148			808			16,850			8,148			808			16,850
Inventories		4,896			-	��		2,326			4,896			-			2,326
Other assets		935			73			12,798			935			73			12,798
Property and equipment		1,010			134			19,991			1,010			134			19,996
In-process research and development		-			602			13,400			-			602			13,400
Goodwill		31,051			27,906			104,468			31,204			27,906			106,621
Intangible assets:
Existing technology		2,490			5,179			6,700			2,490			5,179			6,700
Customer relationships											653			2,650			2,700
Backlog		-			-			2,200			-			-			2,200
Patents		-			-			600			-			-			600
Customer relationships		653			2,650			2,700
Trademark		-			482			-			-			482			-
Non-compete agreements		-			72			-			-			72			-
Total assets acquired		70,734			39,086			368,699			70,887			39,086			370,857
Current liabilities		(16,878	)		(1,373	)		(12,766	)		(17,031	)		(1,373	)		(14,903	)
Acquisition related costs		(781	)		(740	)		(8,043	)		(781	)		(740	)		(8,064	)
Long-term liabilities		-			(301	)		(46	)		-			(301	)		(46	)
Total liabilities assumed		(17,659	)		(2,414	)		(20,855	)		(17,812	)		(2,414	)		(23,013	)
Net assets acquired	$	53,075		$	36,672		$	347,844		$	53,075		$	36,672		$	347,844

Description	Balance at Beginning of Period		Additions ⁽¹⁾		Deductions ⁽²⁾			Balance at End of Period ⁽³⁾
	(In thousands)
Three months ended April 29, 2007	$	17,958	$	4,980	$	(3,875	)	$	19,063

Three months ended April 30, 2006	$	10,239	$	11,775	$	(10,448	)	$	11,566

	Three Months Ended						Change
	April 29, 2007			April 30, 2006			$		%
	(In millions)
Research and Development:
Salaries and benefits	$	87.7		$	68.0		$	19.7	29%
Stock-based compensation		22.4			14.4			8.0	56%
Depreciation and amortization		16.5			15.0			1.5	10%
Computer software and lab equipment		14.9			12.9			2.0	16%
Facility expense		11.6			8.1			3.5	43%
New product development		4.2			7.5			(3.3)	(44)%
In-process research and development
License and development project costs		(2.4)			(5.8	)		3.4	(59)%
Other		3.4			3.1			0.3	10%
Total	$	158.3		$	123.2		$	35.1	29%

Research and development as a percentage of net revenue		19	%		18	%

	As of April 29, 2007		As of January 28, 2007
	(In millions)
Cash and cash equivalents	$	678.9	$	544.4
Marketable securities		628.1		573.4
Cash, cash equivalents, and marketable securities	$	1,307.0	$	1,117.8

																July 29, 2007							January 28, 2007
	April 29, 2007								January 28, 2007							Gross Carrying		Accumulated			Net Carrying		Gross Carrying		Accumulated			Net Carrying
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Amount		Amortization			Amount		Amount		Amortization			Amount
	(In thousands)															(In thousands)
Technology licenses	$	49,368	$	(23,437	)	$	25,931	$		37,516	$	(20,480	)	$	17,036	$	58,439	$	(26,394	)	$	32,045	$	37,516	$	(20,480	)	$	17,036
Patents		34,539		(25,489	)		9,050			34,623		(24,569	)		10,054		34,898		(26,236	)		8,662		34,623		(24,569	)		10,054
Acquired intellectual property		50,812		(34,899	)		15,913			50,212		(31,894	)		18,318		50,812		(36,784	)		14,028		50,212		(31,894	)		18,318
Trademarks		11,310		(11,310	)		-			11,310		(11,310	)		-		11,310		(11,310	)		-		11,310		(11,310	)		-
Other		1,494		(1,474	)		20			1,494		(1,391	)		103		1,494		(1,494	)		-		1,494		(1,391	)		103
Total intangible assets	$	147,523	$	(96,609	)	$	50,914	$		135,155	$	(89,644	)	$	45,511	$	156,953	$	(102,218	)	$	54,735	$	135,155	$	(89,644	)	$	45,511

Period	Total Number of Shares Purchased				Average Price Paid per Share				Total Number of Shares Purchased as Part of Publicly Announced Plans of Programs				Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ⁽¹⁾
January 29, 2007 - February 25, 2007		-			$	-				-			211,869,417
February 26, 2007 - March 25, 2007		-			$	-				-			211,869,417
March 26, 2006 - April 29, 2007		3,958,555	⁽³	⁾	$	31.58	⁽²	⁾		3,958,555	⁽³	⁾	86,869,417
Total		3,958,555			$	31.58				3,958,555

Period	Total Number of Shares Purchased		Average Price Paid per Share ⁽²⁾		Total Number of Shares Purchased as Part of Publicly Announced Plans of Programs ⁽³⁾		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ⁽¹⁾
April 30, 2007 through May 27, 2007		-	$	-		-		86,869,417
May 28, 2007 through June 24, 2007		-	$	-		-		1,086,869,417
June 25, 2007 through July 29, 2007		3,333,333	$	37.32		3,333,333		962,482,529
Total		3,333,333	$	37.32		3,333,333

Number of shares voted For	182,726,644
Number of shares voted Against	102,346,413
Number of shares Abstaining	2,069,274
Number of Broker Non-Votes	47,044,454

Number of shares voted For	328,541,406
Number of shares voted Against	3,748,287
Number of shares Abstaining	1,897,092
Number of Broker Non-Votes	-

		Incorporated by Reference
Exhibit No.	Exhibit Description	Schedule/Form	File Number	Exhibit	Filing Date

10.22	Fiscal Year 2008 Variable Compensation Plan	8-K	0-23985	10.1	4/5/2007

10.23	2007 Equity Incentive Plan	8-K	0-23985	10.1	4/30/2007

31.1*	Certification of Chief Executive Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934

31.2*	Certification of Chief Financial Officer as required by Rule 13a-14(a) of the Securities Exchange Act of 1934

32.1#*	Certification of Chief Executive Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934

32.2#*	Certification of Chief Financial Officer as required by Rule 13a-14(b) of the Securities Exchange Act of 1934

Date: ~~May 24,~~August 22, 2007
NVIDIA Corporation
By:	/s/ MARVIN D. BURKETT
	Marvin D. Burkett
	(Duly Authorized Officer and Principal Financial and Accounting Officer)