NVIDIA 2009 Annual Report Download - page 14

Inventory and Working Capital
Our management focuses considerable attention on managing our inventories and other working-capital-related items. We manage
inventories by communicating with our customers and then using our industry experience to forecast demand on a product-by-product
basis. We then place manufacturing orders for our products that are based on forecasted demand. The quantity of products actually
purchased by our customers as well as shipment schedules are subject to revisions that reflect changes in both the customers’
requirements and in manufacturing availability. We generally maintain substantial inventories of our products because the
semiconductor industry is characterized by short lead time orders and quick delivery schedules.
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 twelve 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.
Research and Development
We believe that the continued introduction of new and enhanced products designed to deliver leading 3D graphics, HD video,
audio, ultra-low power communications, storage, and secure networking performance and features is essential to our future success.
Our research and development strategy is to focus on concurrently developing multiple generations of GPUs, MCPs and our consumer
products that support netbooks, PNDs, PMPs, PDAs, cellular phones or other handheld devices using independent design teams. Our
research and development efforts are performed within specialized groups consisting of software engineering, hardware engineering,
very large scale integration design engineering, process engineering, architecture and algorithms. These groups act as a pipeline
designed to allow the efficient simultaneous development of multiple generations of products.
A critical component of our product development effort is our partnerships with leaders in the computer aided design, or CAD,
industry. We invest significant resources in the development of relationships with industry leaders, including Cadence Design
Systems, Inc., and Synopsys, Inc., often assisting these companies in the product definition of their new products. We believe that
forming these relationships and utilizing next-generation development tools to design, simulate and verify our products will help us
remain at the forefront of the 3D graphics market and develop products that utilize leading-edge technology on a rapid basis. We
believe this approach assists us in meeting the new design schedules of PC OEM and other manufacturers.
We substantially increased our engineering and technical resources in fiscal year 2009, and had 3,772 full-time employees engaged
in research and development as of January 25, 2009, compared to 3,255 employees as of January 27, 2008 and 2,668 employees as of
January 28, 2007. During fiscal years 2009, 2008 and 2007, we incurred research and development expenditures of $855.9 million,
$691.6 million and $553.5 million, respectively.
11
Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Research℠