content: <PAGE>
  
                         SECURITIES AND EXCHANGE COMMISSION
  
                               Washington, D. C. 20549
  
                                      FORM 8-K
  
                                   CURRENT REPORT
  
  
                       Pursuant to Section 13 or 15(d) of the
                           Securities Exchange Act of 1934
  
  
        Date of Report (Date of earliest event reported): September 28, 2000
  
  
  
                                 NVIDIA CORPORATION
               (Exact name of registrant as specified in its charter)
  
  
                                      Delaware
                   (State or other jurisdiction of incorporation)
  
  
             000-23985                                  94-3177549
       (Commission File No.)               (I.R.S. Employer Identification No.)
  
  
                                 3535 Monroe Street
                                Santa Clara, CA 95051
                (Address of principal executive offices and zip code)
  
  
         Registrant's telephone number, including area code: (408) 615-2500
  <PAGE>
  
  Item 5.  Other Events.
  
       NVIDIA Corporation (the "Company") hereby updates its Risk Factors and
  description of its Business.
  
       The Company's Risk Factors are updated as follows:
  
                                   RISK FACTORS
  
       Our operating results are unpredictable and may fluctuate.
  
       Many of our revenue components fluctuate and are difficult to predict,
  and our operating expenses are largely independent of revenue in any particular
  period. It is therefore difficult for us to accurately forecast revenue and
  profits or losses. We believe that our quarterly and annual results of
  operations will be affected by a variety of factors that could adversely affect
  our revenue, gross profit and results of operations.
  
       Factors that have affected our results of operations in the past, and
  are likely to affect our results of operations in the future, include the
  following:
  
       .    demand and market acceptance for our products and/or our customers'
            products;
  
       .    the successful development and volume production of next-generation
            products;
  
       .    new product announcements or product introductions by our competitors;
  <PAGE>
  
       .    our ability to introduce new products in accordance with OEM design
            requirements and design cycles;
  
       .    changes in the timing of product orders due to unexpected delays in
            the introduction of our customers' products;
  
       .    fluctuations in the availability of manufacturing capacity or
            manufacturing yields;
  
       .    competitive pressures resulting in lower than expected average selling
            prices;
  
       .    rates of return in excess of that forecasted or expected due to
            quality issues;
  
       .    the rescheduling or cancellation of customer orders;
  
       .    the loss of a key customer or the termination of a strategic
            relationship;
  
       .    seasonal fluctuations associated with the PC market;
  
       .    substantial disruption in our suppliers' operations, either as a
            result of a natural disaster, equipment failure or other cause;
  
       .    supply constraints for and changes in the cost of the other components
            incorporated into our customers' products, including memory devices;
  
       .    our ability to reduce the manufacturing costs of our products;
  
       .    legal and other costs related to defending intellectual property;
  
       .    bad debt write-offs;
  
       .    unexpected inventory write-downs; and
  
       .    introductions of enabling technologies to keep pace with faster
            generations of processors and controllers.
  
       Any one or more of the factors discussed above could prevent us from
  achieving our expected future revenue or net income.
  
       Because most operating expenses are relatively fixed in the short term,
  we may be unable to adjust spending sufficiently in a timely manner to
  compensate for any unexpected sales shortfall. We may be required to reduce
  prices in response to competition or to pursue new market opportunities. If new
  competitors, technological advances by existing competitors or other competitive
  factors require us to invest significantly greater resources than anticipated in
  research and development or sales and marketing efforts, our business could
  suffer. Accordingly, we believe that period-to-period comparisons of our results
  of operations should not be relied upon as an indication of future performance.
  In addition, the results of any quarterly period are not indicative of results
  to be expected for a full fiscal year.
  <PAGE>
  
       Our 3D graphics solution may not continue to be accepted by the PC market.
  
       Our success will depend in part upon continued broad adoption of our 3D
  graphics processors for high performance 3D graphics in PC applications. The
  market for 3D graphics processors has been characterized by unpredictable and
  sometimes rapid shifts in the popularity of products, often caused by the
  publication of competitive industry benchmark results, changes in dynamic random
  memory devices pricing and other changes in the total system cost of add-in
  boards, as well as by severe price competition and by frequent new technology
  and product introductions. Only a small number of products have achieved broad
  market acceptance and such market acceptance, if achieved, is difficult to
  sustain due to intense competition. Since we have no other product line, our
  business would suffer if for any reason our current or future 3D graphics
  processors do not continue to achieve widespread acceptance in the PC market. If
  we are unable to complete the timely development of or successfully and
  cost-effectively manufacture and deliver products that meet the requirements of
  the PC market, our business would be harmed.
  
       Our integrated graphics product may not be accepted by the PC market.
  
       We expect that integrated graphics chipset products will become an
  increasing part of the lower cost segment of the PC graphics market. We have
  only recently introduced a 3D graphics processor targeted at this segment, as
  part of a joint development effort with ALi. If this product is not competitive
  in this segment and the integrated chipset segment continues to account for an
  increasing percentage of the units sold in the PC market, our business may
  suffer.
  
       We need to develop new products and to manage product transitions in
  order to succeed.
  
       Our business will depend to a significant extent on our ability to
  successfully develop new products for the 3D graphics market. Our add-in board
  manufacturers and major OEM customers typically introduce new system
  configurations as often as twice per year, typically based on spring and fall
  design cycles. Accordingly, our existing products must have competitive
  performance levels or we must introduce new products on a timely basis with such
  performance characteristics in order to be included in new system
  configurations. This requires that we do the following:
  
       .    anticipate the features and functionality that consumers will demand;
  
       .    incorporate those features and functionality into products that meet
            the exacting design requirements of PC OEMs and add-in board
            manufacturers or CEMs;
  
       .    price our products competitively; and
  
       .    introduce the products to the market within the limited window for PC
            OEM and add-in board manufacturers.
  <PAGE>
  
       As a result, we believe that significant expenditures for research and
  development will continue to be required in the future. The success of new
  product introductions will depend on several factors, including the following:
  
       .    proper new product definition;
  
       .    timely completion and introduction of new product designs;
  
       .    the ability of Taiwan Semiconductor Manufacturing Co., or TSMC, our
            primary manufacturer, WaferTech LLC, a joint venture controlled by
            TSMC, and any additional third-party manufacturers to effectively
            manufacture our new products in a timely manner;
  
       .    the quality of any new products;
  
       .    differentiation of new products from those of our competitors;
  
       .    market acceptance of our and our customers' products; and
  
       .    availability of adequate quantity and configurations of various types
            of memory products.
  
       Our strategy is to utilize the most advanced semiconductor process
  technology appropriate for our products and available from commercial third-
  party foundries. Use of advanced processes has in the past resulted in initial
  yield problems. New products that we introduce may not incorporate the features
  and functionality demanded by PC OEMs, add-in board manufacturers and consumers
  of 3D graphics. In addition, we may not successfully develop or introduce new
  products in sufficient volumes within the appropriate time to meet both the PC
  OEMs' design cycles and market demand. We have in the past experienced delays in
  the development of some new products. Our failure to successfully develop,
  introduce or achieve market acceptance for new 3D graphics products would harm
  our business.
  
       Our failure to identify new product opportunities or to develop new
  products could harm business.
  
       As markets for our 3D graphics processors develop and competition
  increases, we anticipate that product life cycles at the high end will remain
  short and average selling prices will continue to decline. In particular, we
  expect average selling prices and gross margins for our 3D graphics processors
  to decline as each product matures and as unit volume increases. As a result, we
  will need to introduce new products and enhancements to existing products to
  maintain overall average selling prices and gross margins. In order for our 3D
  graphics processors to achieve high volumes, leading PC OEMs and add-in board
  manufacturers must select our 3D graphics processor for design into their
  products and then successfully complete the designs of their products and sell
  them. We may be unable to successfully identify new product opportunities or to
  develop and bring to market in a timely fashion any new products. In addition,
  we cannot guarantee that any new products we develop will be selected for design
  into PC OEMs' and add-in board manufacturers' products, that any new designs
  will be successfully
  <PAGE>
  
  completed or that any new products will be sold. As the complexity of our
  products and the manufacturing process for products increases, there is an
  increasing risk that we will experience problems with the performance of
  products and that there will be delays in the development, introduction or
  volume shipment of our products. We may experience difficulties related to the
  production of current or future products or other factors may delay the
  introduction or volume sale of new products we develop. In addition, we may be
  unable to successfully manage the production transition risks with respect to
  future products. Failure to achieve any of the foregoing with respect to future
  products or product enhancements could result in rapidly declining average
  selling prices, reduced margins, and reduced demand for products or loss of
  market share. In addition, technologies developed by others may render our 3D
  graphics products non-competitive or obsolete or result in our holding excess
  inventory, either of which would harm our business.
  
       We rely on third-party vendors to supply us tools for the development
  of our new products and we may be unable to obtain the tools necessary to
  develop these products.
  
       In the design and development of new products and product enhancements,
  we rely on third-party software development tools. While we currently are not
  dependent on any one vendor for the supply of these tools, some or all of these
  tools may not be readily available in the future. For example, we have
  experienced delays in the introduction of products in the past as a result of
  the inability of then available software development tools to fully simulate the
  complex features and functionalities of our products. The design requirements
  necessary to meet consumer demands for more features and greater functionality
  from 3D graphics products in the future may exceed the capabilities of the
  software development tools available to us. If the software development tools we
  use become unavailable or fail to produce designs that meet consumer demands,
  our business could suffer.
  
       Our industry is characterized by vigorous protection and pursuit of
  intellectual property rights or positions that could result in substantial costs
  to us.
  
       The semiconductor industry is characterized by vigorous protection and
  pursuit of intellectual property rights or positions, which has resulted in
  protracted and expensive litigation. The 3D graphics market in particular has
  been characterized recently by the aggressive pursuit of intellectual property
  positions, and we expect our competitors to continue to pursue aggressive
  intellectual property positions. In addition, from time to time we receive
  notices alleging that we have infringed patents or other intellectual property
  rights owned by third parties. We expect that, as the number of issued hardware
  and software patents increases, and as competition in our markets intensifies,
  the volume of intellectual property infringement claims will increase. If
  infringement claims are made against us, we may seek licenses under the
  claimant's patents or other intellectual property rights. However, licenses may
  not be offered at all or on terms acceptable to us. The failure to obtain a
  license from a third party for technology used by us could cause us to incur
  substantial liabilities and to suspend the manufacture of products. Furthermore,
  we may initiate claims or litigation against third parties for infringement of
  our proprietary rights or to establish the validity of our proprietary rights.
  We have agreed to indemnify certain customers for claims of infringement arising
  out of sale of our products. Litigation by or against us or our customers
  concerning infringement would likely result in
  <PAGE>
  
  significant expense to us and divert the efforts of our technical and management
  personnel, whether or not the litigation results in a favorable determination
  for us.
  
       We are subject to a patent infringement lawsuit and could be subject to
  future lawsuits that could divert our resources and result in the payment of
  substantial damages.
  
       On September 21, 1998, 3Dfx Interactive, Inc. filed a patent infringement
  suit against us in the United States District Court for the Northern District of
  California alleging infringement of a 3Dfx patent. On March 2, 1999, 3Dfx added
  a second patent to the suit and on May 24, 1999, 3Dfx added a third patent to
  the suit. The amended complaint alleges that our RIVA TNT, RIVA TNT2 and RIVA
  TNT2 Ultra products infringe the patents in suit and seeks unspecified
  compensatory and trebled damages and attorneys' fees. Our current generation of
  products is not identified as infringing any of the patents in suit. We have
  filed an answer and counter-claims asserting that the patents in suit are
  invalid and not infringed. These assertions are supported by our investigations
  to date and an opinion from our patent counsel in this suit. We anticipate that
  the trial date will be set by the District Court after it rules on claims
  construction issues. We have and will continue to defend vigorously this suit.
  The litigation with 3Dfx has resulted, and we expect that the 3Dfx litigation
  will continue to result, in significant legal expenses, whether or not the
  litigation results in a favorable determination for us. In the event of an
  adverse result in the 3Dfx suit, we might be required to do one or more of the
  following:
  
       .    pay substantial damages (including treble damages);
  
       .    permanently cease the manufacture and sale of any of the infringing
            products;
  
       .    expend significant resources to develop non-infringing products; or
  
       .    obtain a license from 3Dfx for infringing products.
  
       On August 28, 2000, we filed a patent infringement lawsuit against 3Dfx
  in the United States District Court for the Northern District of California. The
  lawsuit alleges that 3Dfx's graphics chip and card products, which are used to
  accelerate 3D graphics on personal computers, infringe five of our patents and
  seeks an injunction restraining 3Dfx from manufacturing, selling or importing
  infringing graphics chip and card products including its Voodoo 3, Voodoo 4 and
  Voodoo 5 and VSA-100 family of products, as well as monetary damages. The matter
  is in its earliest stages, discovery has not yet begun and no trial date has
  been set.
  
       We have in the past been subject to patent infringement suits with SGI
  and S3 Incorporated, both of which were settled and resulted in cross-licenses
  and, in the case of SGI, payments by us. In addition, we may be subject to
  patent infringement suits brought by other parties in the future. For example,
  we have received correspondence from Rambus Inc. indicating that it believes our
  products infringe certain patents held by Rambus and requesting that we agree to
  certain licensing terms, including royalty payments. We believe the Rambus
  patents are invalid, not infringed and unenforceable. Although we currently are
  having discussions with Rambus regarding potential business alternatives to
  Rambus' proposed licensing
  <PAGE>
  
  terms, we cannot guarantee that we will be able to reach a satisfactory
  agreement with Rambus. If we are unable to do so, Rambus may sue us for patent
  infringement at any time.
  
       We may be unable to adequately protect our intellectual property.
  
       We rely primarily on a combination of patents, trademarks, copyrights,
  trade secrets, employee and third-party nondisclosure agreements and licensing
  arrangements to protect our intellectual property. We own 33 issued United
  States patents, and have 46 United States patent applications pending. Our
  issued patents have expiration dates from April 2015 to April 2018. Our issued
  patents and pending patent applications relate to technology developed by us in
  connection with the development of our 3D graphics processors. Our pending
  patent applications and any future applications may not be approved. In
  addition, any issued patents may not provide us with competitive advantages or
  may be challenged by third parties. The enforcement of patents of others may
  harm our ability to conduct our business. Others may independently develop
  substantially equivalent intellectual property or otherwise gain access to our
  trade secrets or intellectual property, or disclose our intellectual property or
  trade secrets. Our failure to effectively protect our intellectual property
  could harm our business. We have licensed technology from third parties for
  incorporation in our graphics processors, and expect to continue to enter into
  license agreements for future products. These licenses may result in royalty
  payments to third parties, the cross-license of technology by us or payment of
  other consideration. If these arrangements are not concluded on commercially
  reasonable terms, our business could suffer.
  
       Our failure to achieve one or more design wins would harm our business.
  
       Our future success will depend in large part on achieving design wins,
  which entails having our existing and future products chosen as the 3D graphics
  processors for hardware components or subassemblies designed by PC OEMs and
  motherboard and add-in board manufacturers. Our add-in board manufacturers and
  major OEM customers typically introduce new system configurations as often as
  twice per year, generally based on spring and fall design cycles. Accordingly,
  our existing products must have competitive performance levels or we must timely
  introduce new products with such performance characteristics in order to be
  included in new system configurations. Our failure to achieve one or more design
  wins would harm our business. The process of being qualified for inclusion in a
  PC OEM's product can be lengthy and could cause us to miss a cycle in the demand
  of end users for a particular product feature, which also could harm our
  business.
  
       Our ability to achieve design wins also depends in part on our ability
  to identify and ensure compliance with evolving industry standards.
  Unanticipated changes in industry standards could render our products
  incompatible with products developed by major hardware manufacturers and
  software developers, including Intel and Microsoft. This would require us to
  invest significant time and resources to redesign our products to ensure
  compliance with relevant standards. If our products are not in compliance with
  prevailing industry standards for a significant period of time, our ability to
  achieve design wins could suffer.
  <PAGE>
  
       We are dependent on the PC market, which may not continue to grow.
  
       In fiscal 2000, we derived all of our revenue from the sale of products
  for use in PCs. In the first quarter of fiscal 2001, we derived most of our
  revenue from the sale of products for use in the entire desktop PC market, from
  professional workstations to low-cost PCs. We expect to continue to derive most
  of our revenue from the sale or license of products for use in PCs in the next
  several years. The PC market is characterized by rapidly changing technology,
  evolving industry standards, frequent new product introductions and significant
  price competition. These factors result in short product life cycles and regular
  reductions of average selling prices over the life of a specific product.
  Although the PC market has grown substantially in recent years, this growth may
  not continue. A reduction in sales of PCs, or a reduction in the growth rate of
  PC sales, would likely reduce demand for our products. Moreover, changes in
  demand could be large and sudden. Since PC manufacturers often build inventories
  during periods of anticipated growth, they may be left with excess inventories
  if growth slows or if they have incorrectly forecast product transitions. In
  these cases, PC manufacturers may abruptly suspend substantially all purchases
  of additional inventory from suppliers like us until the excess inventory has
  been absorbed. Any reduction in the demand for PCs generally, or for a
  particular product that incorporates our 3D graphic processors, could harm our
  business.
  
       The acceptance of next generation products in business PC 3D graphics
  may not continue to develop.
  
       Our success will depend in part upon the demand for performance 3D
  graphics for business PC applications. The market for performance 3D graphics on
  business PCs has only recently begun to emerge and is dependent on the future
  development of, and substantial end-user and OEM demand for, 3D graphics
  functionality. As a result, the market for business PC 3D graphics computing may
  not continue to develop or may not grow at a rate sufficient to support our
  business. The development of the market for performance 3D graphics on business
  PCs will in turn depend on the development and availability of a large number of
  business PC software applications that support or take advantage of performance
  3D graphics capabilities. Currently there are only a limited number of software
  applications like this, most of which are games, and a broader base of software
  applications may not develop in the near term or at all. Consequently, a broad
  market for full function performance 3D graphics on business PCs may not
  develop. Our business prospects will suffer if the market for business PC 3D
  graphics fails to develop or develops more slowly than expected.
  
       We are dependent on a small number of customers and we are subject to
  order and shipment uncertainties.
  
       We have only a limited number of customers and our sales are highly
  concentrated. We primarily sell our products to add-in board and motherboard
  manufacturers and CEMs, which incorporate graphics products in the boards they
  sell to PC OEMs. Sales to add-in board manufacturers and CEMs are primarily
  dependent on achieving design wins with leading PC OEMs. The number of add-in
  board manufacturers and CEMs and leading PC OEMs is limited. We expect that a
  small number of add-in board manufacturers and CEMs directly, and a small number
  of PC OEMs indirectly, will continue to account for a substantial portion of our
  revenue for the foreseeable future. As a result, our business could be harmed by
  the loss of business from
  <PAGE>
  
  PC OEMs or add-in board manufacturers and CEMs. In addition, revenue from add-in
  board manufacturers, motherboard manufacturers, CEMs and PC OEMs that have
  directly or indirectly accounted for significant revenue in past periods,
  individually or as a group, may not continue, or may not reach or exceed
  historical levels in any future period.
  
       Our business may be harmed by instability in Asia due to the
  concentration of customers who are located or have substantial operations in
  Asia, including Taiwan. The People's Republic of China and Taiwan have in the
  past experienced and currently are experiencing strained relations. A worsening
  of these relations or the development of hostilities between the two could
  result in disruptions in Taiwan and possibly other areas of Asia, which could
  harm our business. While we believe political instability in Asia has not
  adversely affected our business, because of our reliance on companies with
  operations in Asia, continued economic and political instability in Asia might
  harm us.
  
       We may be unable to manage our growth and, as a result, may be unable
  to successfully implement our strategy.
  
       Our rapid growth has placed, and is expected to continue to place, a
  significant strain on our managerial, operational and financial resources. As of
  July 30, 2000, we had 529 employees as compared to 392 employees as of January
  30, 2000. We expect that the number of our employees will increase substantially
  over the next 12 months. Our future growth, if any, will depend on our ability
  to continue to implement and improve operational, financial and management
  information and control systems on a timely basis, as well as our ability to
  maintain effective cost controls. Further, we will be required to manage
  multiple relationships with various customers and other third parties. Our
  systems, procedures or controls may not be adequate to support our operations
  and our management may be unable to achieve the rapid execution necessary to
  successfully implement our strategy.
  
       We are dependent on key personnel and the loss of these employees could
  harm our business.
  
       Our performance will be substantially dependent on the performance of
  our executive officers and key employees. None of our officers or employees is
  bound by an employment agreement, and our relationships with these officers and
  employees are, therefore, at will. We do not have "key person" life insurance
  policies on any of our employees. The loss of the services of any of our
  executive officers, technical personnel or other key employees, particularly
  Jen-Hsun Huang, our President and Chief Executive Officer, would harm our
  business. Our success will depend on our ability to identify, hire, train and
  retain highly qualified technical and managerial personnel. Our failure to
  attract and retain the necessary technical and managerial personnel would harm
  our business.
  
       We depend on third-party fabrication to produce our products.
  
       We do not manufacture the semiconductor wafers used for our products
  and do not own or operate a wafer fabrication facility. Our products require
  wafers manufactured with state-of-the-art fabrication equipment and techniques.
  We utilize TSMC and WaferTech to produce our semiconductor wafers and utilize
  independent contractors to perform assembly, test and
  <PAGE>
  
  packaging. We depend on these suppliers to allocate to us a portion of their
  manufacturing capacity sufficient to meet our needs, to produce products of
  acceptable quality and at acceptable manufacturing yields, and to deliver those
  products to us on a timely basis. These manufacturers may be unable to meet our
  near-term or long- term manufacturing requirements. We obtain manufacturing
  services on a purchase order basis and TSMC has no obligation to provide us with
  any specified minimum quantities of product. TSMC fabricates wafers for other
  companies, including certain of our competitors, and could choose to prioritize
  capacity for other users or reduce or eliminate deliveries to us on short
  notice. Because the lead time needed to establish a strategic relationship with
  a new manufacturing partner could be several quarters, there is no readily
  available alternative source of supply for any specific product. We believe that
  long-term market acceptance for our products will depend on reliable
  relationships with TSMC and any other manufacturers used by us to ensure
  adequate product supply to respond to customer demand.
  
       In September 1999, a significant earthquake in Taiwan contributed to a
  temporary shortage of graphics processors in the third and fourth quarters of
  fiscal 2000. Because of our reliance on TSMC, our business may be harmed by
  political instability in Taiwan, including the worsening of the strained
  relations between The People's Republic of China and Taiwan. Furthermore, any
  substantial disruption in our suppliers' operations, either as a result of a
  natural disaster, political unrest, economic instability, equipment failure or
  other cause, could harm our business.
  
       We are dependent primarily on TSMC and we expect in the future to
  continue to be dependent upon third-party manufacturers to do the following:
  
       .    produce wafers of acceptable quality and with acceptable manufacturing
            yields;
  
       .    deliver those wafers to us and our independent assembly and testing
            subcontractors on a timely basis; and
  
       .    allocate to us a portion of their manufacturing capacity sufficient to
            meet our needs.
  
       Our wafer requirements represent a significant portion of the total
  production capacity of TSMC. Although our products are designed using TSMC's
  process design rules, TSMC may be unable to achieve or maintain acceptable
  yields or deliver sufficient quantities of wafers on a timely basis and/or at an
  acceptable cost. Additionally, TSMC may not continue to devote resources to the
  production of our products, or to advance the process design technologies on
  which the manufacturing of our products is based. Any difficulties like these
  would harm our business.
  
       Failure to achieve expected manufacturing yields would reduce our product
  supply and harm our business.
  
       Semiconductor manufacturing yields are a function both of product design,
  which is developed largely by us, and process technology, which typically is
  proprietary to the manufacturer. Since low yields may result from either design
  or process technology failures, yield problems may not be effectively determined
  or resolved until an actual product exists that
  <PAGE>
  
  can be analyzed and tested to identify process sensitivities relating to the
  design rules that are used. As a result, yield problems may not be identified
  until well into the production process, and resolution of yield problems would
  require cooperation by and communication between the manufacturer and us.
  
       The risk of low yields is compounded by the offshore location of most
  of our manufacturers, increasing the effort and time required to identify,
  communicate and resolve manufacturing yield problems. Because of our potentially
  limited access to wafer fabrication capacity from our manufacturers, any
  decrease in manufacturing yields could result in an increase in our per unit
  costs and force us to allocate our available product supply among our customers.
  This could potentially harm customer relationships as well as revenue and gross
  profit. Our wafer manufacturers may be unable to achieve or maintain acceptable
  manufacturing yields in the future. Our inability to achieve planned yields from
  our wafer manufacturers could harm our business. We also face the risk of
  product recalls or product returns resulting from design or manufacturing
  defects that are not discovered during the manufacturing and testing process. In
  the event of a significant number of product returns due to a defect or recall,
  our business could suffer.
  
       Failure to transition to new manufacturing process technologies could
  affect our ability to compete effectively.
  
       Our strategy is to utilize the most advanced semiconductor process
  technology appropriate for our products and available from commercial third-
  party foundries. Use of advanced processes may have greater risk of initial
  yield problems. Manufacturing process technologies are subject to rapid change
  and require significant expenditures for research and development. We
  continuously evaluate the benefits of migrating to smaller geometry process
  technologies in order to improve performance and reduce costs. We have migrated
  to the .18 micron technology with the GeForce2 GTS GPUs, and we believe that the
  transition of our products to increasingly smaller geometries will be important
  to our competitive position. Other companies in the industry have experienced
  difficulty in migrating to new manufacturing processes and, consequently, have
  suffered reduced yields, delays in product deliveries and increased expense
  levels. We may experience similar difficulties and the corresponding negative
  effects. Moreover, we are dependent on our relationships with our third-party
  manufacturers to migrate to smaller geometry processes successfully. We may be
  unable to migrate to new manufacturing process technologies successfully or on a
  timely basis.
  
       The 3D graphics industry is highly competitive and we may be unable to
  compete.
  
       The market for 3D graphics processors for PCs in which we compete is
  intensely competitive and is characterized by rapid technological change,
  evolving industry standards and declining average selling prices. We believe
  that the principal competitive factors in this market are performance, breadth
  of product offerings, access to customers and distribution channels,
  backward-forward software support, conformity to industry standard APIs,
  manufacturing capabilities, price of graphics processors and total system costs
  of add-in boards and motherboards. We expect competition to increase both from
  existing competitors and new market entrants with products that may be less
  costly than our 3D graphics processors or may provide better performance or
  additional features not provided by our products.
  <PAGE>
  
       Our primary source of competition is from companies that provide or
  intend to provide 3D graphics solutions for the PC market. Our competitors
  include the following:
  
       .    suppliers of graphics add-in boards that utilize their internally
            developed graphics chips, such as ATI Technologies Inc. and Matrox
            Electronics Systems Ltd.;
  
       .    suppliers of integrated core logic chipsets that incorporate 2D and 3D
            graphics functionality as part of their existing solutions, such as
            Intel, Silicon Integrated Systems and Via Technologies;
  
       .    companies that have traditionally focused on the professional market
            and provide high end 3D solutions for PCs and workstations, including
            3Dlabs Inc., SGI and Evans and Sutherland Computer Corporation; and
  
       .    companies that focus on the video game market, such as 3Dfx and
            VideoLogic Group plc.
  
       If and to the extent we offer products outside of the 3D graphics
  processor market, we may face competition from some of our existing competitors
  as well as from companies with which we currently do not compete. We cannot
  accurately predict if we will compete successfully in any new markets we may
  enter.
  
       We may compete with Intel in the integrated low-cost chipset market.
  
       In June 2000, Intel began shipping the Intel 815 and 815e 3D graphics
  chipsets that are targeted at the low-cost PC market. Intel has significantly
  greater resources than we do, and our products may not compete effectively
  against future products introduced by Intel. In addition, we may be unable to
  compete effectively against Intel or Intel may introduce additional products
  that are competitive with our products in either performance or price or both.
  We expect Intel to continue to do the following:
  
       .    invest heavily in research and development and new manufacturing
            facilities;
  
       .    maintain its position as the largest manufacturer of PC
            microprocessors;
  
       .    increasingly dominate the PC platform; and
  
       .    promote its product offerings through advertising campaigns designed
            to engender brand loyalty among PC users.
  
       Intel may in the future develop graphics add-in cards or graphics-enabled
  motherboards that could directly compete with graphics add-in cards or graphics-
  enabled motherboards based on our product. In addition, due to the widespread
  industry acceptance of Intel's microprocessor architecture and interface
  architecture, including its AGP, and Intel's intellectual property position with
  respect to such architecture, Intel exercises significant influence over the PC
  industry generally. Any significant modifications by Intel to the AGP, the
  microprocessor or core logic components or other aspects of the PC
  microprocessor architecture could result in
  <PAGE>
  
  incompatibility with our technology, which would harm our business. In addition,
  any delay in the public release of information relating to modifications like
  this could harm our business.
  
       We are dependent on third parties for assembly and testing of our
  products.
  
       Our graphics processors are assembled and tested by Advance
  Semiconductor Engineering, Inc., ChipPAC Incorporated and Siliconware Precision
  Industries Company Ltd., all of which are based in Asia. Because we rely on
  Asian assembly and test subcontractors, our business may be harmed by political
  instability in Asia, including the worsening of the strained relations between
  The People's Republic of China and Taiwan. We do not have long-term agreements
  with any of these subcontractors. As a result of our dependence on third-party
  subcontractors for assembly and testing of our products, we do not directly
  control product delivery schedules or product quality. Any product shortages or
  quality assurance problems could increase the costs of manufacture, assembly or
  testing of our products and could harm our business. Due to the amount of time
  typically required to qualify assemblers and testers, we could experience
  significant delays in the shipment of our products if we are required to find
  alternative third parties to assemble or test our products or components. Any
  delays in delivery of our products could harm our business.
  
       We are subject to risks associated with product defects and
  incompatibilities.
  
       Products as complex as ours may contain defects or failures when
  introduced or when new versions or enhancements to existing products are
  released. We have in the past discovered software defects and incompatibilities
  with customers' hardware in certain of our products and may experience delays or
  lost revenue to correct any new defects in the future. Errors in new products or
  releases after commencement of commercial shipments could result in loss of
  market share or failure to achieve market acceptance. Our products typically go
  through only one verification cycle prior to beginning volume production and
  distribution. As a result, our products may contain defects or flaws that are
  undetected prior to volume production and distribution. The widespread
  production and distribution of defective products could harm our business.
  
       We are subject to risks associated with international operations.
  
       Our reliance on foreign third-party manufacturing, assembly and testing
  operations subjects us to a number of risks associated with conducting business
  outside of the United States, including the following:
  
       .    unexpected changes in, or impositions of, legislative or regulatory
            requirements;
  
       .    delays resulting from difficulty in obtaining export licenses for
            certain technology, tariffs, quotas and other trade barriers and
            restrictions;
  
       .    longer payment cycles;
  
       .    imposition of additional taxes and penalties;
  <PAGE>
  
       .    the burdens of complying with a variety of foreign laws; and
  
       .    other factors beyond our control.
  
       We also are subject to general political risks in connection with our
  international trade relationships. In addition, the laws of certain foreign
  countries in which our products are or may be manufactured or sold, including
  various countries in Asia, may not protect our products or intellectual property
  rights to the same extent as do the laws of the United States. This makes the
  possibility of piracy of our technology and products more likely. Currently, all
  of our arrangements with third-party manufacturers provide for pricing and
  payment in U.S. dollars, and to date we have not engaged in any currency hedging
  activities, although we may do so in the future. Fluctuations in currency
  exchange rates could harm our business in the future.
  
       The semiconductor industry is cyclical in nature.
  
       The semiconductor industry historically has been characterized by the
  following factors:
  
       .    rapid technological change;
  
       .    cyclical market patterns;
  
       .    significant average selling price erosion;
  
       .    fluctuating inventory levels;
  
       .    alternating periods of overcapacity and capacity constraints; and
  
       .    variations in manufacturing costs and yields and significant
            expenditures for capital equipment and product development.
  
       In addition, the industry has experienced significant economic
  downturns at various times, characterized by diminished product demand and
  accelerated erosion of average selling prices. We may experience substantial
  period-to- period fluctuations in results of operations due to general
  semiconductor industry conditions.
  
       Failure in implementation of our enterprise resource planning system
  could adversely affect our operations.
  
       In December 1999, we began the implementation of an SAP A.G. system as
  our enterprise resource planning, or ERP, system to replace our information
  systems in business, finance, operations and service. The first phase of the
  implementation was successfully completed in June 2000 and our operations are
  fully functioning under the new ERP system. Future phases of the implementation
  are expected to occur throughout fiscal 2001. We are heavily dependent upon the
  proper functioning of our internal systems to conduct our business. System
  failure or malfunctioning may result in disruptions of operations and inability
  to process transactions. Our results of operations and financial position could
  be adversely affected if we encounter unforeseen problems with respect to system
  operations or future implementation.
  <PAGE>
  
           Some provisions in our certificate of incorporation, our bylaws and our
  agreement with Microsoft could delay or prevent a change in control.
  
           Our certificate of incorporation and bylaws contain provisions that
  could make it more difficult for a third party to acquire a majority of our
  outstanding voting stock. These provisions include the following:
  
           .    the ability of the board of directors to create and issue
                preferred stock without prior stockholder approval;
  
           .    the prohibition of stockholder action by written consent;
  
           .    a classified board of directors; and
  
           .    advance notice requirements for director nominations and
                stockholder proposals.
  
           On March 5, 2000, we entered into a licensing and development agreement
  with Microsoft that included a grant to Microsoft of first and last rights of
  refusal over any offer we receive to purchase 30% or more of the outstanding
  shares of our common stock. This provision could also delay or prevent a change
  in control of NVIDIA.
  
           We are subject to risks associated with interest rate and foreign
  exchange rate fluctuation.
  
           The primary objective of our investment activities is to preserve
  principal while at the same time maximizing the income we receive from the
  investments without significantly increasing risk. To minimize potential loss
  arising from adverse changes in interest rates, we maintain a portfolio of cash
  and cash equivalents primarily in highly rated domestic money market funds. In
  general, money market funds are not subject to market risk because the interest
  paid on such funds fluctuates with the prevailing interest rate.
  
           We consider our exposure to foreign exchange rate fluctuations to be
  minimal. Currently, all of our arrangements with third-party manufacturers
  provide for pricing and payment in U.S. dollars, and therefore are not subject
  to exchange rate fluctuations. To date, we have not engaged in any currency
  hedging activities, although we may do so in the future. Fluctuations in foreign
  currency exchange rates could harm our business in the future.
  <PAGE>
  
           The Company's Business description is updated as follows:
  
                                      BUSINESS
  
  Overview
  
           We design, develop and market graphics processors and related software
  for personal computers and digital entertainment platforms. We provide a
  "top-to-bottom" family of award-winning performance 3D graphics processors and
  graphics processing units, or GPUs, that set the standard for performance,
  quality and features for a broad range of desktop PCs, from professional
  workstations to low-cost PCs. Our 3D graphics processors are used in a wide
  variety of applications, including games, business productivity, the Internet
  and industrial design. Our graphics processors were the first to incorporate a
  128-bit multi-texturing graphics architecture designed to deliver to users of
  our products a highly immersive, interactive 3D experience with compelling
  visual quality, realistic imagery and motion, stunning effects and complex
  object and scene interaction at real-time frame rates. The NVIDIA TNT2, TNT2 M64
  and Vanta graphics processors deliver high performance 3D and 2D graphics at
  affordable prices, making them the graphics hardware of choice for a wide range
  of applications for both consumer and commercial use. Our graphics processors
  are designed to be architecturally compatible backward and forward between
  generations, giving our OEM customers and end users a low cost of ownership. We
  are recognized for developing the world's first GPU, the GeForce 256, which
  incorporates independent hardware transform and lighting processing units along
  with a complete rendering pipeline into a single-chip architecture. Our current
  GPUs, the GeForce2 Ultra, the GeForce2 GTS, the GeForce2 MX, the NVIDIA Quadro2
  Pro and the Quadro2 MXR, process hundreds of billions of operations per second
  and increase the PC's ability to render high-definition 3D scenes in real-time.
  Our GPU family provides superior processing and rendering power at competitive
  prices and is architected to deliver the maximum performance from industry
  standards such as Microsoft's Direct3D API and SGI's OpenGL API on Windows 98,
  Windows 2000 and Linux platforms. We have also developed an integrated core
  logic/graphics chipset called Aladdin TNT2 through a partnership with Acer
  Laboratories, Inc., or ALi, one of the leading suppliers of core logic chipsets
  for the PC. The Aladdin TNT2 chipset brings NVIDIA-class graphics performance
  and quality to the value PC segment.
  
           Our products currently are designed into products offered by virtually
  every leading branded PC OEM, including Acer, Compaq, Dell, eMachines, Fujitsu-
  Siemens, Gateway, HP, IBM, micronpc.com, NEC, Packard Bell NEC, SGI and Sony, as
  well as leading CEMs, including Celestica, Intel, Mitac, MSI, SCI and VisionTek,
  and leading add-in board manufacturers, including ASUSTek, Canopus, Creative,
  ELSA and Guillemot. The benefits and performance of the NVIDIA family of 3D
  graphics processors have received significant industry validation and have
  enabled us and our customers to win more than 600 industry awards, including
  over 20 "Editors' Choice" awards from PC Magazine during the last three years,
  Edge Magazine's 1999 "Hardware Innovation of the Year," MicroDesign Research's
  "1999 Analyst's Choice for Best 3D Processor" and, in the workstation market,
  Pro/E the Magazine's "Platinum Award."
  <PAGE>
  
  Industry Background
  
           Interactive 3D graphics technology is emerging as one of the
  significant new computing developments since the introduction of the graphical
  user interface. Interactive 3D graphics is integral to various computing and
  entertainment platforms such as workstations, consumer and commercial desktop
  PCs, Internet appliances and home gaming consoles. 3D graphics is a powerful
  broadband medium that enables the communication and visualization of
  information, whether it is in professional applications like CAD/CAM and digital
  content creation, commercial applications like financial analysis and
  business-to-business collaboration or simply surfing the Internet or playing
  games. The visually engaging and interactive nature of 3D graphics responds to
  consumers' demands for a convincing simulation of reality beyond what is
  possible with traditional 2D graphics. We expect that the fundamental
  interactive capability and distributive nature of 3D graphics will make it the
  primary broadband medium for a digitally connected world.
  
           We believe that a PC's interactive 3D graphics capability represents
  one of the primary means by which users differentiate among various systems. PC
  users today can easily differentiate the quality of graphics and prefer personal
  computers that provide a superior visual experience. These factors have
  dramatically increased demand for 3D graphics processors. Mercury Research
  estimates that 3D graphics will be standard in every PC unit shipped by 2001.
  Mercury Research also estimates that 126.8 million desktop 3D graphics
  processors were sold worldwide in 1999 and that 292.2 million will be sold
  worldwide in 2004.
  
           Continuing advancements in semiconductor process and manufacturing have
  made available more powerful and affordable microprocessors and 3D graphics
  processors, both of which are essential to deliver interactive 3D graphics to
  the PC market. Additionally, the industry has broadly adopted Microsoft's
  Direct3D API and SGI's OpenGL API, which serve as common and standard languages
  between software applications and 3D graphics processors, allowing the
  development of numerous 3D applications and resulting in increased consumer
  demand.
  
           The technology required to create interactive and visually engaging 3D
  graphics is algorithmically complex and computationally intensive. To deliver
  high quality interactive 3D graphics, advanced 3D GPUs require millions of
  transistors to process billions of arithmetic operations per second. Current 3D
  GPUs, like the Quadro2 and the GeForce2 Ultra, are over 100 times more complex
  than 2D accelerators and comparable to the complexity of Intel Pentium III
  microprocessors. Despite these ongoing advances, PC 3D graphics available today
  cannot deliver in real time the quality of graphics seen in digitally-created
  films like "Toy Story 2." 3D graphics like those required over 1,400 powerful
  workstations to render 122,699 movie frames, each of which required from 10
  minutes to three days to complete. For PCs to provide even this level of 3D
  graphics capability, the performance of 3D graphics processors will need to be
  improved by several more orders of magnitude, with the ultimate goal being to
  achieve "real world" graphics performance well beyond that seen in "Toy Story
  2."
  <PAGE>
  
           We believe that a substantial market opportunity exists for providers
  of performance 3D graphics processors, particularly as performance 3D graphics
  have become an increasingly important requirement and point of differentiation
  for PC OEMs. Consumer PC users demand a compelling visual experience and
  compatibility with existing and next-generation 3D graphics applications at an
  affordable price. Application developers require high-performance, standards-
  based 3D architectures with broad market penetration. Since graphics is a key
  point of differentiation, PC OEMs continually seek to incorporate leading-edge,
  cost-effective 3D graphics solutions to build award-winning products. We believe
  that providers of interactive 3D graphics solutions will compete based on their
  ability to leverage their technology expertise to simultaneously meet the needs
  of end users, application developers and OEMs.
  
  Our Solution
  
           We designed our GPUs and graphics processors to enable PC OEMs and
  add-in board manufacturers to build award-winning products by delivering
  state-of-the-art interactive 3D graphics capability while maintaining
  affordable prices. We believe that by developing 3D graphics solutions that
  provide superior performance and address the key requirements of the PC market,
  we will accelerate the adoption of 3D graphics throughout this market. We
  combine scalable architectural technology with mass market economies-of-scale to
  deliver a complete family of products that span workstations to low-cost value
  PCs.
  
           The key features and benefits of our solution are as follows:
  
           Advanced Scalable Single-Chip Graphics Architectures. In each of the
  past three years, we have introduced a graphics processor that has subsequently
  defined the 3D graphics standard widely adopted by the PC industry. In 1997, we
  delivered the industry's first 128-bit 3D graphics processor with the RIVA 128.
  The RIVA 128's wide data path enabled high frame rate playback of interactive
  games. In 1998, we introduced the industry's first dual pixel pipeline with the
  RIVA TNT, which provided the ability to apply multiple textures to each polygon,
  enabling stunning visual effects. In 1999, we introduced the world's first GPU,
  the GeForce 256, by integrating transform and lighting into the graphics
  processor. Dedicated transform and lighting engines, which are substantially
  more powerful than those functions on general purpose microprocessors, provide
  the extremely high computational throughput necessary to generate
  high-resolution polygonal 3D models. In addition, in 2000, we introduced the
  first per-pixel shading GPUs, the GeForce2 GTS and GeForce2 Ultra, moving even
  closer to cinematic-quality real-time graphics for the desktop PC market.
  Per-pixel shading allows control of the visual and material components, such as
  color, shadow, light and reflectivity, used to create realistic scenes and
  objects. Each of these generations has served as the foundation for an
  architecturally compatible family of products designed to offer additional
  products focused on either enhanced performance and features or lower cost.
  
           High-Performance, Backward-Forward Compatible Software Drivers. NVIDIA
  graphics processors include an extensive set of reference drivers that translate
  between the software API and hardware. The NVIDIA Unified Driver Architecture
  (UDA) is designed to maximize the performance of the graphics processor and to
  maintain compatibility with each successive generation of our products. These
  software drivers have the flexibility to be continually enhanced in order to
  further improve the performance of our processors. We believe our UDA provides a
  <PAGE>
  
  competitive advantage to our OEM customers. We are the only graphics vendor that
  offers a family of graphics processors that are binary software compatible,
  enabling both backward and forward compatibility between generations as well as
  top-to-bottom compatibility. This compatibility is achieved through an
  innovative graphics hardware architecture that virtualizes the software
  interface, allowing us to innovate independent of the API. This compatibility
  provides OEMs and end users with a great degree of flexibility.
  
           Feature-Optimized, Standards-Based Architecture. The NVIDIA family of
  graphics processors are architected to take full advantage of industry standards
  such as Microsoft's Direct3D and SGI's OpenGL. We work closely with Microsoft
  and SGI so that our family of graphics processors provide feature complete,
  performance optimized drivers from one generation to the next. The
  standards-compliant design of our graphics processors provides OEMs maximum
  flexibility in the design and use of their systems. In particular, we believe
  that our focus on industry standard APIs positions us well in the PC market, as
  these standards proliferate and support more advanced 3D visuals. Direct3D and
  OpenGL have gained broad developer support, with numerous 3D titles currently
  using those APIs.
  
  Our Strategy
  
           Our objective is to ultimately be the leading supplier of performance
  graphics communications processors for a broad range of PCs, laptops, Internet
  appliances, handhelds and any future computing device with a display. Our
  current focus is on the PC market and we plan to expand into other markets. Our
  strategy to achieve this objective includes the following key elements:
  
           Build Award-Winning, Architecturally-Compatible 3D Graphics Product
  Families for the PC and Digital Entertainment Markets. Our strategy is to
  achieve market share leadership in the PC and digital entertainment markets by
  providing award-winning performance at every price point. By developing 3D
  graphics solutions that provide superior performance and address the key
  requirements of these markets, we believe that we will accelerate the adoption
  of 3D graphics. As part of our strategy, we have closely aligned our product
  development with Direct3D and OpenGL, which we believe maximizes third-party
  software support.
  
           Target Leading OEMs. Our strategy is to enable our leading OEM
  customers to differentiate their products in a highly competitive marketplace by
  using our 3D graphics processors. We believe that design wins with these
  industry leaders provide market validation of our products, increase brand
  awareness and enhance our ability to penetrate additional leading customer
  accounts. In addition, we believe that close relationships with OEMs will allow
  us to better anticipate and address customer needs with our future generations
  of products. Our products currently are designed into products offered by
  virtually every leading branded PC OEM, including Acer, Compaq, Dell, eMachines,
  Fujitsu-Siemens, Gateway, HP, IBM, micronpc.com, NEC, Packard Bell NEC, SGI and
  Sony.
  
           Sustain Technology and Roadmap Leadership in 3D Graphics. We are
  focused on leveraging our advanced engineering capabilities to accelerate the
  quality and performance of 3D graphics in PCs. A fundamental aspect of our
  strategy is to actively recruit the best 3D graphics engineers in the industry,
  and we believe that we have assembled an exceptionally experienced
  <PAGE>
  
  and talented engineering team. We increased the number of our employees engaged
  in research and development activities to 289 at July 30, 2000 from 214 at
  January 30, 2000. Our research and development strategy is to focus on
  concurrently developing multiple generations of graphics processors using
  independent design teams. As we have in the past, we intend to leverage this
  strategy to achieve new levels of graphics features and performance, enabling
  our customers to achieve award-winning performance in their products.
  
           Increase Market Share. We believe that substantial market share will be
  important to achieving success in the 3D graphics business. We intend to achieve
  a leading share of the market by devoting substantial resources to building
  award-winning families of products for a wide range of applications.
  
           Leverage Our Expertise in Digital Multimedia. We believe the synergy
  created by the combination of 3D graphics and the Internet will fundamentally
  change the way people work, learn, communicate and play. We believe that our
  expertise in 3D graphics and system architecture positions us to help drive this
  transformation. We are leveraging our expertise in the processing and
  transmission of high-bandwidth digital media to develop products designed to
  address the requirements of high-bandwidth concurrent multimedia.
  
  NVIDIA Architecture, Products and Products Under Development
  
           3D Graphics Processing Architecture
  
           3D graphics processors create two-dimensional images, which can be
  displayed on computer monitors or other output devices, from computer
  specifications of three-dimensional objects or "models." These two-dimensional
  images are typically the perspective view of the objects from an eye-point that
  changes with time and, as such, are computationally very intensive. The 3D
  effect arises from a variety of visual cues, such as perspective, occlusion,
  surface shading, shadows, focus and motion. Convincing realism arises from
  precise calculation of these and other effects. These calculations are best
  performed by dedicated processors, which provide far more power and bandwidth
  than microprocessors can deliver.
  
           The 3D graphics process is a series of specialized steps, often
  referred to as the 3D graphics pipeline. Typically, the microprocessor chooses
  an eye- point and decides which objects should be displayed. These are commonly
  communicated to the graphics subsystem via a software interface, such as
  Microsoft's Direct3D or SGI's OpenGL. The processing itself occurs in several
  steps, as depicted and described below:
  
  Model (right Transform and (right Polygon Setup (right Rasterization (right
  Display arrow)        Lighting       arrow)        arrow)      arrow)
  
           Model. The model typically is expressed as a set of polygons, such as
  triangles, that form the basic shape of a three-dimensional object and have
  attributes such as position and color at each vertex.
  
           Transform and Lighting. In the transform and lighting step, the
  original position and orientation of the polygons are transformed to their new
  position on the screen. Based on their
  <PAGE>
  
  position and orientation, some aspects of their surface color and lighting can
  be computed. The 3D visual cues of perspective and motion are handled during
  this stage. These calculations require very high floating-point computation
  power and are performed either by the host microprocessor or on a higher
  performance GPU. Lighting occurs after transform and provides high visual
  impact. Lighting effects enhance the realism of a scene and bring rendered
  images one step closer to a "real world" perception.
  
           Polygon Setup. Polygon setup calculates the slopes of the polygon sides
  and various other derivatives that greatly accelerate the rasterization process.
  Although early graphics devices performed these calculations in the host
  microprocessor, existing 3D graphics processors perform these calculations,
  permitting significantly higher performance. By offloading setup and
  rasterization from the microprocessor, the additional bandwidth can be utilized
  for computationally-intensive operations such as character animation, physics
  and object behaviors.
  
           Rasterization. Rasterization computes the color and other information
  for every pixel (dot on the screen) that a transformed polygon touches. A number
  of complex algorithms compute the color uniquely for each pixel, as well as
  perform the remaining visual cues, such as shading, shadows, focus and
  occlusion. This is the most computationally intensive step of the graphics
  pipeline and the processors are required to perform up to 1,000 calculations per
  pixel, with this number increasing rapidly as the technology advances.
  
           Display. Display consists of sequentially reading out the color of each
  pixel at a rate matched to the monitor. Unlike the other stages in the 3D
  graphics pipeline, which are purely digital, the signals to the monitor are
  analog, and the frequencies are far higher.
  
           The complexity of the different steps in the 3D graphics pipeline
  requires billions of floating-point and integer operations in real time in order
  to deliver a realistic and interactive experience. Image quality determines
  whether 3D computer representation looks realistic, and 3D performance
  determines whether a 3D system conveys a sense of fluid motion in real time. If
  the performance is below a certain threshold, a 3D system can reduce the
  productivity or the enjoyment of the user, even if the image quality is high.
  The challenge with high-quality 3D is to deliver the processing power required
  to perform these computations without creating bottlenecks in the 3D graphics
  pipeline.
  <PAGE>
  
  Current Product Offerings
  
  <TABLE>
  <CAPTION>
  ------------------------------------------------------------------------------------------------------------------------------------
                            Desktop                                        Key Architectural          Performance          Commercial
  Product                   Segment                    End User                Features                 Metrics             Ship Date
  ------------------------------------------------------------------------------------------------------------------------------------
  <S>                      <C>                    <C>                   <C>                      <C>                      <C>
  NVIDIA GeForce2          Enthusiast              Home users seeking      Hardware transform     31 million triangles     August 2000
  Ultra GPU                                        the best graphics       and lighting           per second and 1
                                                   performance and         engines, multi-        billion pixels per
                                                   quality for digital     texturing per-pixel    second
                                                   multimedia and          rendering pipelines
                                                   entertainment           designed to deliver
                                                   applications            the maximum
                                                                           performance for
                                                                           Direct3D and
                                                                           OpenGL applications
  
  NVIDIA GeForce2          Performance             Home users seeking      Same as the GeForce2   25 million triangles      March 2000
  GPU GTS                                          great graphics          Ultra                  per second and 800
                                                   performance and                                million pixels per
                                                   quality for digital                            second
                                                   multimedia and
                                                   entertainment
                                                   applications
  
  NVIDIA GeForce2          Mid-Range               Home and corporate      In addition to the     20 million triangles       June 2000
  MX GPU                                           users seeking an        GeForce2 Ultra and     per second and 350
                                                   optimal combination     GeForce2 GTS           million pixels per
                                                   of graphics             features, the          second
                                                   performance and         GeForce2 MX has
                                                   quality for digital     TwinView and Digital
                                                   multimedia, business    Vibrance capabilities
                                                   and entertainment
                                                   applications
  </TABLE>
  <PAGE>
  
  <TABLE>
  <CAPTION>
  ------------------------------------------------------------------------------------------------------------------------------------
  <S>                       <C>                    <C>                     <C>                    <C>                      <C>
  NVIDIA Quadro2 Pro        Performance            Professionals seeking   100% hardware-         31 million triangles     August 2000
  Graphics Board            Workstation            high-precision          accelerated            per second and 1
                                                   real-time 3D            OpenGL transform and   billion pixels per
                                                   performance for         lighting engines       second
                                                   CAD/CAM, digital
                                                   content creation,
                                                   scientific analysis
                                                   and life sciences
                                                   applications
  
  NVIDIA Quadro2 MXR        Entry Level            Professionals seeking   In addition to the     25 million triangles     August 2000
  Graphics Board            Workstation            high-precision          Quadro2 Pro            per second and 400
                                                   real-time 3D            features, the          million pixels per
                                                   performance for         Quadro2 MXR has        second
                                                   CAD/CAM, digital        TwinView and Digital
                                                   content creation,       Vibrance capabilities
                                                   scientific analysis
                                                   and life sciences
                                                   applications
  ------------------------------------------------------------------------------------------------------------------------------------
  NVIDIA TNT2               Mainstream             Home and corporate      128-bit dual-pixel     350 million pixels        April 1999
                                                   users seeking           rendering pipeline     per second
                                                   performance and         for stunning
                                                   features for business   multi-textured
                                                   productivity and        effects
                                                   management
  
  NVIDIA TNT2  M64               Value             Home and corporate      Low-cost 64-bit        286 million pixels         July 1999
                                                   users seeking the       memory interface and   per second
                                                   optimal combination     package delivers
                                                   of performance and      TNT2-class
                                                   features at an          performance and
                                                   affordable price        excellent quality at
                                                                           a lower cost
  
  NVIDIA Vanta                Low-Cost             Home and corporate      Low-cost 64-bit        250 million pixels         July 1999
                                                   users seeking a         memory interface and   per second
                                                   low-cost solution       package delivers
                                                                           TNT2-class
                                                                           performance
  
  NVIDIA Vanta LT           Low-Cost               Home and corporate      Low-cost 8MB frame    160 million pixels         April 2000
                                                   users seeking a         buffer with           per second
                                                   low-cost solution       TNT2-class
                                                                           performance
  ------------------------------------------------------------------------------------------------------------------------------------
  </TABLE>
  
                                        31
  <PAGE>
  
           NVIDIA GeForce2 Ultra GPU
  
           We began commercial shipment of the NVIDIA GeForce2 Ultra in August
  2000. The GeForce2 Ultra is designed for the PC enthusiast market and is a
  member of our second-generation GeForce2 family. The GeForce2 Ultra replaced our
  first-generation GPU, the GeForce 256, as our flagship processor.
  
           The GeForce2 Ultra is the first GPU able to break the one billion
  pixels per second barrier by providing two to three times the pixel processing
  power of any competitors' graphics processor currently available. Fabricated on
  a .18 micron process technology, the 25 million transistor GeForce2 Ultra
  delivers 31 million sustained triangles per second. GeForce2 Ultra is the
  world's first graphics product to ship with 230MHz (460MHz effective) Double
  Data Rate (DDR) memory, producing 7.36GB per second bandwidth. The GeForce2
  Ultra includes the NVIDIA Shading Rasterizer (NSR) technology that enables
  per-pixel control of visual and material components, such as color, shadow,
  light and reflectivity, used to create realistic scenes and objects.
  
           NVIDIA GeForce2 GTS GPU
  
           We began commercial shipment of the NVIDIA GeForce2 GTS in March 2000.
  The NVIDIA GeForce2 GTS is designed for the PC performance market and is a
  member of our second-generation GeForce2 family.
  
           The GeForce2 GTS is the first per-pixel shading GPU and was the first
  to incorporate NSR and a High-Definition Video Processor (HDVP), which provides
  a cost-effective, high-quality HDTV playback solution when combined with a
  digital television receiver. In addition, GeForce2 GTS enables new applications
  like high-definition timeshifting and digital VCR capabilities. Each of the four
  new rasterization pipelines processes two textures per pixel, in photorealistic
  32-bit color, at full speed. Fabricated on a .18 micron process technology, the
  GeForce2 GTS second-generation transform and lighting architecture delivers 25
  million triangles per second.
  
           NVIDIA GeForce2 MX GPU
  
           We began commercial shipment of the NVIDIA GeForce2 MX in June 2000.
  The NVIDIA GeForce2 MX is designed for the mid-range PC market and is a member
  of our second-generation GeForce2 family.
  
           The GeForce2 MX brings the power of a GPU to the mainstream computer
  market. With its innovative TwinView architecture, GeForce2 MX is the only GPU
  capable of driving two digital displays independently, while fully supporting
  analog RGB (VGA) and TV-out. In addition, the GeForce2 MX incorporates Digital
  Vibrance Control, which makes all images, including 2D, 3D and video, more
  colorful and vibrant, even on digital flat panels. Utilizing a two-pipe form of
  the GeForce2 GTS architecture, the GeForce2 MX is a powerful, versatile GPU
  <PAGE>
  
  at mainstream price points. Fabricated on a .18 micron process technology, the
  GeForce2 MX delivers 20 million triangles per second.
  
           NVIDIA Quadro2 Workstation Graphics Boards
  
           We began commercial shipment of NVIDIA Quadro2 workstation graphics
  boards in August 2000. The Quadro2 family is designed for the professional
  workstation, digital content creation and CAD/CAM markets. The Quadro2 graphics
  board family consists of the Quadro2 Pro and the Quadro2 MXR. The Quadro2
  replaces the Quadro workstation GPU as our flagship workstation processor and is
  incorporated into our first family of graphics boards for the workstation
  market. We combine the Quadro2 workstation GPU with our UDA, giving graphics and
  design professionals a solution for both the development and deployment of
  leading-edge content.
  
           We offer two distinct implementations of Quadro2 workstation boards.
  Quadro2 Pro delivers exceptional 3D and 2D performance for the engineering
  professional. Quadro2 MXR features our TwinView display architecture and a
  complete set of workstation capabilities for the mainstream professional. Both
  implementations deliver balanced high-end performance for OpenGL and Direct3D
  professional applications. With a high-speed 256-bit memory interface and up to
  128MB of DDR memory on-board, the Quadro2 increases the interactivity of the
  very largest models and scenes. Fabricated on a .18 micron process technology,
  Quadro2 also offers an integrated high-definition video processor capable of
  supporting a wide range of Advanced Television Standards Committee formats,
  including 720p at 60 frames per second.
  
           Our Quadro2 line is designed for use with professional applications
  such as 3D Studio MAX, Adobe Photoshop, AutoCAD, ESRI, LightWave 3D, Maya,
  Nichimen Mirai and SOFTIMAGE/3D.
  
           NVIDIA TNT2 Graphics Processor
  
           We began commercial shipment of the NVIDIA TNT2 graphics processor in
  April 1999. The TNT2 is designed for the mainstream PC market. The TNT2 features
  our fourth-generation, 128-bit multi-texturing 3D architecture. The TNT2 extends
  the performance and function of the original RIVA TNT graphics processor for PC
  OEMs and graphics card manufacturers. Fabricated on a .22 micron process
  technology, the TNT2 graphics processor delivers the highest performance of its
  generation through the use of high frequency clock rates for the 3D processor
  and memory. The TNT2 supports 32 megabytes of frame buffer memory.
  
           NVIDIA TNT2 M64, Vanta and Vanta LT Graphics Processors
  
           Our NVIDIA TNT2 M64, Vanta and Vanta LT graphics processors are
  designed for the value and low-cost consumer and commercial desktop PC markets.
  Based on our award-winning TNT2 architecture, these processors offer low-cost,
  highly integrated choices for entry-level add-in card and motherboard solutions.
  The TNT2 M64, Vanta and Vanta LT are manufactured on a .22 micron process
  technology and offer good quality and performance at an affordable price. The
  TNT2 M64, Vanta and Vanta LT support up to 32, 16 and 8 megabytes of frame
  buffer memory, respectively.
  <PAGE>
  
  Other Products and Projects
  
           Aladdin TNT2 Integrated Chipset
  
           The Aladdin TNT2 is a joint development with ALi. It combines our
  award- winning TNT2 core with ALi's M1631 North Bridge. This chipset is sold
  with an ALi M1535D South Bridge and brings NVIDIA graphics performance and image
  quality to the fast growing value PC segment while reducing overall system cost.
  ALi is responsible for the sale of this product. The Aladdin TNT2 began
  commercial shipment in March 2000.
  
           Microsoft Xbox
  
           On March 5, 2000, we entered into an agreement with Microsoft in which
  we agreed to develop and sell graphics chips and to license certain technology
  to Microsoft and its licensees for use in the Xbox video game console under
  development by Microsoft. In April 2000, Microsoft paid us $200.0 million as an
  advance against graphics chip purchases. Microsoft may terminate the agreement
  at any time. If termination occurs prior to offset in full of the advance
  payments, we would be required to return to Microsoft up to $100.0 million of
  the prepayment and to convert the remainder into our preferred stock at a 30%
  premium to the 30-day average trading price of our common stock preceding
  Microsoft's termination of the agreement. In addition, in the event that an
  individual or corporation makes an offer to purchase shares equal to or greater
  than thirty percent (30%) of the outstanding shares of our common stock,
  Microsoft has first and last rights of refusal to purchase the stock. The
  graphics chip contemplated by the agreement is highly complex, and the
  development and release of the Microsoft Xbox video game console and its
  commercial success are dependent upon a number of factors, many of which we
  cannot control. We cannot guarantee that we will be successful in developing the
  graphics chip for use by Microsoft or that the product will be developed or
  released, or if released, will be commercially successful.
  
  Sales and Marketing
  
           Our worldwide sales strategy is a key part of our objective to become
  the leading supplier of performance 3D graphics processors for PCs. Our sales
  team works closely with PC OEMs, add-in board manufacturers and industry
  trendsetters to define product features, performance, price and timing of new
  products. Members of our sales team have a high level of technical expertise and
  product and industry knowledge to support a competitive and complex design win
  process. We also employ a highly skilled team of application engineers to assist
  PC OEMs and add-in board manufacturers in designing, testing and qualifying
  system designs that incorporate our products. We believe that the depth and
  quality of our design support are key to improving PC OEMs' and add-in board
  manufacturers' time-to-market, maintaining a high level of customer satisfaction
  among PC OEMs and add-in board manufacturers and fostering relationships that
  encourage customers to use the next generation of our products.
  
           In the 3D graphics market, the sales process involves influencing
  leading PC OEMs' and add-in board manufacturers' graphics processor purchasing
  decisions, achieving key design wins and supporting the product design into high
  volume production. These design wins in turn influence the retail and system
  integrator channel that is serviced by add-in board and
  <PAGE>
  
  motherboard manufacturers. Our distribution strategy is to work with a number of
  leading CEMs, add-in board manufacturers and distributors that have
  relationships with a broad range of major PC OEMs and/or strong brand name
  recognition in the retail channel. Currently, we sell a significant majority of
  our graphics processors directly to CEMs and add-in board manufacturers, which
  then sell boards with our graphics processor to leading OEMs, to retail outlets
  and to a large number of system integrators.
  
           To encourage software title developers and publishers to develop games
  optimized for platforms utilizing our products, we seek to establish and
  maintain strong relationships in the software development community. Engineering
  and marketing personnel interact with and visit key software developers to
  promote and discuss our products, as well as to ascertain product requirements
  and solve technical problems. Our developer program makes products available to
  partners prior to volume availability to encourage the development of software
  titles that are optimized for our products.
  
  Backlog
  
           Our sales are primarily made pursuant to standard purchase orders that
  are cancelable without significant penalties. The quantity of our products
  actually purchased by the customer as well as shipment schedules are subject to
  revisions to reflect changes in the customer's requirements and manufacturing
  availability. The semiconductor industry is characterized by short lead time
  orders and quick delivery schedules. In light of industry practice and
  experience, we do not believe that backlog as of any particular date is
  indicative of future results.
  
  Manufacturing
  
           We have a "fabless" manufacturing strategy whereby we employ
  world-class suppliers for all phases of the manufacturing process, including
  fabrication, assembly and testing. This strategy leverages the expertise of
  industry-leading, ISO-certified suppliers in such areas as fabrication,
  assembly, quality control and assurance, reliability and testing. In addition,
  we are able to avoid most of the significant costs and risks associated with
  owning and operating manufacturing operations. These suppliers are also
  responsible for procurement of most of the raw materials used in the production
  of our products. As a result, we can focus resources on product design,
  additional quality assurance, marketing and customer support.
  
           Our graphics processors are fabricated by TSMC and WaferTech and
  assembled and tested by Advanced Semiconductor Engineering, ChipPAC and
  Siliconware. We receive semiconductor products from our subcontractors, perform
  incoming quality assurance and then ship them to CEMs, motherboard and add-in
  board manufacturer customers from our Santa Clara location in the U.S. and a
  third-party warehouse in Singapore. Generally, these manufacturers assemble and
  test the boards based on our design kit and test specifications, then ship the
  products to the retail, system integrator or OEM markets as add-in board
  solutions. Our hardware and software development teams work closely with
  certification agencies, Microsoft Windows Hardware Quality Labs and our OEM
  customers to ensure that both our boards and software drivers are certified for
  inclusion in the OEMs' products.
  <PAGE>
  
  Research and Development
  
           We believe that the continued introduction of new and enhanced products
  designed to deliver leading 3D graphics performance and features is essential to
  our future success. Our research and development strategy is to focus on
  concurrently developing multiple generations of graphics processors using
  independent design teams. Our research and development efforts are performed
  within specialized groups consisting of software engineering, hardware
  engineering, VLSI design engineering, process engineering, and 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 CAD industry. We have invested significant
  resources to develop relationships with industry leaders, including Avant!
  Corporation, Cadence Design Systems, Inc., IKOS 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
  on a rapid basis that utilize leading-edge technology. We believe this approach
  assists us in meeting the new design schedules of PC manufacturers.
  
           We have substantially increased our engineering and technical resources
  and have 289 full-time employees engaged in research and development as of July
  30, 2000, compared to 214 employees as of January 30, 2000. Research and
  development expenses totaled $7.1 million in 1997, $25.1 million in the year
  ended January 31, 1999, $47.4 million in the year ended January 30, 2000 and
  $38.0 million in the six months ended July 30, 2000.
  
  Competition
  
           The market for 3D graphics processors for PCs is intensely competitive
  and characterized by rapid technological change, evolving industry standards and
  declining average selling prices. We believe that the principal competitive
  factors in this market are performance, breadth of product offerings, access to
  customers and distribution channels, backward-forward software support,
  conformity to industry standard APIs, manufacturing capabilities, price of
  graphics processors and total system costs of add-in boards or motherboards. We
  expect competition to increase both from existing competitors and new market
  entrants with products that may be less costly than our 3D graphics processors
  or may provide better performance or additional features not provided by our
  products.
  
           Our primary source of competition is from companies that provide or
  intend to provide 3D graphics solutions for the PC market. Our competitors
  include the following:
  
           .    suppliers of graphics add-in boards that utilize their internally
                developed graphics chips, such as ATI and Matrox;
  <PAGE>
  
           .    suppliers of integrated core logic chipsets that incorporate 2D
                and 3D graphics functionality as part of their existing solutions,
                such as Intel, Silicon Integrated Systems and Via Technologies;
  
           .    companies that have traditionally focused on the professional
                market and provide high end 3D solutions for PCs and workstations,
                including 3Dlabs, SGI and Evans and Sutherland Computer; and
  
           .    companies that focus on the video game market, such as 3Dfx and
                VideoLogic.
  
           If and to the extent we offer products outside of the 3D graphics
  processor market, we may face competition from some of our existing competitors
  as well as from companies with which we currently do not compete. We cannot
  accurately predict if we will compete successfully in any new markets we may
  enter.
  
  Patents and Proprietary Rights
  
           We rely primarily on a combination of patent, trademarks, copyrights,
  trade secrets, employee and third-party nondisclosure agreements and licensing
  arrangements to protect our intellectual property. We own 33 issued patents and
  have 46 U.S. patent applications pending. Our issued patents have expiration
  dates from April 2015 to April 2018. Our issued patents and pending patent
  applications relate to technology developed by us in connection with the
  development of our 3D graphics processors. We have no foreign patents or patent
  applications. We seek patents that have broad application in the semiconductor
  industry and that we believe will provide a competitive advantage. However, our
  pending patent applications or any future applications may not be approved, and
  any issued patents may not provide us with competitive advantages or may be
  challenged by third parties. We have licensed technology from third parties for
  incorporation in our graphics processors and expect to continue to enter into
  agreements like this for future products. These licenses may result in royalty
  payments to third parties, the cross-license of technology by us or payment of
  other consideration. If these arrangements are not concluded on commercially
  reasonable terms, our business could suffer. We attempt to protect our trade
  secrets and other proprietary information through confidentiality agreements
  with manufacturers and other partners, proprietary information agreements with
  employees and consultants and other security measures. We also rely on
  trademarks and trade secret laws to protect our intellectual property.
  
  Employees
  
           As of July 30, 2000 we had 529 employees, 289 of whom were engaged in
  research and development and 240 of whom were engaged in sales, marketing,
  operations and administrative positions. None of our employees is covered by
  collective bargaining agreements, and we believe our relationship with our
  employees is good.
  
  Facilities
  
           We lease approximately 117,000 square feet for our headquarters in
  Santa Clara, California, under leases expiring in 2002. We also lease a design
  center consisting of
  <PAGE>
  
  approximately 2,900 square feet in one building in Durham, North Carolina,
  pursuant to a lease that expires in March 2002. In addition, we lease sales and
  administrative offices in Texas, Washington, Arizona, Singapore and the United
  Kingdom to support our customers. In April 2000, we entered into leases for our
  new headquarters complex in Santa Clara, California. Our new complex will
  comprise four buildings, representing approximately 500,000 total square feet.
  We expect the first phase of two buildings consisting of approximately 250,000
  square feet to be completed in June 2001, the second phase of one building
  consisting of approximately 125,000 square feet to be completed in July 2001 and
  the last phase of one building to be completed in March 2002. The leases expire
  in 2012 and include two seven-year renewals at our option. We believe that we
  currently have sufficient facilities to conduct our operations for the next
  twelve months, although we expect to lease additional facilities throughout the
  world as our business requires.
  
  Legal Proceedings
  
           On September 21, 1998, 3Dfx filed a patent infringement lawsuit against
  us in the United States District Court for the Northern District of California
  alleging infringement of a 3Dfx patent. On March 2, 1999, 3Dfx added a second
  patent to the suit and on May 24, 1999, 3Dfx added a third patent to the suit.
  The amended complaint alleges that our RIVA TNT, RIVA TNT2 and RIVA TNT2 Ultra
  products infringe the patents in suit and seeks unspecified compensatory and
  trebled damages and attorneys' fees. Our current generation of products is not
  identified as infringing any of the patents in suit. We have filed an answer and
  counter-claims asserting that the patents in suit are invalid and not infringed.
  These assertions are supported by our investigations to date and an opinion from
  our patent counsel in this suit. We anticipate that the trial date will be set
  by the District Court after it rules on claims construction issues.
  
           On August 28, 2000, we filed a patent infringement lawsuit against 3Dfx
  in the United States District Court for the Northern District of California. The
  lawsuit alleges that 3Dfx's graphics chip and card products, which are used to
  accelerate 3D graphics on personal computers, infringe five of our patents and
  seeks an injunction restraining 3Dfx from manufacturing, selling or importing
  infringing graphics chip and card products including its Voodoo3, Voodoo4 and
  Voodoo5 and VSA-100 family of products, as well as monetary damages. The matter
  is in its earliest stages, discovery has not yet begun and no trial date has
  been set.
  
           On February 22, 2000, Graphiques Matrox, Inc. and Systemes
  Electroniques Matrox Ltd. (collectively "Matrox") filed suit against us in the
  Superior Court, Judicial District of Montreal, Province of Quebec, Canada. The
  suit alleges that we improperly solicited and recruited Matrox employees and
  encouraged Matrox employees to breach their Matrox confidentiality and/or non-
  competition agreements. The suit by Matrox seeks, among other things, certain
  injunctive relief. We believe that the claims asserted by Matrox are without
  merit and we intend to vigorously defend this suit.
  
           On May 19, 2000, we filed suit against Matrox in Santa Clara County
  Superior Court alleging that Matrox's efforts to prevent its current and former
  employees from pursuing employment opportunities with us constitute interference
  with prospective economic advantage and contract and unfair competition. Our
  suit seeks, among other things, unspecified monetary
  <PAGE>
  
  damages, a declaration that Matrox's confidentiality and/or non-competition
  agreements are unenforceable under California law and a declaration that its use
  of those agreements and other tactics constitutes unfair competition. On May 26,
  2000, the case was transferred to the San Jose Division of the United States
  District Court for the Northern District of California. On June 14, 2000, Matrox
  filed an answer denying our claims and a counterclaim alleging trade secret
  misappropriation, intentional interference with contractual relations and unfair
  competition. Matrox's California suit seeks unspecified monetary damages and
  injunctive relief. We filed an answer to this counterclaim on July 7, 2000,
  denying all of Matrox's claims. As with the Montreal action, we believe that the
  claims asserted by Matrox are without merit and we intend to vigorously defend
  this suit.
  
         In addition, we may be subject to litigation in the future. See "Risk
  Factors--We are subject to a patent infringement lawsuit and could be subject to
  future lawsuits that could divert our resources and result in the payment of
  substantial damages." From time to time, we are also subject to claims in the
  ordinary course of business, none of which in our view would have a material
  adverse impact on our business or financial position if resolved unfavorably.
  <PAGE>
  
                                      SIGNATURE
  
           Pursuant to the requirements of the Securities Exchange Act of 1934,
  the registrant has duly caused this report to be signed on its behalf by the
  undersigned, thereunto duly authorized.
  
  
                                             NVIDIA CORPORATION
  
  
  
  Dated: September 28, 2000           BY:   /s/ Christine B. Hoberg
                                         -----------------------------
                                             Christine B. Hoberg
                                             Chief Financial Officer
                                             (Principal Financial and
                                             Accounting Officer)
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text: SECURITIES AND EXCHANGE COMMISSION
  
                               Washington, D. C. 20549
  
                                      FORM 8-K
  
                                   CURRENT REPORT
  
                       Pursuant to Section 13 or 15(d) of the
                           Securities Exchange Act of 1934
  
        Date of Report (Date of earliest event reported): September 28, 2000
  
                                 NVIDIA CORPORATION
               (Exact name of registrant as specified in its charter)
  
                                      Delaware
                   (State or other jurisdiction of incorporation)
  
             000-23985                                  94-3177549
       (Commission File No.)               (I.R.S. Employer Identification No.)
  
                                 3535 Monroe Street
                                Santa Clara, CA 95051
                (Address of principal executive offices and zip code)
  
         Registrant's telephone number, including area code: (408) 615-2500
  Item 5.  Other Events.
  
       NVIDIA Corporation (the "Company") hereby updates its Risk Factors and
  description of its Business.
  
       The Company's Risk Factors are updated as follows:
  
                                   RISK FACTORS
  
       Our operating results are unpredictable and may fluctuate.
  
       Many of our revenue components fluctuate and are difficult to predict,
  and our operating expenses are largely independent of revenue in any particular
  period. It is therefore difficult for us to accurately forecast revenue and
  profits or losses. We believe that our quarterly and annual results of
  operations will be affected by a variety of factors that could adversely affect
  our revenue, gross profit and results of operations.
  
       Factors that have affected our results of operations in the past, and
  are likely to affect our results of operations in the future, include the
  following:
  
       .    demand and market acceptance for our products and/or our customers'
            products;
  
       .    the successful development and volume production of next-generation
            products;
  
       .    new product announcements or product introductions by our competitors;
  .    our ability to introduce new products in accordance with OEM design
            requirements and design cycles;
  
       .    changes in the timing of product orders due to unexpected delays in
            the introduction of our customers' products;
  
       .    fluctuations in the availability of manufacturing capacity or
            manufacturing yields;
  
       .    competitive pressures resulting in lower than expected average selling
            prices;
  
       .    rates of return in excess of that forecasted or expected due to
            quality issues;
  
       .    the rescheduling or cancellation of customer orders;
  
       .    the loss of a key customer or the termination of a strategic
            relationship;
  
       .    seasonal fluctuations associated with the PC market;
  
       .    substantial disruption in our suppliers' operations, either as a
            result of a natural disaster, equipment failure or other cause;
  
       .    supply constraints for and changes in the cost of the other components
            incorporated into our customers' products, including memory devices;
  
       .    our ability to reduce the manufacturing costs of our products;
  
       .    legal and other costs related to defending intellectual property;
  
       .    bad debt write-offs;
  
       .    unexpected inventory write-downs; and
  
       .    introductions of enabling technologies to keep pace with faster
            generations of processors and controllers.
  
       Any one or more of the factors discussed above could prevent us from
  achieving our expected future revenue or net income.
  
       Because most operating expenses are relatively fixed in the short term,
  we may be unable to adjust spending sufficiently in a timely manner to
  compensate for any unexpected sales shortfall. We may be required to reduce
  prices in response to competition or to pursue new market opportunities. If new
  competitors, technological advances by existing competitors or other competitive
  factors require us to invest significantly greater resources than anticipated in
  research and development or sales and marketing efforts, our business could
  suffer. Accordingly, we believe that period-to-period comparisons of our results
  of operations should not be relied upon as an indication of future performance.
  In addition, the results of any quarterly period are not indicative of results
  to be expected for a full fiscal year.
  Our 3D graphics solution may not continue to be accepted by the PC market.
  
       Our success will depend in part upon continued broad adoption of our 3D
  graphics processors for high performance 3D graphics in PC applications. The
  market for 3D graphics processors has been characterized by unpredictable and
  sometimes rapid shifts in the popularity of products, often caused by the
  publication of competitive industry benchmark results, changes in dynamic random
  memory devices pricing and other changes in the total system cost of add-in
  boards, as well as by severe price competition and by frequent new technology
  and product introductions. Only a small number of products have achieved broad
  market acceptance and such market acceptance, if achieved, is difficult to
  sustain due to intense competition. Since we have no other product line, our
  business would suffer if for any reason our current or future 3D graphics
  processors do not continue to achieve widespread acceptance in the PC market. If
  we are unable to complete the timely development of or successfully and
  cost-effectively manufacture and deliver products that meet the requirements of
  the PC market, our business would be harmed.
  
       Our integrated graphics product may not be accepted by the PC market.
  
       We expect that integrated graphics chipset products will become an
  increasing part of the lower cost segment of the PC graphics market. We have
  only recently introduced a 3D graphics processor targeted at this segment, as
  part of a joint development effort with ALi. If this product is not competitive
  in this segment and the integrated chipset segment continues to account for an
  increasing percentage of the units sold in the PC market, our business may
  suffer.
  
       We need to develop new products and to manage product transitions in
  order to succeed.
  
       Our business will depend to a significant extent on our ability to
  successfully develop new products for the 3D graphics market. Our add-in board
  manufacturers and major OEM customers typically introduce new system
  configurations as often as twice per year, typically based on spring and fall
  design cycles. Accordingly, our existing products must have competitive
  performance levels or we must introduce new products on a timely basis with such
  performance characteristics in order to be included in new system
  configurations. This requires that we do the following:
  
       .    anticipate the features and functionality that consumers will demand;
  
       .    incorporate those features and functionality into products that meet
            the exacting design requirements of PC OEMs and add-in board
            manufacturers or CEMs;
  
       .    price our products competitively; and
  
       .    introduce the products to the market within the limited window for PC
            OEM and add-in board manufacturers.
  As a result, we believe that significant expenditures for research and
  development will continue to be required in the future. The success of new
  product introductions will depend on several factors, including the following:
  
       .    proper new product definition;
  
       .    timely completion and introduction of new product designs;
  
       .    the ability of Taiwan Semiconductor Manufacturing Co., or TSMC, our
            primary manufacturer, WaferTech LLC, a joint venture controlled by
            TSMC, and any additional third-party manufacturers to effectively
            manufacture our new products in a timely manner;
  
       .    the quality of any new products;
  
       .    differentiation of new products from those of our competitors;
  
       .    market acceptance of our and our customers' products; and
  
       .    availability of adequate quantity and configurations of various types
            of memory products.
  
       Our strategy is to utilize the most advanced semiconductor process
  technology appropriate for our products and available from commercial third-
  party foundries. Use of advanced processes has in the past resulted in initial
  yield problems. New products that we introduce may not incorporate the features
  and functionality demanded by PC OEMs, add-in board manufacturers and consumers
  of 3D graphics. In addition, we may not successfully develop or introduce new
  products in sufficient volumes within the appropriate time to meet both the PC
  OEMs' design cycles and market demand. We have in the past experienced delays in
  the development of some new products. Our failure to successfully develop,
  introduce or achieve market acceptance for new 3D graphics products would harm
  our business.
  
       Our failure to identify new product opportunities or to develop new
  products could harm business.
  
       As markets for our 3D graphics processors develop and competition
  increases, we anticipate that product life cycles at the high end will remain
  short and average selling prices will continue to decline. In particular, we
  expect average selling prices and gross margins for our 3D graphics processors
  to decline as each product matures and as unit volume increases. As a result, we
  will need to introduce new products and enhancements to existing products to
  maintain overall average selling prices and gross margins. In order for our 3D
  graphics processors to achieve high volumes, leading PC OEMs and add-in board
  manufacturers must select our 3D graphics processor for design into their
  products and then successfully complete the designs of their products and sell
  them. We may be unable to successfully identify new product opportunities or to
  develop and bring to market in a timely fashion any new products. In addition,
  we cannot guarantee that any new products we develop will be selected for design
  into PC OEMs' and add-in board manufacturers' products, that any new designs
  will be successfully
  completed or that any new products will be sold. As the complexity of our
  products and the manufacturing process for products increases, there is an
  increasing risk that we will experience problems with the performance of
  products and that there will be delays in the development, introduction or
  volume shipment of our products. We may experience difficulties related to the
  production of current or future products or other factors may delay the
  introduction or volume sale of new products we develop. In addition, we may be
  unable to successfully manage the production transition risks with respect to
  future products. Failure to achieve any of the foregoing with respect to future
  products or product enhancements could result in rapidly declining average
  selling prices, reduced margins, and reduced demand for products or loss of
  market share. In addition, technologies developed by others may render our 3D
  graphics products non-competitive or obsolete or result in our holding excess
  inventory, either of which would harm our business.
  
       We rely on third-party vendors to supply us tools for the development
  of our new products and we may be unable to obtain the tools necessary to
  develop these products.
  
       In the design and development of new products and product enhancements,
  we rely on third-party software development tools. While we currently are not
  dependent on any one vendor for the supply of these tools, some or all of these
  tools may not be readily available in the future. For example, we have
  experienced delays in the introduction of products in the past as a result of
  the inability of then available software development tools to fully simulate the
  complex features and functionalities of our products. The design requirements
  necessary to meet consumer demands for more features and greater functionality
  from 3D graphics products in the future may exceed the capabilities of the
  software development tools available to us. If the software development tools we
  use become unavailable or fail to produce designs that meet consumer demands,
  our business could suffer.
  
       Our industry is characterized by vigorous protection and pursuit of
  intellectual property rights or positions that could result in substantial costs
  to us.
  
       The semiconductor industry is characterized by vigorous protection and
  pursuit of intellectual property rights or positions, which has resulted in
  protracted and expensive litigation. The 3D graphics market in particular has
  been characterized recently by the aggressive pursuit of intellectual property
  positions, and we expect our competitors to continue to pursue aggressive
  intellectual property positions. In addition, from time to time we receive
  notices alleging that we have infringed patents or other intellectual property
  rights owned by third parties. We expect that, as the number of issued hardware
  and software patents increases, and as competition in our markets intensifies,
  the volume of intellectual property infringement claims will increase. If
  infringement claims are made against us, we may seek licenses under the
  claimant's patents or other intellectual property rights. However, licenses may
  not be offered at all or on terms acceptable to us. The failure to obtain a
  license from a third party for technology used by us could cause us to incur
  substantial liabilities and to suspend the manufacture of products. Furthermore,
  we may initiate claims or litigation against third parties for infringement of
  our proprietary rights or to establish the validity of our proprietary rights.
  We have agreed to indemnify certain customers for claims of infringement arising
  out of sale of our products. Litigation by or against us or our customers
  concerning infringement would likely result in
  significant expense to us and divert the efforts of our technical and management
  personnel, whether or not the litigation results in a favorable determination
  for us.
  
       We are subject to a patent infringement lawsuit and could be subject to
  future lawsuits that could divert our resources and result in the payment of
  substantial damages.
  
       On September 21, 1998, 3Dfx Interactive, Inc. filed a patent infringement
  suit against us in the United States District Court for the Northern District of
  California alleging infringement of a 3Dfx patent. On March 2, 1999, 3Dfx added
  a second patent to the suit and on May 24, 1999, 3Dfx added a third patent to
  the suit. The amended complaint alleges that our RIVA TNT, RIVA TNT2 and RIVA
  TNT2 Ultra products infringe the patents in suit and seeks unspecified
  compensatory and trebled damages and attorneys' fees. Our current generation of
  products is not identified as infringing any of the patents in suit. We have
  filed an answer and counter-claims asserting that the patents in suit are
  invalid and not infringed. These assertions are supported by our investigations
  to date and an opinion from our patent counsel in this suit. We anticipate that
  the trial date will be set by the District Court after it rules on claims
  construction issues. We have and will continue to defend vigorously this suit.
  The litigation with 3Dfx has resulted, and we expect that the 3Dfx litigation
  will continue to result, in significant legal expenses, whether or not the
  litigation results in a favorable determination for us. In the event of an
  adverse result in the 3Dfx suit, we might be required to do one or more of the
  following:
  
       .    pay substantial damages (including treble damages);
  
       .    permanently cease the manufacture and sale of any of the infringing
            products;
  
       .    expend significant resources to develop non-infringing products; or
  
       .    obtain a license from 3Dfx for infringing products.
  
       On August 28, 2000, we filed a patent infringement lawsuit against 3Dfx
  in the United States District Court for the Northern District of California. The
  lawsuit alleges that 3Dfx's graphics chip and card products, which are used to
  accelerate 3D graphics on personal computers, infringe five of our patents and
  seeks an injunction restraining 3Dfx from manufacturing, selling or importing
  infringing graphics chip and card products including its Voodoo 3, Voodoo 4 and
  Voodoo 5 and VSA-100 family of products, as well as monetary damages. The matter
  is in its earliest stages, discovery has not yet begun and no trial date has
  been set.
  
       We have in the past been subject to patent infringement suits with SGI
  and S3 Incorporated, both of which were settled and resulted in cross-licenses
  and, in the case of SGI, payments by us. In addition, we may be subject to
  patent infringement suits brought by other parties in the future. For example,
  we have received correspondence from Rambus Inc. indicating that it believes our
  products infringe certain patents held by Rambus and requesting that we agree to
  certain licensing terms, including royalty payments. We believe the Rambus
  patents are invalid, not infringed and unenforceable. Although we currently are
  having discussions with Rambus regarding potential business alternatives to
  Rambus' proposed licensing
  terms, we cannot guarantee that we will be able to reach a satisfactory
  agreement with Rambus. If we are unable to do so, Rambus may sue us for patent
  infringement at any time.
  
       We may be unable to adequately protect our intellectual property.
  
       We rely primarily on a combination of patents, trademarks, copyrights,
  trade secrets, employee and third-party nondisclosure agreements and licensing
  arrangements to protect our intellectual property. We own 33 issued United
  States patents, and have 46 United States patent applications pending. Our
  issued patents have expiration dates from April 2015 to April 2018. Our issued
  patents and pending patent applications relate to technology developed by us in
  connection with the development of our 3D graphics processors. Our pending
  patent applications and any future applications may not be approved. In
  addition, any issued patents may not provide us with competitive advantages or
  may be challenged by third parties. The enforcement of patents of others may
  harm our ability to conduct our business. Others may independently develop
  substantially equivalent intellectual property or otherwise gain access to our
  trade secrets or intellectual property, or disclose our intellectual property or
  trade secrets. Our failure to effectively protect our intellectual property
  could harm our business. We have licensed technology from third parties for
  incorporation in our graphics processors, and expect to continue to enter into
  license agreements for future products. These licenses may result in royalty
  payments to third parties, the cross-license of technology by us or payment of
  other consideration. If these arrangements are not concluded on commercially
  reasonable terms, our business could suffer.
  
       Our failure to achieve one or more design wins would harm our business.
  
       Our future success will depend in large part on achieving design wins,
  which entails having our existing and future products chosen as the 3D graphics
  processors for hardware components or subassemblies designed by PC OEMs and
  motherboard and add-in board manufacturers. Our add-in board manufacturers and
  major OEM customers typically introduce new system configurations as often as
  twice per year, generally based on spring and fall design cycles. Accordingly,
  our existing products must have competitive performance levels or we must timely
  introduce new products with such performance characteristics in order to be
  included in new system configurations. Our failure to achieve one or more design
  wins would harm our business. The process of being qualified for inclusion in a
  PC OEM's product can be lengthy and could cause us to miss a cycle in the demand
  of end users for a particular product feature, which also could harm our
  business.
  
       Our ability to achieve design wins also depends in part on our ability
  to identify and ensure compliance with evolving industry standards.
  Unanticipated changes in industry standards could render our products
  incompatible with products developed by major hardware manufacturers and
  software developers, including Intel and Microsoft. This would require us to
  invest significant time and resources to redesign our products to ensure
  compliance with relevant standards. If our products are not in compliance with
  prevailing industry standards for a significant period of time, our ability to
  achieve design wins could suffer.
  We are dependent on the PC market, which may not continue to grow.
  
       In fiscal 2000, we derived all of our revenue from the sale of products
  for use in PCs. In the first quarter of fiscal 2001, we derived most of our
  revenue from the sale of products for use in the entire desktop PC market, from
  professional workstations to low-cost PCs. We expect to continue to derive most
  of our revenue from the sale or license of products for use in PCs in the next
  several years. The PC market is characterized by rapidly changing technology,
  evolving industry standards, frequent new product introductions and significant
  price competition. These factors result in short product life cycles and regular
  reductions of average selling prices over the life of a specific product.
  Although the PC market has grown substantially in recent years, this growth may
  not continue. A reduction in sales of PCs, or a reduction in the growth rate of
  PC sales, would likely reduce demand for our products. Moreover, changes in
  demand could be large and sudden. Since PC manufacturers often build inventories
  during periods of anticipated growth, they may be left with excess inventories
  if growth slows or if they have incorrectly forecast product transitions. In
  these cases, PC manufacturers may abruptly suspend substantially all purchases
  of additional inventory from suppliers like us until the excess inventory has
  been absorbed. Any reduction in the demand for PCs generally, or for a
  particular product that incorporates our 3D graphic processors, could harm our
  business.
  
       The acceptance of next generation products in business PC 3D graphics
  may not continue to develop.
  
       Our success will depend in part upon the demand for performance 3D
  graphics for business PC applications. The market for performance 3D graphics on
  business PCs has only recently begun to emerge and is dependent on the future
  development of, and substantial end-user and OEM demand for, 3D graphics
  functionality. As a result, the market for business PC 3D graphics computing may
  not continue to develop or may not grow at a rate sufficient to support our
  business. The development of the market for performance 3D graphics on business
  PCs will in turn depend on the development and availability of a large number of
  business PC software applications that support or take advantage of performance
  3D graphics capabilities. Currently there are only a limited number of software
  applications like this, most of which are games, and a broader base of software
  applications may not develop in the near term or at all. Consequently, a broad
  market for full function performance 3D graphics on business PCs may not
  develop. Our business prospects will suffer if the market for business PC 3D
  graphics fails to develop or develops more slowly than expected.
  
       We are dependent on a small number of customers and we are subject to
  order and shipment uncertainties.
  
       We have only a limited number of customers and our sales are highly
  concentrated. We primarily sell our products to add-in board and motherboard
  manufacturers and CEMs, which incorporate graphics products in the boards they
  sell to PC OEMs. Sales to add-in board manufacturers and CEMs are primarily
  dependent on achieving design wins with leading PC OEMs. The number of add-in
  board manufacturers and CEMs and leading PC OEMs is limited. We expect that a
  small number of add-in board manufacturers and CEMs directly, and a small number
  of PC OEMs indirectly, will continue to account for a substantial portion of our
  revenue for the foreseeable future. As a result, our business could be harmed by
  the loss of business from
  PC OEMs or add-in board manufacturers and CEMs. In addition, revenue from add-in
  board manufacturers, motherboard manufacturers, CEMs and PC OEMs that have
  directly or indirectly accounted for significant revenue in past periods,
  individually or as a group, may not continue, or may not reach or exceed
  historical levels in any future period.
  
       Our business may be harmed by instability in Asia due to the
  concentration of customers who are located or have substantial operations in
  Asia, including Taiwan. The People's Republic of China and Taiwan have in the
  past experienced and currently are experiencing strained relations. A worsening
  of these relations or the development of hostilities between the two could
  result in disruptions in Taiwan and possibly other areas of Asia, which could
  harm our business. While we believe political instability in Asia has not
  adversely affected our business, because of our reliance on companies with
  operations in Asia, continued economic and political instability in Asia might
  harm us.
  
       We may be unable to manage our growth and, as a result, may be unable
  to successfully implement our strategy.
  
       Our rapid growth has placed, and is expected to continue to place, a
  significant strain on our managerial, operational and financial resources. As of
  July 30, 2000, we had 529 employees as compared to 392 employees as of January
  30, 2000. We expect that the number of our employees will increase substantially
  over the next 12 months. Our future growth, if any, will depend on our ability
  to continue to implement and improve operational, financial and management
  information and control systems on a timely basis, as well as our ability to
  maintain effective cost controls. Further, we will be required to manage
  multiple relationships with various customers and other third parties. Our
  systems, procedures or controls may not be adequate to support our operations
  and our management may be unable to achieve the rapid execution necessary to
  successfully implement our strategy.
  
       We are dependent on key personnel and the loss of these employees could
  harm our business.
  
       Our performance will be substantially dependent on the performance of
  our executive officers and key employees. None of our officers or employees is
  bound by an employment agreement, and our relationships with these officers and
  employees are, therefore, at will. We do not have "key person" life insurance
  policies on any of our employees. The loss of the services of any of our
  executive officers, technical personnel or other key employees, particularly
  Jen-Hsun Huang, our President and Chief Executive Officer, would harm our
  business. Our success will depend on our ability to identify, hire, train and
  retain highly qualified technical and managerial personnel. Our failure to
  attract and retain the necessary technical and managerial personnel would harm
  our business.
  
       We depend on third-party fabrication to produce our products.
  
       We do not manufacture the semiconductor wafers used for our products
  and do not own or operate a wafer fabrication facility. Our products require
  wafers manufactured with state-of-the-art fabrication equipment and techniques.
  We utilize TSMC and WaferTech to produce our semiconductor wafers and utilize
  independent contractors to perform assembly, test and
  packaging. We depend on these suppliers to allocate to us a portion of their
  manufacturing capacity sufficient to meet our needs, to produce products of
  acceptable quality and at acceptable manufacturing yields, and to deliver those
  products to us on a timely basis. These manufacturers may be unable to meet our
  near-term or long- term manufacturing requirements. We obtain manufacturing
  services on a purchase order basis and TSMC has no obligation to provide us with
  any specified minimum quantities of product. TSMC fabricates wafers for other
  companies, including certain of our competitors, and could choose to prioritize
  capacity for other users or reduce or eliminate deliveries to us on short
  notice. Because the lead time needed to establish a strategic relationship with
  a new manufacturing partner could be several quarters, there is no readily
  available alternative source of supply for any specific product. We believe that
  long-term market acceptance for our products will depend on reliable
  relationships with TSMC and any other manufacturers used by us to ensure
  adequate product supply to respond to customer demand.
  
       In September 1999, a significant earthquake in Taiwan contributed to a
  temporary shortage of graphics processors in the third and fourth quarters of
  fiscal 2000. Because of our reliance on TSMC, our business may be harmed by
  political instability in Taiwan, including the worsening of the strained
  relations between The People's Republic of China and Taiwan. Furthermore, any
  substantial disruption in our suppliers' operations, either as a result of a
  natural disaster, political unrest, economic instability, equipment failure or
  other cause, could harm our business.
  
       We are dependent primarily on TSMC and we expect in the future to
  continue to be dependent upon third-party manufacturers to do the following:
  
       .    produce wafers of acceptable quality and with acceptable manufacturing
            yields;
  
       .    deliver those wafers to us and our independent assembly and testing
            subcontractors on a timely basis; and
  
       .    allocate to us a portion of their manufacturing capacity sufficient to
            meet our needs.
  
       Our wafer requirements represent a significant portion of the total
  production capacity of TSMC. Although our products are designed using TSMC's
  process design rules, TSMC may be unable to achieve or maintain acceptable
  yields or deliver sufficient quantities of wafers on a timely basis and/or at an
  acceptable cost. Additionally, TSMC may not continue to devote resources to the
  production of our products, or to advance the process design technologies on
  which the manufacturing of our products is based. Any difficulties like these
  would harm our business.
  
       Failure to achieve expected manufacturing yields would reduce our product
  supply and harm our business.
  
       Semiconductor manufacturing yields are a function both of product design,
  which is developed largely by us, and process technology, which typically is
  proprietary to the manufacturer. Since low yields may result from either design
  or process technology failures, yield problems may not be effectively determined
  or resolved until an actual product exists that
  can be analyzed and tested to identify process sensitivities relating to the
  design rules that are used. As a result, yield problems may not be identified
  until well into the production process, and resolution of yield problems would
  require cooperation by and communication between the manufacturer and us.
  
       The risk of low yields is compounded by the offshore location of most
  of our manufacturers, increasing the effort and time required to identify,
  communicate and resolve manufacturing yield problems. Because of our potentially
  limited access to wafer fabrication capacity from our manufacturers, any
  decrease in manufacturing yields could result in an increase in our per unit
  costs and force us to allocate our available product supply among our customers.
  This could potentially harm customer relationships as well as revenue and gross
  profit. Our wafer manufacturers may be unable to achieve or maintain acceptable
  manufacturing yields in the future. Our inability to achieve planned yields from
  our wafer manufacturers could harm our business. We also face the risk of
  product recalls or product returns resulting from design or manufacturing
  defects that are not discovered during the manufacturing and testing process. In
  the event of a significant number of product returns due to a defect or recall,
  our business could suffer.
  
       Failure to transition to new manufacturing process technologies could
  affect our ability to compete effectively.
  
       Our strategy is to utilize the most advanced semiconductor process
  technology appropriate for our products and available from commercial third-
  party foundries. Use of advanced processes may have greater risk of initial
  yield problems. Manufacturing process technologies are subject to rapid change
  and require significant expenditures for research and development. We
  continuously evaluate the benefits of migrating to smaller geometry process
  technologies in order to improve performance and reduce costs. We have migrated
  to the .18 micron technology with the GeForce2 GTS GPUs, and we believe that the
  transition of our products to increasingly smaller geometries will be important
  to our competitive position. Other companies in the industry have experienced
  difficulty in migrating to new manufacturing processes and, consequently, have
  suffered reduced yields, delays in product deliveries and increased expense
  levels. We may experience similar difficulties and the corresponding negative
  effects. Moreover, we are dependent on our relationships with our third-party
  manufacturers to migrate to smaller geometry processes successfully. We may be
  unable to migrate to new manufacturing process technologies successfully or on a
  timely basis.
  
       The 3D graphics industry is highly competitive and we may be unable to
  compete.
  
       The market for 3D graphics processors for PCs in which we compete is
  intensely competitive and is characterized by rapid technological change,
  evolving industry standards and declining average selling prices. We believe
  that the principal competitive factors in this market are performance, breadth
  of product offerings, access to customers and distribution channels,
  backward-forward software support, conformity to industry standard APIs,
  manufacturing capabilities, price of graphics processors and total system costs
  of add-in boards and motherboards. We expect competition to increase both from
  existing competitors and new market entrants with products that may be less
  costly than our 3D graphics processors or may provide better performance or
  additional features not provided by our products.
  Our primary source of competition is from companies that provide or
  intend to provide 3D graphics solutions for the PC market. Our competitors
  include the following:
  
       .    suppliers of graphics add-in boards that utilize their internally
            developed graphics chips, such as ATI Technologies Inc. and Matrox
            Electronics Systems Ltd.;
  
       .    suppliers of integrated core logic chipsets that incorporate 2D and 3D
            graphics functionality as part of their existing solutions, such as
            Intel, Silicon Integrated Systems and Via Technologies;
  
       .    companies that have traditionally focused on the professional market
            and provide high end 3D solutions for PCs and workstations, including
            3Dlabs Inc., SGI and Evans and Sutherland Computer Corporation; and
  
       .    companies that focus on the video game market, such as 3Dfx and
            VideoLogic Group plc.
  
       If and to the extent we offer products outside of the 3D graphics
  processor market, we may face competition from some of our existing competitors
  as well as from companies with which we currently do not compete. We cannot
  accurately predict if we will compete successfully in any new markets we may
  enter.
  
       We may compete with Intel in the integrated low-cost chipset market.
  
       In June 2000, Intel began shipping the Intel 815 and 815e 3D graphics
  chipsets that are targeted at the low-cost PC market. Intel has significantly
  greater resources than we do, and our products may not compete effectively
  against future products introduced by Intel. In addition, we may be unable to
  compete effectively against Intel or Intel may introduce additional products
  that are competitive with our products in either performance or price or both.
  We expect Intel to continue to do the following:
  
       .    invest heavily in research and development and new manufacturing
            facilities;
  
       .    maintain its position as the largest manufacturer of PC
            microprocessors;
  
       .    increasingly dominate the PC platform; and
  
       .    promote its product offerings through advertising campaigns designed
            to engender brand loyalty among PC users.
  
       Intel may in the future develop graphics add-in cards or graphics-enabled
  motherboards that could directly compete with graphics add-in cards or graphics-
  enabled motherboards based on our product. In addition, due to the widespread
  industry acceptance of Intel's microprocessor architecture and interface
  architecture, including its AGP, and Intel's intellectual property position with
  respect to such architecture, Intel exercises significant influence over the PC
  industry generally. Any significant modifications by Intel to the AGP, the
  microprocessor or core logic components or other aspects of the PC
  microprocessor architecture could result in
  incompatibility with our technology, which would harm our business. In addition,
  any delay in the public release of information relating to modifications like
  this could harm our business.
  
       We are dependent on third parties for assembly and testing of our
  products.
  
       Our graphics processors are assembled and tested by Advance
  Semiconductor Engineering, Inc., ChipPAC Incorporated and Siliconware Precision
  Industries Company Ltd., all of which are based in Asia. Because we rely on
  Asian assembly and test subcontractors, our business may be harmed by political
  instability in Asia, including the worsening of the strained relations between
  The People's Republic of China and Taiwan. We do not have long-term agreements
  with any of these subcontractors. As a result of our dependence on third-party
  subcontractors for assembly and testing of our products, we do not directly
  control product delivery schedules or product quality. Any product shortages or
  quality assurance problems could increase the costs of manufacture, assembly or
  testing of our products and could harm our business. Due to the amount of time
  typically required to qualify assemblers and testers, we could experience
  significant delays in the shipment of our products if we are required to find
  alternative third parties to assemble or test our products or components. Any
  delays in delivery of our products could harm our business.
  
       We are subject to risks associated with product defects and
  incompatibilities.
  
       Products as complex as ours may contain defects or failures when
  introduced or when new versions or enhancements to existing products are
  released. We have in the past discovered software defects and incompatibilities
  with customers' hardware in certain of our products and may experience delays or
  lost revenue to correct any new defects in the future. Errors in new products or
  releases after commencement of commercial shipments could result in loss of
  market share or failure to achieve market acceptance. Our products typically go
  through only one verification cycle prior to beginning volume production and
  distribution. As a result, our products may contain defects or flaws that are
  undetected prior to volume production and distribution. The widespread
  production and distribution of defective products could harm our business.
  
       We are subject to risks associated with international operations.
  
       Our reliance on foreign third-party manufacturing, assembly and testing
  operations subjects us to a number of risks associated with conducting business
  outside of the United States, including the following:
  
       .    unexpected changes in, or impositions of, legislative or regulatory
            requirements;
  
       .    delays resulting from difficulty in obtaining export licenses for
            certain technology, tariffs, quotas and other trade barriers and
            restrictions;
  
       .    longer payment cycles;
  
       .    imposition of additional taxes and penalties;
  .    the burdens of complying with a variety of foreign laws; and
  
       .    other factors beyond our control.
  
       We also are subject to general political risks in connection with our
  international trade relationships. In addition, the laws of certain foreign
  countries in which our products are or may be manufactured or sold, including
  various countries in Asia, may not protect our products or intellectual property
  rights to the same extent as do the laws of the United States. This makes the
  possibility of piracy of our technology and products more likely. Currently, all
  of our arrangements with third-party manufacturers provide for pricing and
  payment in U.S. dollars, and to date we have not engaged in any currency hedging
  activities, although we may do so in the future. Fluctuations in currency
  exchange rates could harm our business in the future.
  
       The semiconductor industry is cyclical in nature.
  
       The semiconductor industry historically has been characterized by the
  following factors:
  
       .    rapid technological change;
  
       .    cyclical market patterns;
  
       .    significant average selling price erosion;
  
       .    fluctuating inventory levels;
  
       .    alternating periods of overcapacity and capacity constraints; and
  
       .    variations in manufacturing costs and yields and significant
            expenditures for capital equipment and product development.
  
       In addition, the industry has experienced significant economic
  downturns at various times, characterized by diminished product demand and
  accelerated erosion of average selling prices. We may experience substantial
  period-to- period fluctuations in results of operations due to general
  semiconductor industry conditions.
  
       Failure in implementation of our enterprise resource planning system
  could adversely affect our operations.
  
       In December 1999, we began the implementation of an SAP A.G. system as
  our enterprise resource planning, or ERP, system to replace our information
  systems in business, finance, operations and service. The first phase of the
  implementation was successfully completed in June 2000 and our operations are
  fully functioning under the new ERP system. Future phases of the implementation
  are expected to occur throughout fiscal 2001. We are heavily dependent upon the
  proper functioning of our internal systems to conduct our business. System
  failure or malfunctioning may result in disruptions of operations and inability
  to process transactions. Our results of operations and financial position could
  be adversely affected if we encounter unforeseen problems with respect to system
  operations or future implementation.
  Some provisions in our certificate of incorporation, our bylaws and our
  agreement with Microsoft could delay or prevent a change in control.
  
           Our certificate of incorporation and bylaws contain provisions that
  could make it more difficult for a third party to acquire a majority of our
  outstanding voting stock. These provisions include the following:
  
           .    the ability of the board of directors to create and issue
                preferred stock without prior stockholder approval;
  
           .    the prohibition of stockholder action by written consent;
  
           .    a classified board of directors; and
  
           .    advance notice requirements for director nominations and
                stockholder proposals.
  
           On March 5, 2000, we entered into a licensing and development agreement
  with Microsoft that included a grant to Microsoft of first and last rights of
  refusal over any offer we receive to purchase 30% or more of the outstanding
  shares of our common stock. This provision could also delay or prevent a change
  in control of NVIDIA.
  
           We are subject to risks associated with interest rate and foreign
  exchange rate fluctuation.
  
           The primary objective of our investment activities is to preserve
  principal while at the same time maximizing the income we receive from the
  investments without significantly increasing risk. To minimize potential loss
  arising from adverse changes in interest rates, we maintain a portfolio of cash
  and cash equivalents primarily in highly rated domestic money market funds. In
  general, money market funds are not subject to market risk because the interest
  paid on such funds fluctuates with the prevailing interest rate.
  
           We consider our exposure to foreign exchange rate fluctuations to be
  minimal. Currently, all of our arrangements with third-party manufacturers
  provide for pricing and payment in U.S. dollars, and therefore are not subject
  to exchange rate fluctuations. To date, we have not engaged in any currency
  hedging activities, although we may do so in the future. Fluctuations in foreign
  currency exchange rates could harm our business in the future.
  The Company's Business description is updated as follows:
  
                                      BUSINESS
  
  Overview
  
           We design, develop and market graphics processors and related software
  for personal computers and digital entertainment platforms. We provide a
  "top-to-bottom" family of award-winning performance 3D graphics processors and
  graphics processing units, or GPUs, that set the standard for performance,
  quality and features for a broad range of desktop PCs, from professional
  workstations to low-cost PCs. Our 3D graphics processors are used in a wide
  variety of applications, including games, business productivity, the Internet
  and industrial design. Our graphics processors were the first to incorporate a
  128-bit multi-texturing graphics architecture designed to deliver to users of
  our products a highly immersive, interactive 3D experience with compelling
  visual quality, realistic imagery and motion, stunning effects and complex
  object and scene interaction at real-time frame rates. The NVIDIA TNT2, TNT2 M64
  and Vanta graphics processors deliver high performance 3D and 2D graphics at
  affordable prices, making them the graphics hardware of choice for a wide range
  of applications for both consumer and commercial use. Our graphics processors
  are designed to be architecturally compatible backward and forward between
  generations, giving our OEM customers and end users a low cost of ownership. We
  are recognized for developing the world's first GPU, the GeForce 256, which
  incorporates independent hardware transform and lighting processing units along
  with a complete rendering pipeline into a single-chip architecture. Our current
  GPUs, the GeForce2 Ultra, the GeForce2 GTS, the GeForce2 MX, the NVIDIA Quadro2
  Pro and the Quadro2 MXR, process hundreds of billions of operations per second
  and increase the PC's ability to render high-definition 3D scenes in real-time.
  Our GPU family provides superior processing and rendering power at competitive
  prices and is architected to deliver the maximum performance from industry
  standards such as Microsoft's Direct3D API and SGI's OpenGL API on Windows 98,
  Windows 2000 and Linux platforms. We have also developed an integrated core
  logic/graphics chipset called Aladdin TNT2 through a partnership with Acer
  Laboratories, Inc., or ALi, one of the leading suppliers of core logic chipsets
  for the PC. The Aladdin TNT2 chipset brings NVIDIA-class graphics performance
  and quality to the value PC segment.
  
           Our products currently are designed into products offered by virtually
  every leading branded PC OEM, including Acer, Compaq, Dell, eMachines, Fujitsu-
  Siemens, Gateway, HP, IBM, micronpc.com, NEC, Packard Bell NEC, SGI and Sony, as
  well as leading CEMs, including Celestica, Intel, Mitac, MSI, SCI and VisionTek,
  and leading add-in board manufacturers, including ASUSTek, Canopus, Creative,
  ELSA and Guillemot. The benefits and performance of the NVIDIA family of 3D
  graphics processors have received significant industry validation and have
  enabled us and our customers to win more than 600 industry awards, including
  over 20 "Editors' Choice" awards from PC Magazine during the last three years,
  Edge Magazine's 1999 "Hardware Innovation of the Year," MicroDesign Research's
  "1999 Analyst's Choice for Best 3D Processor" and, in the workstation market,
  Pro/E the Magazine's "Platinum Award."
  Industry Background
  
           Interactive 3D graphics technology is emerging as one of the
  significant new computing developments since the introduction of the graphical
  user interface. Interactive 3D graphics is integral to various computing and
  entertainment platforms such as workstations, consumer and commercial desktop
  PCs, Internet appliances and home gaming consoles. 3D graphics is a powerful
  broadband medium that enables the communication and visualization of
  information, whether it is in professional applications like CAD/CAM and digital
  content creation, commercial applications like financial analysis and
  business-to-business collaboration or simply surfing the Internet or playing
  games. The visually engaging and interactive nature of 3D graphics responds to
  consumers' demands for a convincing simulation of reality beyond what is
  possible with traditional 2D graphics. We expect that the fundamental
  interactive capability and distributive nature of 3D graphics will make it the
  primary broadband medium for a digitally connected world.
  
           We believe that a PC's interactive 3D graphics capability represents
  one of the primary means by which users differentiate among various systems. PC
  users today can easily differentiate the quality of graphics and prefer personal
  computers that provide a superior visual experience. These factors have
  dramatically increased demand for 3D graphics processors. Mercury Research
  estimates that 3D graphics will be standard in every PC unit shipped by 2001.
  Mercury Research also estimates that 126.8 million desktop 3D graphics
  processors were sold worldwide in 1999 and that 292.2 million will be sold
  worldwide in 2004.
  
           Continuing advancements in semiconductor process and manufacturing have
  made available more powerful and affordable microprocessors and 3D graphics
  processors, both of which are essential to deliver interactive 3D graphics to
  the PC market. Additionally, the industry has broadly adopted Microsoft's
  Direct3D API and SGI's OpenGL API, which serve as common and standard languages
  between software applications and 3D graphics processors, allowing the
  development of numerous 3D applications and resulting in increased consumer
  demand.
  
           The technology required to create interactive and visually engaging 3D
  graphics is algorithmically complex and computationally intensive. To deliver
  high quality interactive 3D graphics, advanced 3D GPUs require millions of
  transistors to process billions of arithmetic operations per second. Current 3D
  GPUs, like the Quadro2 and the GeForce2 Ultra, are over 100 times more complex
  than 2D accelerators and comparable to the complexity of Intel Pentium III
  microprocessors. Despite these ongoing advances, PC 3D graphics available today
  cannot deliver in real time the quality of graphics seen in digitally-created
  films like "Toy Story 2." 3D graphics like those required over 1,400 powerful
  workstations to render 122,699 movie frames, each of which required from 10
  minutes to three days to complete. For PCs to provide even this level of 3D
  graphics capability, the performance of 3D graphics processors will need to be
  improved by several more orders of magnitude, with the ultimate goal being to
  achieve "real world" graphics performance well beyond that seen in "Toy Story
  2."
  We believe that a substantial market opportunity exists for providers
  of performance 3D graphics processors, particularly as performance 3D graphics
  have become an increasingly important requirement and point of differentiation
  for PC OEMs. Consumer PC users demand a compelling visual experience and
  compatibility with existing and next-generation 3D graphics applications at an
  affordable price. Application developers require high-performance, standards-
  based 3D architectures with broad market penetration. Since graphics is a key
  point of differentiation, PC OEMs continually seek to incorporate leading-edge,
  cost-effective 3D graphics solutions to build award-winning products. We believe
  that providers of interactive 3D graphics solutions will compete based on their
  ability to leverage their technology expertise to simultaneously meet the needs
  of end users, application developers and OEMs.
  
  Our Solution
  
           We designed our GPUs and graphics processors to enable PC OEMs and
  add-in board manufacturers to build award-winning products by delivering
  state-of-the-art interactive 3D graphics capability while maintaining
  affordable prices. We believe that by developing 3D graphics solutions that
  provide superior performance and address the key requirements of the PC market,
  we will accelerate the adoption of 3D graphics throughout this market. We
  combine scalable architectural technology with mass market economies-of-scale to
  deliver a complete family of products that span workstations to low-cost value
  PCs.
  
           The key features and benefits of our solution are as follows:
  
           Advanced Scalable Single-Chip Graphics Architectures. In each of the
  past three years, we have introduced a graphics processor that has subsequently
  defined the 3D graphics standard widely adopted by the PC industry. In 1997, we
  delivered the industry's first 128-bit 3D graphics processor with the RIVA 128.
  The RIVA 128's wide data path enabled high frame rate playback of interactive
  games. In 1998, we introduced the industry's first dual pixel pipeline with the
  RIVA TNT, which provided the ability to apply multiple textures to each polygon,
  enabling stunning visual effects. In 1999, we introduced the world's first GPU,
  the GeForce 256, by integrating transform and lighting into the graphics
  processor. Dedicated transform and lighting engines, which are substantially
  more powerful than those functions on general purpose microprocessors, provide
  the extremely high computational throughput necessary to generate
  high-resolution polygonal 3D models. In addition, in 2000, we introduced the
  first per-pixel shading GPUs, the GeForce2 GTS and GeForce2 Ultra, moving even
  closer to cinematic-quality real-time graphics for the desktop PC market.
  Per-pixel shading allows control of the visual and material components, such as
  color, shadow, light and reflectivity, used to create realistic scenes and
  objects. Each of these generations has served as the foundation for an
  architecturally compatible family of products designed to offer additional
  products focused on either enhanced performance and features or lower cost.
  
           High-Performance, Backward-Forward Compatible Software Drivers. NVIDIA
  graphics processors include an extensive set of reference drivers that translate
  between the software API and hardware. The NVIDIA Unified Driver Architecture
  (UDA) is designed to maximize the performance of the graphics processor and to
  maintain compatibility with each successive generation of our products. These
  software drivers have the flexibility to be continually enhanced in order to
  further improve the performance of our processors. We believe our UDA provides a
  competitive advantage to our OEM customers. We are the only graphics vendor that
  offers a family of graphics processors that are binary software compatible,
  enabling both backward and forward compatibility between generations as well as
  top-to-bottom compatibility. This compatibility is achieved through an
  innovative graphics hardware architecture that virtualizes the software
  interface, allowing us to innovate independent of the API. This compatibility
  provides OEMs and end users with a great degree of flexibility.
  
           Feature-Optimized, Standards-Based Architecture. The NVIDIA family of
  graphics processors are architected to take full advantage of industry standards
  such as Microsoft's Direct3D and SGI's OpenGL. We work closely with Microsoft
  and SGI so that our family of graphics processors provide feature complete,
  performance optimized drivers from one generation to the next. The
  standards-compliant design of our graphics processors provides OEMs maximum
  flexibility in the design and use of their systems. In particular, we believe
  that our focus on industry standard APIs positions us well in the PC market, as
  these standards proliferate and support more advanced 3D visuals. Direct3D and
  OpenGL have gained broad developer support, with numerous 3D titles currently
  using those APIs.
  
  Our Strategy
  
           Our objective is to ultimately be the leading supplier of performance
  graphics communications processors for a broad range of PCs, laptops, Internet
  appliances, handhelds and any future computing device with a display. Our
  current focus is on the PC market and we plan to expand into other markets. Our
  strategy to achieve this objective includes the following key elements:
  
           Build Award-Winning, Architecturally-Compatible 3D Graphics Product
  Families for the PC and Digital Entertainment Markets. Our strategy is to
  achieve market share leadership in the PC and digital entertainment markets by
  providing award-winning performance at every price point. By developing 3D
  graphics solutions that provide superior performance and address the key
  requirements of these markets, we believe that we will accelerate the adoption
  of 3D graphics. As part of our strategy, we have closely aligned our product
  development with Direct3D and OpenGL, which we believe maximizes third-party
  software support.
  
           Target Leading OEMs. Our strategy is to enable our leading OEM
  customers to differentiate their products in a highly competitive marketplace by
  using our 3D graphics processors. We believe that design wins with these
  industry leaders provide market validation of our products, increase brand
  awareness and enhance our ability to penetrate additional leading customer
  accounts. In addition, we believe that close relationships with OEMs will allow
  us to better anticipate and address customer needs with our future generations
  of products. Our products currently are designed into products offered by
  virtually every leading branded PC OEM, including Acer, Compaq, Dell, eMachines,
  Fujitsu-Siemens, Gateway, HP, IBM, micronpc.com, NEC, Packard Bell NEC, SGI and
  Sony.
  
           Sustain Technology and Roadmap Leadership in 3D Graphics. We are
  focused on leveraging our advanced engineering capabilities to accelerate the
  quality and performance of 3D graphics in PCs. A fundamental aspect of our
  strategy is to actively recruit the best 3D graphics engineers in the industry,
  and we believe that we have assembled an exceptionally experienced
  and talented engineering team. We increased the number of our employees engaged
  in research and development activities to 289 at July 30, 2000 from 214 at
  January 30, 2000. Our research and development strategy is to focus on
  concurrently developing multiple generations of graphics processors using
  independent design teams. As we have in the past, we intend to leverage this
  strategy to achieve new levels of graphics features and performance, enabling
  our customers to achieve award-winning performance in their products.
  
           Increase Market Share. We believe that substantial market share will be
  important to achieving success in the 3D graphics business. We intend to achieve
  a leading share of the market by devoting substantial resources to building
  award-winning families of products for a wide range of applications.
  
           Leverage Our Expertise in Digital Multimedia. We believe the synergy
  created by the combination of 3D graphics and the Internet will fundamentally
  change the way people work, learn, communicate and play. We believe that our
  expertise in 3D graphics and system architecture positions us to help drive this
  transformation. We are leveraging our expertise in the processing and
  transmission of high-bandwidth digital media to develop products designed to
  address the requirements of high-bandwidth concurrent multimedia.
  
  NVIDIA Architecture, Products and Products Under Development
  
           3D Graphics Processing Architecture
  
           3D graphics processors create two-dimensional images, which can be
  displayed on computer monitors or other output devices, from computer
  specifications of three-dimensional objects or "models." These two-dimensional
  images are typically the perspective view of the objects from an eye-point that
  changes with time and, as such, are computationally very intensive. The 3D
  effect arises from a variety of visual cues, such as perspective, occlusion,
  surface shading, shadows, focus and motion. Convincing realism arises from
  precise calculation of these and other effects. These calculations are best
  performed by dedicated processors, which provide far more power and bandwidth
  than microprocessors can deliver.
  
           The 3D graphics process is a series of specialized steps, often
  referred to as the 3D graphics pipeline. Typically, the microprocessor chooses
  an eye- point and decides which objects should be displayed. These are commonly
  communicated to the graphics subsystem via a software interface, such as
  Microsoft's Direct3D or SGI's OpenGL. The processing itself occurs in several
  steps, as depicted and described below:
  
  Model (right Transform and (right Polygon Setup (right Rasterization (right
  Display arrow)        Lighting       arrow)        arrow)      arrow)
  
           Model. The model typically is expressed as a set of polygons, such as
  triangles, that form the basic shape of a three-dimensional object and have
  attributes such as position and color at each vertex.
  
           Transform and Lighting. In the transform and lighting step, the
  original position and orientation of the polygons are transformed to their new
  position on the screen. Based on their
  position and orientation, some aspects of their surface color and lighting can
  be computed. The 3D visual cues of perspective and motion are handled during
  this stage. These calculations require very high floating-point computation
  power and are performed either by the host microprocessor or on a higher
  performance GPU. Lighting occurs after transform and provides high visual
  impact. Lighting effects enhance the realism of a scene and bring rendered
  images one step closer to a "real world" perception.
  
           Polygon Setup. Polygon setup calculates the slopes of the polygon sides
  and various other derivatives that greatly accelerate the rasterization process.
  Although early graphics devices performed these calculations in the host
  microprocessor, existing 3D graphics processors perform these calculations,
  permitting significantly higher performance. By offloading setup and
  rasterization from the microprocessor, the additional bandwidth can be utilized
  for computationally-intensive operations such as character animation, physics
  and object behaviors.
  
           Rasterization. Rasterization computes the color and other information
  for every pixel (dot on the screen) that a transformed polygon touches. A number
  of complex algorithms compute the color uniquely for each pixel, as well as
  perform the remaining visual cues, such as shading, shadows, focus and
  occlusion. This is the most computationally intensive step of the graphics
  pipeline and the processors are required to perform up to 1,000 calculations per
  pixel, with this number increasing rapidly as the technology advances.
  
           Display. Display consists of sequentially reading out the color of each
  pixel at a rate matched to the monitor. Unlike the other stages in the 3D
  graphics pipeline, which are purely digital, the signals to the monitor are
  analog, and the frequencies are far higher.
  
           The complexity of the different steps in the 3D graphics pipeline
  requires billions of floating-point and integer operations in real time in order
  to deliver a realistic and interactive experience. Image quality determines
  whether 3D computer representation looks realistic, and 3D performance
  determines whether a 3D system conveys a sense of fluid motion in real time. If
  the performance is below a certain threshold, a 3D system can reduce the
  productivity or the enjoyment of the user, even if the image quality is high.
  The challenge with high-quality 3D is to deliver the processing power required
  to perform these computations without creating bottlenecks in the 3D graphics
  pipeline.
  Current Product Offerings
  ------------------------------------------------------------------------------------------------------------------------------------
                            Desktop                                        Key Architectural          Performance          Commercial
  Product                   Segment                    End User                Features                 Metrics             Ship Date
  ------------------------------------------------------------------------------------------------------------------------------------
  NVIDIA GeForce2          Enthusiast              Home users seeking      Hardware transform     31 million triangles     August 2000
  Ultra GPU                                        the best graphics       and lighting           per second and 1
                                                   performance and         engines, multi-        billion pixels per
                                                   quality for digital     texturing per-pixel    second
                                                   multimedia and          rendering pipelines
                                                   entertainment           designed to deliver
                                                   applications            the maximum
                                                                           performance for
                                                                           Direct3D and
                                                                           OpenGL applications
  
  NVIDIA GeForce2          Performance             Home users seeking      Same as the GeForce2   25 million triangles      March 2000
  GPU GTS                                          great graphics          Ultra                  per second and 800
                                                   performance and                                million pixels per
                                                   quality for digital                            second
                                                   multimedia and
                                                   entertainment
                                                   applications
  
  NVIDIA GeForce2          Mid-Range               Home and corporate      In addition to the     20 million triangles       June 2000
  MX GPU                                           users seeking an        GeForce2 Ultra and     per second and 350
                                                   optimal combination     GeForce2 GTS           million pixels per
                                                   of graphics             features, the          second
                                                   performance and         GeForce2 MX has
                                                   quality for digital     TwinView and Digital
                                                   multimedia, business    Vibrance capabilities
                                                   and entertainment
                                                   applications
  ------------------------------------------------------------------------------------------------------------------------------------
  NVIDIA Quadro2 Pro        Performance            Professionals seeking   100% hardware-         31 million triangles     August 2000
  Graphics Board            Workstation            high-precision          accelerated            per second and 1
                                                   real-time 3D            OpenGL transform and   billion pixels per
                                                   performance for         lighting engines       second
                                                   CAD/CAM, digital
                                                   content creation,
                                                   scientific analysis
                                                   and life sciences
                                                   applications
  
  NVIDIA Quadro2 MXR        Entry Level            Professionals seeking   In addition to the     25 million triangles     August 2000
  Graphics Board            Workstation            high-precision          Quadro2 Pro            per second and 400
                                                   real-time 3D            features, the          million pixels per
                                                   performance for         Quadro2 MXR has        second
                                                   CAD/CAM, digital        TwinView and Digital
                                                   content creation,       Vibrance capabilities
                                                   scientific analysis
                                                   and life sciences
                                                   applications
  ------------------------------------------------------------------------------------------------------------------------------------
  NVIDIA TNT2               Mainstream             Home and corporate      128-bit dual-pixel     350 million pixels        April 1999
                                                   users seeking           rendering pipeline     per second
                                                   performance and         for stunning
                                                   features for business   multi-textured
                                                   productivity and        effects
                                                   management
  
  NVIDIA TNT2  M64               Value             Home and corporate      Low-cost 64-bit        286 million pixels         July 1999
                                                   users seeking the       memory interface and   per second
                                                   optimal combination     package delivers
                                                   of performance and      TNT2-class
                                                   features at an          performance and
                                                   affordable price        excellent quality at
                                                                           a lower cost
  
  NVIDIA Vanta                Low-Cost             Home and corporate      Low-cost 64-bit        250 million pixels         July 1999
                                                   users seeking a         memory interface and   per second
                                                   low-cost solution       package delivers
                                                                           TNT2-class
                                                                           performance
  
  NVIDIA Vanta LT           Low-Cost               Home and corporate      Low-cost 8MB frame    160 million pixels         April 2000
                                                   users seeking a         buffer with           per second
                                                   low-cost solution       TNT2-class
                                                                           performance
  ------------------------------------------------------------------------------------------------------------------------------------
  31
  NVIDIA GeForce2 Ultra GPU
  
           We began commercial shipment of the NVIDIA GeForce2 Ultra in August
  2000. The GeForce2 Ultra is designed for the PC enthusiast market and is a
  member of our second-generation GeForce2 family. The GeForce2 Ultra replaced our
  first-generation GPU, the GeForce 256, as our flagship processor.
  
           The GeForce2 Ultra is the first GPU able to break the one billion
  pixels per second barrier by providing two to three times the pixel processing
  power of any competitors' graphics processor currently available. Fabricated on
  a .18 micron process technology, the 25 million transistor GeForce2 Ultra
  delivers 31 million sustained triangles per second. GeForce2 Ultra is the
  world's first graphics product to ship with 230MHz (460MHz effective) Double
  Data Rate (DDR) memory, producing 7.36GB per second bandwidth. The GeForce2
  Ultra includes the NVIDIA Shading Rasterizer (NSR) technology that enables
  per-pixel control of visual and material components, such as color, shadow,
  light and reflectivity, used to create realistic scenes and objects.
  
           NVIDIA GeForce2 GTS GPU
  
           We began commercial shipment of the NVIDIA GeForce2 GTS in March 2000.
  The NVIDIA GeForce2 GTS is designed for the PC performance market and is a
  member of our second-generation GeForce2 family.
  
           The GeForce2 GTS is the first per-pixel shading GPU and was the first
  to incorporate NSR and a High-Definition Video Processor (HDVP), which provides
  a cost-effective, high-quality HDTV playback solution when combined with a
  digital television receiver. In addition, GeForce2 GTS enables new applications
  like high-definition timeshifting and digital VCR capabilities. Each of the four
  new rasterization pipelines processes two textures per pixel, in photorealistic
  32-bit color, at full speed. Fabricated on a .18 micron process technology, the
  GeForce2 GTS second-generation transform and lighting architecture delivers 25
  million triangles per second.
  
           NVIDIA GeForce2 MX GPU
  
           We began commercial shipment of the NVIDIA GeForce2 MX in June 2000.
  The NVIDIA GeForce2 MX is designed for the mid-range PC market and is a member
  of our second-generation GeForce2 family.
  
           The GeForce2 MX brings the power of a GPU to the mainstream computer
  market. With its innovative TwinView architecture, GeForce2 MX is the only GPU
  capable of driving two digital displays independently, while fully supporting
  analog RGB (VGA) and TV-out. In addition, the GeForce2 MX incorporates Digital
  Vibrance Control, which makes all images, including 2D, 3D and video, more
  colorful and vibrant, even on digital flat panels. Utilizing a two-pipe form of
  the GeForce2 GTS architecture, the GeForce2 MX is a powerful, versatile GPU
  at mainstream price points. Fabricated on a .18 micron process technology, the
  GeForce2 MX delivers 20 million triangles per second.
  
           NVIDIA Quadro2 Workstation Graphics Boards
  
           We began commercial shipment of NVIDIA Quadro2 workstation graphics
  boards in August 2000. The Quadro2 family is designed for the professional
  workstation, digital content creation and CAD/CAM markets. The Quadro2 graphics
  board family consists of the Quadro2 Pro and the Quadro2 MXR. The Quadro2
  replaces the Quadro workstation GPU as our flagship workstation processor and is
  incorporated into our first family of graphics boards for the workstation
  market. We combine the Quadro2 workstation GPU with our UDA, giving graphics and
  design professionals a solution for both the development and deployment of
  leading-edge content.
  
           We offer two distinct implementations of Quadro2 workstation boards.
  Quadro2 Pro delivers exceptional 3D and 2D performance for the engineering
  professional. Quadro2 MXR features our TwinView display architecture and a
  complete set of workstation capabilities for the mainstream professional. Both
  implementations deliver balanced high-end performance for OpenGL and Direct3D
  professional applications. With a high-speed 256-bit memory interface and up to
  128MB of DDR memory on-board, the Quadro2 increases the interactivity of the
  very largest models and scenes. Fabricated on a .18 micron process technology,
  Quadro2 also offers an integrated high-definition video processor capable of
  supporting a wide range of Advanced Television Standards Committee formats,
  including 720p at 60 frames per second.
  
           Our Quadro2 line is designed for use with professional applications
  such as 3D Studio MAX, Adobe Photoshop, AutoCAD, ESRI, LightWave 3D, Maya,
  Nichimen Mirai and SOFTIMAGE/3D.
  
           NVIDIA TNT2 Graphics Processor
  
           We began commercial shipment of the NVIDIA TNT2 graphics processor in
  April 1999. The TNT2 is designed for the mainstream PC market. The TNT2 features
  our fourth-generation, 128-bit multi-texturing 3D architecture. The TNT2 extends
  the performance and function of the original RIVA TNT graphics processor for PC
  OEMs and graphics card manufacturers. Fabricated on a .22 micron process
  technology, the TNT2 graphics processor delivers the highest performance of its
  generation through the use of high frequency clock rates for the 3D processor
  and memory. The TNT2 supports 32 megabytes of frame buffer memory.
  
           NVIDIA TNT2 M64, Vanta and Vanta LT Graphics Processors
  
           Our NVIDIA TNT2 M64, Vanta and Vanta LT graphics processors are
  designed for the value and low-cost consumer and commercial desktop PC markets.
  Based on our award-winning TNT2 architecture, these processors offer low-cost,
  highly integrated choices for entry-level add-in card and motherboard solutions.
  The TNT2 M64, Vanta and Vanta LT are manufactured on a .22 micron process
  technology and offer good quality and performance at an affordable price. The
  TNT2 M64, Vanta and Vanta LT support up to 32, 16 and 8 megabytes of frame
  buffer memory, respectively.
  Other Products and Projects
  
           Aladdin TNT2 Integrated Chipset
  
           The Aladdin TNT2 is a joint development with ALi. It combines our
  award- winning TNT2 core with ALi's M1631 North Bridge. This chipset is sold
  with an ALi M1535D South Bridge and brings NVIDIA graphics performance and image
  quality to the fast growing value PC segment while reducing overall system cost.
  ALi is responsible for the sale of this product. The Aladdin TNT2 began
  commercial shipment in March 2000.
  
           Microsoft Xbox
  
           On March 5, 2000, we entered into an agreement with Microsoft in which
  we agreed to develop and sell graphics chips and to license certain technology
  to Microsoft and its licensees for use in the Xbox video game console under
  development by Microsoft. In April 2000, Microsoft paid us $200.0 million as an
  advance against graphics chip purchases. Microsoft may terminate the agreement
  at any time. If termination occurs prior to offset in full of the advance
  payments, we would be required to return to Microsoft up to $100.0 million of
  the prepayment and to convert the remainder into our preferred stock at a 30%
  premium to the 30-day average trading price of our common stock preceding
  Microsoft's termination of the agreement. In addition, in the event that an
  individual or corporation makes an offer to purchase shares equal to or greater
  than thirty percent (30%) of the outstanding shares of our common stock,
  Microsoft has first and last rights of refusal to purchase the stock. The
  graphics chip contemplated by the agreement is highly complex, and the
  development and release of the Microsoft Xbox video game console and its
  commercial success are dependent upon a number of factors, many of which we
  cannot control. We cannot guarantee that we will be successful in developing the
  graphics chip for use by Microsoft or that the product will be developed or
  released, or if released, will be commercially successful.
  
  Sales and Marketing
  
           Our worldwide sales strategy is a key part of our objective to become
  the leading supplier of performance 3D graphics processors for PCs. Our sales
  team works closely with PC OEMs, add-in board manufacturers and industry
  trendsetters to define product features, performance, price and timing of new
  products. Members of our sales team have a high level of technical expertise and
  product and industry knowledge to support a competitive and complex design win
  process. We also employ a highly skilled team of application engineers to assist
  PC OEMs and add-in board manufacturers in designing, testing and qualifying
  system designs that incorporate our products. We believe that the depth and
  quality of our design support are key to improving PC OEMs' and add-in board
  manufacturers' time-to-market, maintaining a high level of customer satisfaction
  among PC OEMs and add-in board manufacturers and fostering relationships that
  encourage customers to use the next generation of our products.
  
           In the 3D graphics market, the sales process involves influencing
  leading PC OEMs' and add-in board manufacturers' graphics processor purchasing
  decisions, achieving key design wins and supporting the product design into high
  volume production. These design wins in turn influence the retail and system
  integrator channel that is serviced by add-in board and
  motherboard manufacturers. Our distribution strategy is to work with a number of
  leading CEMs, add-in board manufacturers and distributors that have
  relationships with a broad range of major PC OEMs and/or strong brand name
  recognition in the retail channel. Currently, we sell a significant majority of
  our graphics processors directly to CEMs and add-in board manufacturers, which
  then sell boards with our graphics processor to leading OEMs, to retail outlets
  and to a large number of system integrators.
  
           To encourage software title developers and publishers to develop games
  optimized for platforms utilizing our products, we seek to establish and
  maintain strong relationships in the software development community. Engineering
  and marketing personnel interact with and visit key software developers to
  promote and discuss our products, as well as to ascertain product requirements
  and solve technical problems. Our developer program makes products available to
  partners prior to volume availability to encourage the development of software
  titles that are optimized for our products.
  
  Backlog
  
           Our sales are primarily made pursuant to standard purchase orders that
  are cancelable without significant penalties. The quantity of our products
  actually purchased by the customer as well as shipment schedules are subject to
  revisions to reflect changes in the customer's requirements and manufacturing
  availability. The semiconductor industry is characterized by short lead time
  orders and quick delivery schedules. In light of industry practice and
  experience, we do not believe that backlog as of any particular date is
  indicative of future results.
  
  Manufacturing
  
           We have a "fabless" manufacturing strategy whereby we employ
  world-class suppliers for all phases of the manufacturing process, including
  fabrication, assembly and testing. This strategy leverages the expertise of
  industry-leading, ISO-certified suppliers in such areas as fabrication,
  assembly, quality control and assurance, reliability and testing. In addition,
  we are able to avoid most of the significant costs and risks associated with
  owning and operating manufacturing operations. These suppliers are also
  responsible for procurement of most of the raw materials used in the production
  of our products. As a result, we can focus resources on product design,
  additional quality assurance, marketing and customer support.
  
           Our graphics processors are fabricated by TSMC and WaferTech and
  assembled and tested by Advanced Semiconductor Engineering, ChipPAC and
  Siliconware. We receive semiconductor products from our subcontractors, perform
  incoming quality assurance and then ship them to CEMs, motherboard and add-in
  board manufacturer customers from our Santa Clara location in the U.S. and a
  third-party warehouse in Singapore. Generally, these manufacturers assemble and
  test the boards based on our design kit and test specifications, then ship the
  products to the retail, system integrator or OEM markets as add-in board
  solutions. Our hardware and software development teams work closely with
  certification agencies, Microsoft Windows Hardware Quality Labs and our OEM
  customers to ensure that both our boards and software drivers are certified for
  inclusion in the OEMs' products.
  Research and Development
  
           We believe that the continued introduction of new and enhanced products
  designed to deliver leading 3D graphics performance and features is essential to
  our future success. Our research and development strategy is to focus on
  concurrently developing multiple generations of graphics processors using
  independent design teams. Our research and development efforts are performed
  within specialized groups consisting of software engineering, hardware
  engineering, VLSI design engineering, process engineering, and 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 CAD industry. We have invested significant
  resources to develop relationships with industry leaders, including Avant!
  Corporation, Cadence Design Systems, Inc., IKOS 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
  on a rapid basis that utilize leading-edge technology. We believe this approach
  assists us in meeting the new design schedules of PC manufacturers.
  
           We have substantially increased our engineering and technical resources
  and have 289 full-time employees engaged in research and development as of July
  30, 2000, compared to 214 employees as of January 30, 2000. Research and
  development expenses totaled $7.1 million in 1997, $25.1 million in the year
  ended January 31, 1999, $47.4 million in the year ended January 30, 2000 and
  $38.0 million in the six months ended July 30, 2000.
  
  Competition
  
           The market for 3D graphics processors for PCs is intensely competitive
  and characterized by rapid technological change, evolving industry standards and
  declining average selling prices. We believe that the principal competitive
  factors in this market are performance, breadth of product offerings, access to
  customers and distribution channels, backward-forward software support,
  conformity to industry standard APIs, manufacturing capabilities, price of
  graphics processors and total system costs of add-in boards or motherboards. We
  expect competition to increase both from existing competitors and new market
  entrants with products that may be less costly than our 3D graphics processors
  or may provide better performance or additional features not provided by our
  products.
  
           Our primary source of competition is from companies that provide or
  intend to provide 3D graphics solutions for the PC market. Our competitors
  include the following:
  
           .    suppliers of graphics add-in boards that utilize their internally
                developed graphics chips, such as ATI and Matrox;
  .    suppliers of integrated core logic chipsets that incorporate 2D
                and 3D graphics functionality as part of their existing solutions,
                such as Intel, Silicon Integrated Systems and Via Technologies;
  
           .    companies that have traditionally focused on the professional
                market and provide high end 3D solutions for PCs and workstations,
                including 3Dlabs, SGI and Evans and Sutherland Computer; and
  
           .    companies that focus on the video game market, such as 3Dfx and
                VideoLogic.
  
           If and to the extent we offer products outside of the 3D graphics
  processor market, we may face competition from some of our existing competitors
  as well as from companies with which we currently do not compete. We cannot
  accurately predict if we will compete successfully in any new markets we may
  enter.
  
  Patents and Proprietary Rights
  
           We rely primarily on a combination of patent, trademarks, copyrights,
  trade secrets, employee and third-party nondisclosure agreements and licensing
  arrangements to protect our intellectual property. We own 33 issued patents and
  have 46 U.S. patent applications pending. Our issued patents have expiration
  dates from April 2015 to April 2018. Our issued patents and pending patent
  applications relate to technology developed by us in connection with the
  development of our 3D graphics processors. We have no foreign patents or patent
  applications. We seek patents that have broad application in the semiconductor
  industry and that we believe will provide a competitive advantage. However, our
  pending patent applications or any future applications may not be approved, and
  any issued patents may not provide us with competitive advantages or may be
  challenged by third parties. We have licensed technology from third parties for
  incorporation in our graphics processors and expect to continue to enter into
  agreements like this for future products. These licenses may result in royalty
  payments to third parties, the cross-license of technology by us or payment of
  other consideration. If these arrangements are not concluded on commercially
  reasonable terms, our business could suffer. We attempt to protect our trade
  secrets and other proprietary information through confidentiality agreements
  with manufacturers and other partners, proprietary information agreements with
  employees and consultants and other security measures. We also rely on
  trademarks and trade secret laws to protect our intellectual property.
  
  Employees
  
           As of July 30, 2000 we had 529 employees, 289 of whom were engaged in
  research and development and 240 of whom were engaged in sales, marketing,
  operations and administrative positions. None of our employees is covered by
  collective bargaining agreements, and we believe our relationship with our
  employees is good.
  
  Facilities
  
           We lease approximately 117,000 square feet for our headquarters in
  Santa Clara, California, under leases expiring in 2002. We also lease a design
  center consisting of
  approximately 2,900 square feet in one building in Durham, North Carolina,
  pursuant to a lease that expires in March 2002. In addition, we lease sales and
  administrative offices in Texas, Washington, Arizona, Singapore and the United
  Kingdom to support our customers. In April 2000, we entered into leases for our
  new headquarters complex in Santa Clara, California. Our new complex will
  comprise four buildings, representing approximately 500,000 total square feet.
  We expect the first phase of two buildings consisting of approximately 250,000
  square feet to be completed in June 2001, the second phase of one building
  consisting of approximately 125,000 square feet to be completed in July 2001 and
  the last phase of one building to be completed in March 2002. The leases expire
  in 2012 and include two seven-year renewals at our option. We believe that we
  currently have sufficient facilities to conduct our operations for the next
  twelve months, although we expect to lease additional facilities throughout the
  world as our business requires.
  
  Legal Proceedings
  
           On September 21, 1998, 3Dfx filed a patent infringement lawsuit against
  us in the United States District Court for the Northern District of California
  alleging infringement of a 3Dfx patent. On March 2, 1999, 3Dfx added a second
  patent to the suit and on May 24, 1999, 3Dfx added a third patent to the suit.
  The amended complaint alleges that our RIVA TNT, RIVA TNT2 and RIVA TNT2 Ultra
  products infringe the patents in suit and seeks unspecified compensatory and
  trebled damages and attorneys' fees. Our current generation of products is not
  identified as infringing any of the patents in suit. We have filed an answer and
  counter-claims asserting that the patents in suit are invalid and not infringed.
  These assertions are supported by our investigations to date and an opinion from
  our patent counsel in this suit. We anticipate that the trial date will be set
  by the District Court after it rules on claims construction issues.
  
           On August 28, 2000, we filed a patent infringement lawsuit against 3Dfx
  in the United States District Court for the Northern District of California. The
  lawsuit alleges that 3Dfx's graphics chip and card products, which are used to
  accelerate 3D graphics on personal computers, infringe five of our patents and
  seeks an injunction restraining 3Dfx from manufacturing, selling or importing
  infringing graphics chip and card products including its Voodoo3, Voodoo4 and
  Voodoo5 and VSA-100 family of products, as well as monetary damages. The matter
  is in its earliest stages, discovery has not yet begun and no trial date has
  been set.
  
           On February 22, 2000, Graphiques Matrox, Inc. and Systemes
  Electroniques Matrox Ltd. (collectively "Matrox") filed suit against us in the
  Superior Court, Judicial District of Montreal, Province of Quebec, Canada. The
  suit alleges that we improperly solicited and recruited Matrox employees and
  encouraged Matrox employees to breach their Matrox confidentiality and/or non-
  competition agreements. The suit by Matrox seeks, among other things, certain
  injunctive relief. We believe that the claims asserted by Matrox are without
  merit and we intend to vigorously defend this suit.
  
           On May 19, 2000, we filed suit against Matrox in Santa Clara County
  Superior Court alleging that Matrox's efforts to prevent its current and former
  employees from pursuing employment opportunities with us constitute interference
  with prospective economic advantage and contract and unfair competition. Our
  suit seeks, among other things, unspecified monetary
  damages, a declaration that Matrox's confidentiality and/or non-competition
  agreements are unenforceable under California law and a declaration that its use
  of those agreements and other tactics constitutes unfair competition. On May 26,
  2000, the case was transferred to the San Jose Division of the United States
  District Court for the Northern District of California. On June 14, 2000, Matrox
  filed an answer denying our claims and a counterclaim alleging trade secret
  misappropriation, intentional interference with contractual relations and unfair
  competition. Matrox's California suit seeks unspecified monetary damages and
  injunctive relief. We filed an answer to this counterclaim on July 7, 2000,
  denying all of Matrox's claims. As with the Montreal action, we believe that the
  claims asserted by Matrox are without merit and we intend to vigorously defend
  this suit.
  
         In addition, we may be subject to litigation in the future. See "Risk
  Factors--We are subject to a patent infringement lawsuit and could be subject to
  future lawsuits that could divert our resources and result in the payment of
  substantial damages." From time to time, we are also subject to claims in the
  ordinary course of business, none of which in our view would have a material
  adverse impact on our business or financial position if resolved unfavorably.
  SIGNATURE
  
           Pursuant to the requirements of the Securities Exchange Act of 1934,
  the registrant has duly caused this report to be signed on its behalf by the
  undersigned, thereunto duly authorized.
  
                                             NVIDIA CORPORATION
  
  Dated: September 28, 2000           BY:   /s/ Christine B. Hoberg
                                         -----------------------------
                                             Christine B. Hoberg
                                             Chief Financial Officer
                                             (Principal Financial and
                                             Accounting Officer)