- Nvidia's non-PC revenue contribution is increasing as it
expands its footprint in the mobile computing market.
- Introduction of the Tegra 4 family (Tegra 4 and Tegra 4i)
will help increase Nvidia's penetration in smartphones.
- Tegra 4i has integrated 3G and 4G/LTE
communication technologies; 4G/LTE is the future of
wireless connectivity, especially smartphones.
- Nvidia's Tegra revenues to increase from $765 in 2012 to
close to $2 billion by 2019.
- Introduction of Qualcomm's Snapdragon 600
and Snapdragon 800 processors could intensify
- Potential competition from leading handset
manufacturers - Apple and Samsung - who design their own chips
While the slowdown in the PC market has impacted many of its
competitors such as Intel (
) and AMD (
), we believe Nvidia's (
) growing focus and success in the mobile computing space has
cushioned the negative impact of lower PC shipments on the
company's growth rate. Non-PC revenue currently accounts for
approximately 30% of Nvidia's overall revenue, compared to 7% three
years ago. (Read Our Q4 2012 Earnings Article:
Nvidia's Dominance In GPUs And Higher Tegra Sales
Nvidia did well with its standalone dual-core app
processor, Tegra 2, to capture significant non-iPad tablet
market share in 2011. The launch of Tegra 3, the world's first
quad-core processor, is what gave the company's mobile computing
plan a significant push, by scoring high profile design wins in
However, tablets remain the most important driver for
Nvidia's success in mobile computing and its progress in the
smartphone market remains more or less stable. We believe that the
introduction of its next generation Tegra 4 processor and the Tegra
4i, which features built in 3G and 4G/LTE communication
technologies, will help Nvidia make a deeper foray in the
4G/LTE is the future of wireless connectivity for mobile
devices, especially smartphones. The LTE integrated chipset
better equips Nvidia to challenge Qualcomm's (
) growing dominance in smartphones.
See our complete analysis for Nvidia
Tegra 4 Family To Help Expand Nvidia's Mobile
Nvidia's Tegra 4 family includes Tegra 4, which the company
claims to be the fastest mobile processor, and Tegra 4i, its first
fully integrated 4G LTE processor.
Tegra 4 -
Nvidia launched Tegra 4 at the 2013 Consumer Electronic Show
in January. Tegra 4 is the world's first quad-core processor
based on Cortex A15, ARM's most advanced CPU core. The chip
delivers a more realistic gaming experience, new camera
capabilities through computational photography, faster web
browsing and higher resolution displays. With an optional
chipset, Tegra 4 also offers worldwide 4G LTE voice and data
support. In addition, Nvidia claims that Tegra 4 consumes 45%
less power than the Tegra 3 processor. Tegra 4 chips will
target new tablets and high-end smartphones designs.
In its Q4 2012 earnings call, Nvidia highlighted that it
has already scored more design wins for Tegra 4 compared to the
total design wins for Tegra 3. In addition to mobile devices,
Tegra 4 is gaining popularity for use in embedded devices such as
cars and gaming devices.
Tegra 4i -
Nvidia introduced its first fully integrated 4G LTE mobile
processor on February 19 and also showcased its
reference smartphone platform, code-named Phoenix, running on
the Tegra 4i processor. According to the company, Tegra 4i is the
highest performance CPU core and is only half the size of its
nearest competitor, Qualcomm's Snapdragon 800. Tegra 4 is a single
integrated processor that offers solid computing power, a longer
battery life and powers all major functions of a
smartphone. Tegra 4i focuses on bringing the super phone
experience to the more affordable mobile market.
4G/LTE is the future of wireless connectivity for mobile
devices, especially smartphones, and a dominance in the
production of LTE chips has enabled Qualcomm to lead the
smartphone market so far. We believe that Nvidia's upcoming
Tegra LTE chipset integrated into Tegra processors will
help the company increase its penetration in the smartphone market.
Additionally, the upgraded Tegra processors could help it score
additional design wins, as manufacturers continue to roll out new
tablets designs in the coming year.
Nvidia's Tegra revenues increased from $591 million in 2011 to
$765 in 2012, and we expect the figure to reach $2 billion by the
end of 2019.
Potential Threat From Qualcomm's New
Dominating the production of LTE chipsets,
Qualcomm continues to lead the smartphone market. The LTE
leadership has allowed Qualcomm to command majority of the
smartphone market so far. It came out with its own quad-core
chipsets, which reduces Nvidia's advantage of offering the
world's first quad-core processor. While Nvidia expected to
ship around 30 million Tegra processors in 2012, Qualcomm shipped
141 million chipsets in its fiscal Q4 2012 alone.
Though the LTE compatibility will fuel Nvidia's growth in the
smartphone market, the introduction of new Snapdragon processors by
Qualcomm will step up competition for the company. Qualcomm
claims to have already bagged a significant number of design wins
for mid-range and high end smartphones and tablets, powered by
its Snapdragon 800 and Snapdragon 600 processors. The new
Snapdragon lineup, which will be available in commercial devices by
mid-2013, are estimated to deliver as high as 40% improved
performance compared to Qualcomm's S4 Pro processor.
In addition to Qualcomm, Marvell, MediaTek (which
recently unveiled its first quad-core chipset) and
the relatively new entrant Intel (
), Nvidia also faces competition from leading handset manufacturers
- Apple and Samsung - who design their own chips in-house and could
end up selling them to other device manufacturers in the
Our price estimate of $18.68 for Nvidia
is at a significant premium to the current market price.
See our complete analysis for Nvidia's stock