It's the End of NVIDIA as We Know It

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This just in: NVIDIA (Nasdaq: NVDA  ) is getting Tegra-based smartphones on store shelves -- and they look really good.

The LG Optimus 2x will feature a dual-core Tegra 2 processor front and center, pushing smartphone performance to the next level. That unique advantage won't last long, of course -- Texas Instruments (NYSE: TXN  ) recently announced its own two-core OMAP processor lineup and Marvell Technology Group (Nasdaq: MRVL  ) has had its triple-processor chip ready for a while. It's just that NVIDIA's next-generation chip is the first to make it into retail products.

Analyst reports also show Samsung supposedly placing large Tegra 2 orders for its upcoming smartphones and tablets, which would be a huge vote of confidence in NVIDIA's technology from a company that also makes its own high-speed mobile processors. Moreover, Tegra 2 might be the reference design for the next version of the Google (Nasdaq: GOOG  ) Android platform -- the tablet-focused Honeycomb.

The stars are aligning for NVIDIA to become a major player in mobile computing. Meanwhile, its traditional bread-and-butter business in graphics processors for laptops and desktops is suffering from manufacturing problems, delayed releases, and tough-as-nails competition from both Intel (Nasdaq: INTC  ) and Advanced Micro Devices (NYSE: AMD  ) .

If current trends continue, it won't be long before NVIDIA's old graphics powerhouse image becomes a mere memory, replaced by a larger role in mobile computing. Given how sales for tablets and high-end phones are shaping up in comparison to boring old computers, that's not necessarily a bad thing for NVIDIA.

Oh, and before you get too excited about the Optimus 2x, I need to tell you that it's coming to Korea in January with select European and Asian markets to follow -- no mention of North America. Then again, equally powerful or even better phones and tablets are bound to show up here shortly, and some of them should have Tegra 2 inside.

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Fool contributor Anders Bylund holds no position in any of the companies discussed here. Google and Intel are Motley Fool Inside Value recommendations. Google is a Motley Fool Rule Breakers pick. NVIDIA is a Motley Fool Stock Advisor choice. The Fool owns shares of and has bought calls on Intel. Motley Fool Options has recommended buying calls on Intel. The Fool owns shares of Google, Marvell Technology Group, and Texas Instruments. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.

Read/Post Comments (4) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 16, 2010, at 12:12 PM, BuyemHoldem wrote:

    how does NVDA rate a TTM of nearly 40 when AMD's TTM is under 5?

  • Report this Comment On December 16, 2010, at 5:24 PM, Ironbob wrote:

    OP, are you dreaming or on drugs?

    "Meanwhile, its traditional bread-and-butter business in graphics processors for laptops and desktops is suffering from manufacturing problems, delayed releases, and tough-as-nails competition from both Intel (Nasdaq: INTC) and Advanced Micro Devices (NYSE: AMD"

    YES, thank you for the rhetoric. It's pretty obvious that you really don't know a whole lot about the PC graphics card business.

  • Report this Comment On December 16, 2010, at 6:15 PM, rav55 wrote:

    What is really sad about this is Nvidia is using licensed technology for Tegra. Tegra II is ARM core wearing a new dress.

    What they need to do is develop there own RISC core to take them out of the realm of mobile computing and into the pc market. BUT. Who needs another operating system. And right now it is only 32 bit not 64.

    So yeah it is small and cheap and they gotta sell a ton of them to make any money. Right now Apple is the biggest competitor to Nvidia in this market as they use their own licensed version of ARM Cortex. If they ever started producing more than they needed...................... In fact Apple helped develop the tech back in the 80's.

    The biggest mistake most seem to make is why doesn't Nvidia simply make faster Tegra's for PC's. It ain't x86-64.

    ARM began life as an attempt to compete in the PC market and quickly failed.

    It would seem that Nvidia needs to sell it's own techno-bling using it's own technology.

  • Report this Comment On December 20, 2010, at 11:12 AM, rsinj wrote:

    Buyem...only problem with your statement is that AMD TTM is not 5. Take out the Intel one time payola and TTM is negative...which will show once this quarter earnings is posted. It's too bad that AMD cheerleaders always point to this - shows they don't understand what they're looking at.

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