A Major Win for NVIDIA

This day has been a long time coming for chipmaker NVIDIA (Nasdaq: NVDA  ) .

Back in May of last year, the company announced that it was acquiring British baseband specialist Icera for a hefty $367 million, which was NVIDIA's largest purchase ever. The ultimate end goal for the purchase was clear: integrating a baseband directly into its Tegra line of mobile processors. Rival Qualcomm (Nasdaq: QCOM  ) has always had a knack for integrating key functionalities into its SoCs, helping it score design wins for the added efficiencies.

The company has now announced the first smartphone whose core processing capabilities are powered solely by NVIDIA chips, using a dual-core Tegra 2 processor and an NVIDIA Icera modem that includes baseband and RF processors. The device is the ZTE Mimosa X, which runs Google Android 4.0, or Ice Cream Sandwich, and is slated for a second-quarter launch.

Source: NVIDIA press release. ZTE Mimosa X.

Source: NVIDIA press release. ZTE Mimosa X.

Scoring this win is a solid milestone for NVIDIA, as for the first time it will provide both the applications processor and the baseband modem, leveraging the Icera acquisition. The two components are still discrete and are yet to be integrated, but this is definitely a step in the right direction.

Several months after the Icera news last year, NVIDIA laid out its roadmap for its Tegra chips, complete with their super-powered monikers. For NVIDIA, this year will be predominantly a quad-core Tegra 3 affair, codenamed "Kal-El" after Superman. Next up is "Wayne," as in Bruce Wayne, but then comes "Grey," for X-Men's Jean Grey.

Grey will be the first Tegra chip to fully integrate Icera baseband technology and is scheduled for release late this year, complete with 3G and 4G LTE capabilities. Qualcomm won't be sitting still, though, as it's also aiming for integrated 4G LTE in its Snapdragons this year, while it's long had 3G integration down pat.

That day for an integrated baseband is an even longer time coming for NVIDIA, but it'll be momentous when it does.

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Fool contributor Evan Niu has sold bullish put spreads on Qualcomm, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Qualcomm and Google. Motley Fool newsletter services have recommended buying shares of NVIDIA and Google and writing puts in NVIDIA. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On February 22, 2012, at 4:22 PM, jdwelch62 wrote:

    I gave NVIDIA a thumbs down on CAPS just yesterday (actually over the weekend), before this article came out. While you make some good points in NVIDIA's favor, Evan, I will maintain my position that Intel's venture into the mobile space will win out (from the standpoint of outperforming the market) over ARM-based providers of silicon. Of the ARM camp, I think Qualcomm stands a better chance of surviving, and even thriving, than NVIDIA, due to Q's deep vault of patents, something that (as far as I'm aware) NVIDIA doesn't come close to having in comparison. My timeframe for NVIDIA to underperform is only 3 years, and getting this design win is a plus for them, so I may end up being wroing, but I don't think so. I think it'll be harder for NVIDIA to transition from a provider of (primarily) discrete graphics to mobile processors+whatever than it will be for Intel to make significant headway into the mobile space.

    BTW, for the record, I'm not predicting that Intel will dominate the mobile space in 3 years, but they should have a significant share of it by then, and even more of it 5 years from now. There's still plenty of space for ARM-based processors, but I think Qualcomm and Samsung will have a better position there than NVIDIA.

    Just my 2 cents. Fool on!... :-)

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