Did Apple Just Rain on NVIDIA's Parade, Again?

Just last week, Apple (Nasdaq: AAPL  ) rained on NVIDIA's (Nasdaq: NVDA  ) parade when it stacked up its new custom A5X processor against the quad-core Tegra 3, while boasting four times the graphics performance.

Well, it looks like Cupertino may be at it again by partially snubbing the graphics specialist in its bread and butter. According to SemiAccurate, Apple might not be including NVIDIA's newest GPUs in its upcoming MacBook upgrades to the extent NVIDIA was hoping for.

NVIDIA's newest Kepler architecture is built on a 28-nanometer manufacturing process, and the company already disclosed that it was having some 28-nanometer yield issues at foundry partner Taiwan Semiconductor Manufacturing (NYSE: TSM  ) during the last earnings release. TSMC has been having 28-nanometer hiccups, and NVIDIA is just one of the chipmakers affected.

Rumor has it that NVIDIA is about to win back Cupertino, after Advanced Micro Devices (NYSE: AMD  ) scored a cushy Mac spot years ago with its Radeon lineup, and all Macs that use discrete GPUs now use Radeon. Meanwhile, Intel (Nasdaq: INTC  ) has been pushing the integrated graphics in its upcoming Ivy Bridge chips, which have been scoring reasonably well in some gaming benchmarks.

In a recent Foolish conference call with NVIDIA investor relations, the company explained that it addresses the integrated graphics threat every time around and this time should be no different -- an integrated GPU will never be able to achieve the performance of a discrete one. A beefed-up GPU is also one of PC makers' favorite upsells, including partners such as Dell and Hewlett-Packard.

This is absolutely true, but I still think that at a certain performance threshold, integrated GPUs may eventually offer "good enough" alternatives to the average user or casual gamer, while the hardcore gamers will always go discrete.

When Apple refreshes its MacBook lineup this year, which is expected to be a major redesign, the real question is to what extent NVIDIA's GPUs will be featured. The midrange will be the battleground. Intel chips will probably hold down the low end, as it does now with the 13-inch MacBook Pro, while the high end needs a discrete GPU, as the current 17-inch MacBook Pro sports an AMD GPU. If Apple switches back to NVIDIA, expect to see its offerings in the high-end models first.

The midrange 15-inch MacBook Pros currently also use discrete AMD chips, so this is where the story gets interesting. SemiAccurate thinks some of the midrange models will carry a discrete NVIDIA GPU, while others won't.

In fairness, if these rumblings turn out true, it would be primarily related to supply constraints, which is somewhat out of NVIDIA's control, as it relies on TSMC. Kudos, NVIDIA: It looks like you reclaimed a spot from AMD, although it may not be as big as it used to be.

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Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Apple and Intel. Motley Fool newsletter services have recommended buying shares of Apple, Intel, and NVIDIA, writing puts on NVIDIA and covered calls on Dell, and creating a bull call spread position in Apple. 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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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 March 15, 2012, at 9:45 AM, SSchlesinger wrote:

    Thanks for a well written article about Intel. I've seen much the same info elsewhere but not in such detail. It makes sense the way you explained it. Your conclusion of "good enough" I think is dead on. Nvidia may not be entirely out at Apple but may have lost ground.

  • Report this Comment On March 15, 2012, at 11:36 AM, Reginhild wrote:

    I thought NVIDIA production problems created a shortage of what they could supply so Apple really had little choice.

    Also understood, as you mention "included to the extent" NVIDIA would like, that NVIDIA processors will still be in the new higher end Macs. AMD was dropped by Apple. The lower end Macs will just have integrated graphics.

    Overall not bad for NVIDIA since they just won the contract with Apple and will be supplying many GPUs for the higher end Macs. The bad thing for NVIDIA is that their production issues may have lost them an even larger portion of the pie.

  • Report this Comment On March 15, 2012, at 11:58 AM, jdwelch62 wrote:

    "This is absolutely true, but I still think that at a certain performance threshold, integrated GPUs may eventually offer "good enough" alternatives to the average user or casual gamer, while the hardcore gamers will always go discrete."

    That's absolutely been my position since Intel's Sandy Bridge processors came out, and now I've read reports that the Ivy Bridge processors coming soon have significantly better integrated GPU performance than the previous gen. Thanks, Evan! Nice report...

    :-)

  • Report this Comment On March 15, 2012, at 3:12 PM, TEBuddy wrote:

    AMD's integrated graphics are already 100% better than Intel's, so there is your "good enough". Graphics is a weak spot at Intel, always has been.

    Why is this article all over the place? It starts out as a Tegra vs Apple ARM and then loses that and goes to discrete GPUs. tell us more about how Apple is going to dominate the Tegra line, and how Nvidia apparantly didn't anticipate so much competition in the mobile arena. I'm sure Qualcomm will be boasting its next chip that beats Nvidias graphics as well.

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