Is the New Tegra 4 a Game-Changer for NVIDIA?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Earlier this week, NVIDIA  (NASDAQ: NVDA  ) unveiled its latest mobile processor chip, the Tegra 4i, which incorporates an LTE modem right into the processor. The latest addition to the cutthroat mobile-processor space is one the company proclaims to be the best single-chip processor on the market.

What's in a name?
We get a hint of the most important feature of the latest Tegra chip from its name. The "i" is short for the i500 LTE modem that NVIDIA incorporates directly onto the new quad-core processor. The modem not only allows the new chip to connect to LTE networks, but it can also be reprogramed to work on different networks and frequencies, so it can be used across multiple carriers and handsets. NVIDIA says the chip is half the size of its closest competitor's, which is the Snapdragon 800 processor from Qualcomm (NASDAQ: QCOM  ) .

The chip is important for NVIDIA because not just because it's the company's first-ever processor that incorporates 4G LTE connectivity right into the chip. It also brings NVIDIA into the mid-range mobile market for phones in the $200 range, and possibly even for phones without a contract, as opposed to its previous offerings, which focused more on high-end devices.

Coming out swinging
NVIDIA, which previously built its business around graphics processors, is now a major player on the mobile processor field, and the Tegra 4i is just the latest addition. Qualcomm isn't slacking, though. It rakes in about 48% of the smartphone mobile processor market share by revenue. NVIDIA will have to put up quite a fight to wrestle some of that share away from Qualcomm.

The one area in which NVIDIA comes out ahead is in tablets. Take a look.

Source: EE Times.  

Obviously, NVIDIA can't put its chip in Apple's products, because the Cupertino company makes its own A-series mobile processors. It does, however, come in second place for tablet processor market share and easily beats out Qualcomm's 4%. NVIDIA's Tegra 3 processor is already in Microsoft's Surface RT tablet and Google's Nexus 7, but what could now push NVIDIA even further into the tablet market share is that the new Tegra 4i chip incorporates LTE, which the Tegra 3 doesn't have.

What to look for
Last quarter, NVIDIA's Tegra Group grew 90% year over year and earned $208 million in revenue. Hewlett-Packard is likely to use one of NVIDIA's Tegra chips in its upcoming tablet this year, but investors will need to see multiple deals with tablet and smartphone makers for this chip to be a success.

If NVIDIA can prove to tablet and smartphone makers that the new processor is the best way to achieve stellar processing speeds, great battery life, and LTE connectivity, then the company may have a winner. But investors can expect Qualcomm to leverage its current business relationships, and its own powerful chips, to give NVIDIA the fight of its mobile life.

NVIDIA's Tegra chip line has been ahead of the curve in many ways, and the new Tegra 4i is no exception. But investing gains haven't followed as expected, even as the company fights for more smartphone exposure. To help investors identify NVIDIA's stumbling blocks, as well as the opportunities that many are overlooking, The Motley Fool has created a brand-new premium report on the company. Simply click here now to unlock your copy of this comprehensive NVIDIA report.

Read/Post Comments (0) | Recommend This Article (1)

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.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2267555, ~/Articles/ArticleHandler.aspx, 9/29/2016 6:13:08 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,143.45 -195.79 -1.07%
S&P 500 2,151.13 -20.24 -0.93%
NASD 5,269.15 -49.39 -0.93%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/29/2016 4:00 PM
NVDA $67.40 Up +0.62 +0.93%
Nvidia CAPS Rating: ****
AAPL $112.18 Down -1.77 -1.55%
Apple CAPS Rating: ****
GOOGL $802.64 Down -7.42 -0.92%
Alphabet (A shares… CAPS Rating: *****
HPQ $15.39 Down -0.10 -0.65%
HP CAPS Rating: ***
MSFT $57.40 Down -0.63 -1.09%
Microsoft CAPS Rating: ****
QCOM $67.45 Up +4.00 +6.30%
Qualcomm CAPS Rating: ****