Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Tegra 4i: NVIDIA's Remedy for Mobile Seasonality

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

Last week, chip maker NVIDIA (NASDAQ: NVDA  ) finally unveiled the long-awaited Tegra 4i integrated LTE mobile processor (previously code-named "Grey"). The introduction of Tegra 4i will finally allow NVIDIA to compete seriously with Qualcomm (NASDAQ: QCOM  ) as a provider of mobile processors for smartphones. Qualcomm has had a virtual monopoly on integrated LTE chips for the past year, which has allowed it to build up a dominant position in the smartphone market.

Thus far, NVIDIA's heavy research and development spending in Tegra processors and Icera modems have outstripped sales gains. Even in last year's Q3 -- the best quarter ever for Tegra sales -- the company's consumer products business (which included Tegra) lost more than $40 million. The integration of an LTE-capable modem and a Tegra mobile processor will hopefully be the final piece of the puzzle that puts NVIDIA's Tegra division in the black. The Tegra 4i will increase NVIDIA's addressable market, and will also have a beneficial impact on NVIDIA's business by cutting down on the seasonality of the Tegra tablet business.

Product features
Compared to its cousin Tegra 4, the new Tegra 4i system on a chip is optimized for efficiency rather than power. The Tegra 4i uses the older A9 core rather than ARM's next-generation A15 design, has 60 GPU cores (compared to 72 in the Tegra 4) and is somewhat slower overall. However, the CPU is less than half the size of Tegra 4, which reduces costs and improves power efficiency.

The more important comparison, however, is with the competition. NVIDIA is taking aim at Qualcomm's top-of-the-line Snapdragon 800 chip. NVIDIA claims that Tegra 4i will deliver significantly better performance than the Snapdragon 800 despite being half its size. This is an impressive accomplishment. However, Qualcomm's Snapdragon 800 will be shipping in devices by mid-year (and its somewhat lower-performing Snapdragon 600 cousin will come to market even earlier). By contrast, Tegra 4i is not expected to ship in devices until this fall. In the fast-moving smartphone market, this could mean that NVIDIA misses out on design wins for phones shipping earlier in the year.

Financial impacts
In a conversation with me earlier this month, NVIDIA's investor relations team pointed out that the tablet business is very seasonal. A new generation of tablets is released each year, with production ramping up during NVIDIA's Q2, peaking with the holiday build cycle during Q3, and then ramping down in Q4. This leads to sequential declines in tablet-oriented revenue in Q4 and Q1 of most years, but operating expenses remain at the same level as product development continues.

In this respect, the late 2013 release of Tegra 4i will be helpful. The chip will be ramping into production just as Tegra 4 production is dropping off at the end of the holiday tablet build cycle. If NVIDIA can snag a high volume smartphone design win for this fall or winter, that will already be a significant accomplishment. Taking significant market share away from Qualcomm is the ultimate goal, but that will likely be a longer-term process.

Learn more
NVIDIA was ahead of the curve launching its mobile Tegra processor, but investing gains haven't followed as expected, with the company struggling to gain momentum in the smartphone market. The Motley Fool's brand-new premium report examines NVIDIA's stumbling blocks, but also homes in on opportunities that many investors are overlooking. We'll help you sort fact from fiction to determine whether NVIDIA is a buy at today's prices. Simply click here now to unlock your copy of this comprehensive report.

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

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: 2279011, ~/Articles/ArticleHandler.aspx, 9/28/2016 9:51:30 AM

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 18,277.75 49.45 0.27%
S&P 500 2,162.07 2.14 0.10%
NASD 5,310.97 5.26 0.10%

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

9/28/2016 9:35 AM
NVDA $66.15 Down -0.39 -0.59%
Nvidia CAPS Rating: ****
ARMH $0.00 Down +0.00 +0.00%
ARM Holdings CAPS Rating: ***
QCOM $63.47 Up +0.16 +0.25%
Qualcomm CAPS Rating: ****