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NVIDIA's New Tegra Mobile Chip Is a Game-Changer

At this week's annual Consumer Electronics Show, NVIDIA (NASDAQ: NVDA  ) showed off not one but two next-generation mobile processors. For these new mobile processors, NVIDIA has wisely focused on applying its graphics expertise to the mobile realm.

Source: NVIDIA. The new Tegra K1 chip offers console-quality graphics performance.

As a result, these upcoming members of the Tegra lineup should help NVIDIA carve out a niche as the leader for mobile graphics and visual computing. This will encourage OEMs to use Tegra processors in smartphones, tablets, and other devices they want to market to gamers. It will also solidify NVIDIA's strong position as a supplier of embedded processors for the automotive market.

Looking for a rebound in 2014
NVIDIA's Tegra mobile processors were the subject of much fanfare at the 2011 CES, when Android smartphones and tablets sporting Tegra 2 processors were ubiquitous. However, Samsung soon came to dominate the Android smartphone market, and it has increasingly relied on processors designed and built in-house.

Meanwhile, the Android tablet market struggled to take off. By the time it did, NVIDIA had lost some key design wins, due in part to aggressive pricing offered by competitors. This year, the company's Tegra woes have been aggravated by a product (Tegra 4) that was delayed and therefore passed over for some design slots. As a result, NVIDIA has suffered a significant year-over-year drop in Tegra sales in the last two quarters. 

However, delaying the Tegra 4 processor allowed NVIDIA to speed up development of future Tegra chips. First, the Tegra 4i integrated mobile processor (which includes a cellular modem on the same piece of silicon) will be available in the next few months. The addition of cellular capability will vastly improve NVIDIA's competitiveness, especially in smartphones.

Second, the delay of the Tegra 4 allowed NVIDIA to speed up development of the new Tegra K1 chips announced this week. Both will feature graphics based on the Kepler architecture that powers NVIDIA's PC and professional graphics cards.

Creating differentiation
The Tegra K1 is the first NVIDIA mobile chip that really differentiates itself from the pack based on graphics -- which, after all, is the company's strong suit. Both versions of the chip will feature an impressive 192-core Kepler GPU. NVIDIA claims this GPU will be 1.5 times more efficient than other mobile GPUs.

The result is that these new chips will provide solid battery life while offering console-quality gaming performance. Moreover, NVIDIA has put significant effort into making it easy for developers to rewrite PC games to run on Tegra .

The first version of K1 is almost ready and will be found in devices shipping in the first half of 2014. It will feature a 32-bit processor licensed from ARM (NASDAQ: ARMH  ) using NVIDIA's tried and true 4+1 core arrangement.

The second version will utilize NVIDIA's long-anticipated "Denver" chip, which is a dual-core 64-bit processor designed by NVIDIA and based on the ARM architecture. Apple (NASDAQ: AAPL  ) shocked the mobile world last fall by upgrading to 64-bit processors for the new iPhones and iPads, and many analysts expect 64-bit chips to become a crucial part of mobile computing. This makes it all the more significant that NVIDIA offered the first demonstration of Android running on a 64-bit processor at its press event on Sunday. 

The graphics prowess of NVIDIA's next-generation Tegra chips will also offer benefits in the automotive market, which has rapidly become a key part of the Tegra business. The Tegra K1 will be able to power digital dashboards, infotainment systems, and advanced driver assistance systems while consuming very little power.

Better times ahead
After suffering through an 18-month Tegra product gap between late 2011 and mid 2013, NVIDIA is well positioned for a return to growth in the Tegra business this year. The new K1 Tegra processors revealed this week will help NVIDIA differentiate its high-end mobile processors from competing products by appealing to gamers with console-quality graphics. Meanwhile, the Tegra 4i will offer a strong value proposition for midrange smartphones and tablets.

As a result, investors should continue to be patient with NVIDIA. By the middle of this year, the company should be delivering rapid sales growth as the newest Tegra chips help it become a serious competitor in the mobile processor market.

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Comments from our Foolish Readers

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  • Report this Comment On January 08, 2014, at 9:49 AM, GirlsUnder30 wrote:

    The achilles heel of the Tegra line has been power consumption. Some background on the mobile sector in the article below:

    ...and one more article showing how important the power/perfomance metric will be going forward.

  • Report this Comment On January 09, 2014, at 4:51 AM, enihcam wrote:

    Apparently you are cheated by NVIDIA's fancy slideshow, because of the following facts:

    1. Not only Tegra K1 has a 192-Core GPU, AMD's low-end APU, Mullins, also has GPU with 3 CU x 64-Core = 192-Core. 192 is really not a big number in 2014.

    2. An ARM mobile processor should be less than 2W, but the power consumption of Tegra K1 is 5W, which actually puts this processor into battlefield with x86(64) processors. For example, Intel Baytrail 1.5-4w; AMD Mullins 2~4.5W.

    3. Tegra K1-64 only has dual-core CPU, but Baytrail/Mullins are quad-core in same power consumption level.

    4. Tegra K1 supports only DX11.1, but Mullins support DX11.2 and native OpenCL.

    5. Tegra K1-64 will not be available to OEMs till the end of 2014, but Mullins will be available to OEMs in summer of 2014.

  • Report this Comment On January 09, 2014, at 4:47 PM, TMFGemHunter wrote:

    @enihcam: We'll see what happens, but I would be pretty shocked if AMD takes a significant share of the mobile market this year or next. I don't know where you got your statistics, but K1's power consumption is much lower than the 5W you quote under normal operating circumstances.

    According to NVIDIA's presentation, Tegra K1 has significantly better performance per watt than Snapdragon 800 or Apple A7. Both of those, of course, are much more widely deployed than AMD or Intel mobile chips.


  • Report this Comment On January 10, 2014, at 3:16 AM, enihcam wrote:


    I got all the data from popular media I Googled, so correct my data I were wrong.

    Also, I didn't mean mobile market is AMD's primary market in 2014, but although AMD didn't focus on mobile, AMD simply made Mullins.

    If you are talking about SDP (used for testing in normal operating circumstances), Mullins' SDP is 2W, and I haven't seen TK1-64 is smaller than 2W.

    In the end of day, the mobile and embedded market is the primary and final market for NVIDIA, but its product simply doesn't meet my expectation, everybody's expectation. It even doesn't have LTE integrated. (Talking about LTE, how many mobile devices have Tegra 4i inside?)

    For markets other than mobile, NVIDIA didn't do well either. I don't want to mention it here, please go to google yourself.

    SD800 and A7 are products from 2013.

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Adam Levine-Weinberg

Adam Levine-Weinberg is a senior Industrials/Consumer Goods specialist with The Motley Fool. He is an avid stock-market watcher and a value investor at heart. He primarily covers airline, auto, retail, and tech stocks. Follow him on Twitter for the latest news and commentary on the airline industry!

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