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NVIDIA Corporation CEO Provides Update on Low-End Graphics Chips

By Ashraf Eassa - Aug 12, 2016 at 3:16PM

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NVIDIA has new, low-cost graphics processors based on its Pascal architecture waiting in the wings.

Image credit: NVIDIA. 

Graphics specialist NVIDIA (NVDA -2.88%) began rolling out gaming-oriented graphics processors based on its new Pascal architecture back in May. Since then, the company has refreshed a substantial majority of its lineup in this cateogry, releasing the Titan X (based on a chip known as GP102), the GeForce GTX 1070 and GTX 1080 (both based on GP104), and the GeForce GTX 1060 (based on GP106).

Interestingly, on the company's most recent earnings call, analyst Ian Ing asked CEO Jen-Hsun Huang about the company's plans to compete in the market for graphics cards below the $250 mark that the GTX 1060 is priced at.

In particular, Ing wanted to know if NVIDIA planned to "cede the sub-$250 price point for cards to competition" or if the company could address the market "with older Maxwell product or some upcoming product."

Let's see what Huang had to say.

Pascal family is finished

"We have taped out, we have verified, we have ramped every Pascal GPU, that's right," Huang began. "However we have not introduced every one."

In other words, all of the chips based on the Pascal architecture are finished and ready to go, but the company has some chips or products left to bring to market.

What are these products?

The two remaining Pascal-based chips that NVIDIA plans to bring to market are GP107 and GP108, the direct successors to the Maxwell-based GM107 and GM108. NVIDIA used GM107 to address the very low end of the gaming market (the specific products were GeForce GTX 750 Ti, GeForce GTX 750, and, for system builders, the GeForce GTX 745).

GM108 was used in low-power laptops and convertibles, such as the Surface Book.

At any rate, it's not hard to see how NVIDIA will bring Pascal to lower price points. First off, various leaks (like this one) point to a variant of the GeForce GTX 1060 with 3 gigabytes of video memory on board and a partially disabled chip. This will likely be the first product that NVIDIA introduces at the sub-$250 price point for desktop gamers. According to website IT Home (via WCCFTech), this model comes in "early September."

Beyond that, we should expect NVIDIA to trot out the GP107 chip (which will be less powerful than the GP106 chip -- in NVIDIA code names, larger numbers tend to mean lower-end chips) to act as a lower-end GeForce GTX 1050. The same IT Home report says the 1050 might be out in October.

Why is NVIDIA holding back these products?

The GTX 1060 with 3 gigabytes of memory should be trivial to launch. It's based on a partially disabled version of a chip that's already shipping in solid quantities today. In addition, based on Huang's comments, it would seem that GP107 is also pretty much "ready to go."

If that's the case, why is NVIDIA holding back? I have a potential explanation.

Remember that the majority of NVIDIA's graphics processors aren't sold directly by NVIDIA to end customers. Instead, NVIDIA sells graphics processors to third-party add-in-board vendors. Those vendors take the processors, build boards around them, and then distribute those boards through channel partners (retail stores, online resellers, and so on).

My guess is that NVIDIA wants to give its channel partners time to drain their stock of older-generation GTX 950-class products. And, frankly, given that NVIDIA's older GTX 950 still seems to be reasonably competitive, moving those products with appropriate price cuts shouldn't be too painful.

Ashraf Eassa has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Nvidia. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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