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Did Apple Just Rain on NVIDIA's Parade?

By Evan Niu, CFA – Updated Apr 7, 2017 at 12:33PM

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Yes, and no.

Did the storyline of 2012 as the year of the quad-core mobile CPU just go out the window? Apple (Nasdaq: AAPL) opted to stick with a dual-core CPU in its new A5X in the new iPad, and tech trends and their corresponding narratives tend to live and die by what Cupertino dictates as important.

Is four better than twelve?
With NVIDIA's (Nasdaq: NVDA) Tegra 3 at the forefront of the quad-core mobile migration, did the Mac maker effectively just rain on NVIDIA's parade?

Well, yes, since Apple directly stacked up its A5X right next to the Tegra 3 in a comparison of graphics performance. But also no, since Apple did bump up the processing cores in the GPU to four, so the A5X has a dual-core CPU and quad-core GPU.

Meanwhile, dominant mobile chipmaker Qualcomm (Nasdaq: QCOM) still has quad-core Snapdragons in its pipeline slated for later this year. In all likelihood, Apple will probably also follow up with a quad-core A6 later this year in the next iPhone, but only time will tell on that one.

Source: Used with permission from Apple PR.

Marketing chief Phil Schiller compared a couple of Apple's custom A-family processors to the Tegra 3, with the dual-core A5 that launched last year in the iPad 2 and iPhone 4S boasting double the graphics performance of the quad-core Tegra 3. The new A5X supposedly fetches four times the graphics performance.

Keep in mind that the Tegra 3 really has five cores in the CPU, with one being a low-power "Ninja" core for tasks that don't need as much horsepower as the four primary ones deliver, while the Tegra 3's GPU has a whopping 12 cores.

NVIDIA to Apple: Can I get your digits?
Apple didn't provide benchmarks or any additional data to show how it arrived at the 4x figure, and NVIDIA wants to see the digits behind the claim and spokesman Ken Brown called Apple's assertion a "really generic statement." Once the new iPad hits the market next week, the smaller chipmaker plans on running its own tests and will probably release its own counter claims.


AnandTech had separately run some benchmark tests on the Asus Transformer Prime (and its Tegra 3) a few months ago and showed that it outperformed the iPad 2 (and its A5) in a few categories. The scores were related to browser performance and not graphics performance, and the Tegra 3 wasn't outperforming by fourfold.

Is there an app for that?
Benchmarks aside, you also have to remember that many current mobile applications aren't optimized to tap into the raw power that four cores serve up. NVIDIA and Apple both worked with a handful of game developers to tout the graphics performance of their respective chips.

For example, NVIDIA collaborated with Madfinger Games to show off Shadowgun on the Transformer Prime, while Apple tapped Epic Games to showcase the next installment of its popular Infinity Blade franchise at the iPad event.

Most apps out there don't get such special attention. Apps will follow in processors' footsteps, but for now, some of that quad-core power from the Tegra 3 remains untapped.

Infighting within the ARMy
Apple, NVIDIA, and Qualcomm are all ARM Holdings (Nasdaq: ARMH) licensees, but Apple and Qualcomm are among the few players that set themselves apart with chip differentiation. Qualcomm licenses an ARM instruction set and builds its Snapdragons from scratch, and Apple acquired small chip shops P.A. Semi and Intrinsity to custom-design its ARM-based A-processors in-house.

Other players like NVIDIA, Samsung, and Texas Instruments use stock reference ARM cores for their respective Tegra, Exynos, and OMAP families. That distinction is one reason Qualcomm isn't afraid of NVIDIA and why its processor designs are more "elegant," according to Qualcomm's Raj Talluri, and this is probably an advantage that Apple should enjoy as well.

Same old story
Make no mistake: 2012 is still the year of the quad-core mobile processor. It just won't happen as fast as we may have thought a few months ago, and it's probably not as pressing as NVIDIA might have you believe.

All good things come to those who wait.

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Fool contributor Evan Niu has sold bullish put spreads on Qualcomm and owns shares of Apple and ARM Holdings, 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 Qualcomm. Motley Fool newsletter services have recommended buying shares of Apple and NVIDIA, creating a bull call spread position in Apple, and writing puts on NVIDIA. 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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