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.
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.
Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple, Google, and NVIDIA and owns shares of Apple, Google, Microsoft, and Qualcomm. Try any of our Foolish newsletter services free for 30 days. 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.