Qualcomm (NASDAQ:QCOM) just announced its next-generation high-end mobile applications processor -- the Snapdragon 805. This, interestingly enough, is a 32-bit ARM (NASDAQ:ARMH) compatible chip with a number of enhancements (primarily in graphics). Interestingly enough, this is a good thing for NVIDIA (NASDAQ:NVDA). While the launch of a highly competitive part from a competitor is usually not a good thing for a tech company, the devil's in the details here.
No 64-bit from Qualcomm in 2014
When Qualcomm's former Chief Marketing Officer made a comment (in rather poor form) that Apple's A7 was a "gimmick," this seemed to signal that the company may be a ways off from a 64-bit CPU solution for mobile devices. While the move to 64-bit doesn't buy much in the way of performance improvements (so in a sense, the guy wasn't lying), it is important from a marketing perspective since, if one player has it the rest will look foolish without it.
Fortunately for NVIDIA, which has signaled that its first 64-bit system-on-chip will come in the 2015 timeframe with its "Parker" system-on-chip, its next-generation "Logan" (32-bit ARM with much improved GPU) system-on-chip won't suffer a major competitive/marketing disadvantage. This means the door is open for "Logan" (which has been sampling for months) to take back share in the Android tablet space (something Qualcomm took from NVIDIA during 2013).
No integrated modem, either?
What is more interesting is that, while Qualcomm's flagship mobile chip, the Snapdragon 800, has an integrated LTE baseband, the 805 appears to be compatible with both the MDM9x25 LTE modem available today and the upcoming 20-nanometer MDM9x35 modem that begins sampling in early 2014.
What's interesting is that, while one of Qualcomm's big selling points has been baseband integration across its entire product portfolio, we are now seeing that at the very high end, the flexibility to use discrete modems comes in handy. Not only does this free up die space on the apps processor for more computing horsepower, but it allows the company to meaningfully improve cellular connectivity without having to revise the entire system-on-chip. In cost-sensitive markets, this isn't important, but for the high end, it's a great feature.
NVIDIA's next-generation system-on-chip, Logan, will also be a stand-alone apps processor, meaning that lack of an integrated baseband won't be a competitive disadvantage in the highest-end smartphones. Of course, this would be even better for NVIDIA since it could potentially sell both a Tegra 5 and a discrete Icera modem into the sockets it wins.
Both stuck on 28-nanometers
Another thing to note is that the Snapdragon 805 is built on Taiwan Semiconductor's (NYSE:TSM) 28nm HPM process, just as NVIDIA's next-generation Tegra 5 will be. This means neither player has an advantage with respect to process technology. This is significant, as it had previously appeared as if NVIDIA would be fighting with a 28nm part against a potential 20nm Qualcomm competitor. With both on the same process node, and coming to market at about the same time, the match will be very close -- much closer than this generation was when NVIDIA was late with Tegra 4.
The Intel dark horse
As the elephant in the room (with both NVIDIA and Qualcomm seemingly stuck on 28nm planar processes) for 2014, does this open up a huge opportunity for Intel (NASDAQ:INTC)? The chip giant has already fired its tablet shot at 22-nanometers with Bay Trail (leadership CPU performance and power, but only "good" graphics), but things could get very ugly if 14-nanometer tablet processors from Intel show up around the same time that Tegra 5 and Snapdragon 805 hit the market.
That being said, it is unlikely that Intel will have 14-nanometer smartphone chips available until 2015, which means that in phones, Intel will be fielding its 22-nanometer "Merrifield" platform. This chip is unlikely to be targeted at the high end of the market, as it's a dual-core Silvermont in a market against quad Krait 450/A15 parts. Even if the latter ends up throttling to the point of not offering a performance advantage over Intel's parts, the marketing of "quad core" will make it difficult for Intel to compete, giving Qualcomm -- and potentially NVIDIA -- an edge.
Foolish bottom line
Now that we see Qualcomm isn't likely to put out a 64-bit mobile apps processor during 2014, nor is it likely to put out a 20-nanometer one, NVIDIA's chances in tablets (and maybe in smartphones) just got a whole lot better.