NVIDIA (NVDA -2.73%) is making noise -- moving toward a custom core approach with its mobile processors. The next iteration of the new NVIDIA Tegra K1 chip is expected to offer more targeted performance and consumption, and a challenge to Qualcomm (QCOM -2.72%) in the smartphone arena.

The Motley Fool's Evan Niu got a chance to check out the new chip at NVIDIA's booth at the 2014 Consumer Electronics Show in Las Vegas. In this video Evan chats with Rex Moore from the exhibit floor about the opportunities in this space, and what it means to Qualcomm.

A full transcript follows the video.

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Rex Moore: Next thing let's talk about is chips. You saw the nice, impressive NVIDIA booth. What did you think of their new chip?

Evan Niu: Yes, I just came from NVIDIA's booth, and talking to them about their new Tegra K1, a brand new chip they announced earlier this week. Really impressive graphics; they're talking console-level graphics on a mobile chip, which is pretty impressive. We were seeing some pretty nice things running on a tablet -- stuff that's better than the PlayStation 3, which they also power -- some really high-level stuff there.

But also, on the next iteration of that K1 chip, they're going to finally be going to more of a custom core approach. I think that they led this race to, "How many cores can you get into a processor?" but that's not necessarily the best solution, in a lot of cases.

They're going to be taking the design to another level in terms of more sophisticated -- going to more custom designs -- which should really allow you to pinpoint performance and consumption a little bit better.

Really, that will put some heat on Qualcomm, because they haven't had as much traction in smartphones. Qualcomm has really led the way because they have a custom approach. Apple also has a custom approach, but NVIDIA is now stepping into the game.