NVIDIA (NASDAQ: NVDA) might not have made material progress in mobile, and the continuously shrinking PC market is a threat to its graphics processing unit business. But, one area where it is making rapid progress is automotive. Everything is expected to get connected to the Internet, be it homes or a simple alarm clock, under the concept of the Internet of Things, and cars won't be left behind, either. In addition, self-driving cars are the next hot trend in automotive, and NVIDIA is not sparing this market.
By 2019, the connected car market will be worth $132 billion, according to Transparency Market Research, growing at a phenomenal annual rate of almost 35%. On the other hand, as IHS Automotive points out, self-driving cars could account for 9% of global auto sales in 2035, hitting 11.8 million units.
NVIDIA recognized these opportunities early on and seems to have seized the initiative with the Tegra K1 chip, and Google (NASDAQ:GOOG) (NASDAQ: GOOGL) might turn out to be its marquee customer.
In January, at the Consumer Electronics Show, NVIDIA announced that its new Tegra K1 processor will help self-driving cars become mainstream. With this chip, NVIDIA is bringing supercomputing technology to cars, as the GPU powers 10 of the most energy-efficient supercomputers in the world. Based on the Kepler architecture, the Tegra K1 is armed with a quad-core CPU and a 192-core GPU, enabling camera-powered advanced driver assistance systems.
Pedestrian detection, blind-spot monitoring, lane-departure warning, street sign recognition, and driver alertness are some of the features that NVIDIA is looking to power with its chip. In addition, these applications are expected to generate a sizable amount of data, requiring efficient supercomputing capabilities. For example, Google's Self-Driving Lexus RX 450H collects 1GB of visual data every second.
Visual computing will form the core of self-driven cars, as several objects will have to be handled and evaluated in real-time. This is where NVIDIA's expertise comes into play. The GPU specialist powers some of the world's fastest supercomputers, and it believes that it will be able to leverage such technology in self-driving cars. NVIDIA provides the Jetson Pro development kit, allowing automakers to create and test applications such as in-car infotainment, advanced driver assist systems, and collision avoidance.
Big names are already with NVIDIA
NVIDIA's technology has found a number of big-name takers, 14 to be precise. The likes of Audi, Porsche, BMW, Mini, Peugeot, and Tesla all have partnered with NVIDIA to advance their technology. In fact, there are already 4.5 million cars on the road with NVIDIA chips in them, and the company expects this number to grow to 25 million in the next few years. Since NVIDIA is the technology provider for the Open Automotive Alliance, it has a strong head start in this area.
In fact, Audi recently showcased a self-driving car at NVIDIA's GPU Technology Conference. The car is based on the Tegra K1 and uses Audi's own module to process real-time visuals from several cameras. This example illustrates NVIDIA's position in autonomous cars, and it won't be surprising if Google opts for the Tegra for its own self-driving vehicles.
NVIDIA's Director of Automotive, Danny Shapiro, recently called out a blog post on Google's self-driving initiative. He stated that his company has been mastering visual computing for 20 years, indicating that its GPUs can be an ideal foil for Google's self-driving cars.
Moreover, it has been reported that Google is already tapping NVIDIA in automotive. At Google I/O, the tech giant announced Android Auto, putting its mobile platform into cars. The voice-powered Android Auto will provide drivers access to several services such as Google Maps, Play Music, voice-enabled messaging, and other apps in an intuitive way.
NVIDIA is reportedly the company powering the reference hardware. In a recent blog post, the company stated, "Scratch just about anywhere beneath the surface of Google I/O's news about Android, and you'll find NVIDIA and our Tegra mobile processor." Reading between the lines, it looks like the chipmaker will provide the computing power for Android Auto. In addition, since Android Auto is an Open Automotive Alliance venture, the probability of NVIDIA powering it increases.
The bottom line
Evidently, NVIDIA's automotive business is gaining traction. The market is huge, and NVIDIA is partnering with the right companies to make the most of the opportunity. The company has come a long way from powering personal computers and is moving into the technology of tomorrow, where automotive could be its next big market.
Harsh Chauhan has no position in any stocks mentioned. The Motley Fool recommends Google (A shares), Google (C shares), and Nvidia. The Motley Fool owns shares of Google (A shares) and Google (C shares). 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.