Prior to CES 2015, NVIDIA (NASDAQ:NVDA) held a press conference at which it disclosed its next-generation Tegra X1 processor. As I have written about previously, this is a very impressive high-end system-on-chip, and I look forward to seeing how it does in production devices (NVIDIA seems to be really focused on automotive applications with its Tegra chips).

However, there's one storyline among NVIDIA's Tegra efforts that I have been following for quite some time: the fate of the company's cellular baseband business. As investors may recall, NVIDIA purchased a company known as Icera back in 2011. This acquisition was supposed to get NVIDIA into phones, particularly once NVIDIA integrated Icera modems with its Tegra processors.

Back in early 2013, NVIDIA launched the stand-alone Icera i500 LTE modem, and then in 2014, it launched Tegra 4i, an integrated apps processor and Icera i500 intended for mainstream phones. Tegra 4i didn't fare too well commercially, and shortly thereafter, NVIDIA told investors it didn't plan to launch a successor to the 4i.

In an article published last month, I suggested there was overwhelming evidence that pointed to NVIDIA winding down its baseband efforts. In the article, I made the following suggestion:

Failure to launch an i500 successor at the next CES in January would be, in my humble view, the final signal that NVIDIA has exited cellular baseband processors.

With NVIDIA's CES press conference having come and gone, and with not a mention of a successor to i500, I now fully believe NVIDIA is done with cellular basebands.

What does this mean for Tegra?
In NVIDIA's press release for the Tegra X1, the company claims that the chip is built for "embedded products, mobile devices, autonomous machines, and automotive applications." Three of those four applications either don't require a stand-alone baseband or could work just fine with a stand-alone baseband from another vendor such as Qualcomm or Intel.

Within the "mobile devices" application (the one segment listed above where a bundled baseband might be helpful), NVIDIA seems to be targeting mainly gaming-centric tablets and Chromebooks. Most of those devices are Wi-Fi only, and in the case where cellular versions are needed, a stand-alone baseband from one of the two aforementioned vendors will work just fine -- just look at the Nexus 9.

In smartphones, not having an internal baseband solution is going to make Tegra a tough sell in those markets. However, even with a stand-alone category 4 LTE solution, NVIDIA didn't win the Nexus 9, and in the variant of the Xiaomi Mi3 that it won with the Tegra 4 way back when, the modem used was from Spreadtrum. In fact, beyond the few Tegra 4i wins, I am not aware of any smartphone design that used the stand-alone i500 baseband.

All told, it seems that Icera didn't work out for NVIDIA. The bad news is that the initial purchase price for Icera and any subsequent modem development that took place didn't pay off. The good news is that those expenses have likely been coming down and will be completely eliminated going forward -- boosting the bottom line. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.