Yesterday NVIDIA held their quarterly earnings call and Tegra was the hottest topic, being mentioned close to 50 times. Even though Tegra only accounted for $360 million in 2012 (roughly 9% of NVIDIA’s revenue), investors had many questions about the future of the mobile application processor business.
Earlier in the year, analyst were expecting anywhere from $400-600 million in Tegra revenue in 2011, but that number fell short when Tegra 2 design wins trailed off as manufacturers moved on to Tegra 3 products and competition from Samsung LSI and Qualcomm increased.
NVIDIA has invested over $2 billion into their Tegra division and company CEO Jen-Hsun Huang has said in the past that if you want to build and sustain a world-class SoC (system-on-a-chip) business, then you need that business generating up to $1 billion in revenue to remain competitive.
Unfortunately, it does not look like 2012 will be the year that Tegra revenue reaches $1 billion. NVIDIA said on their earnings call that Tegra revenue should be up 50% year over year, which is around $540 million in 2012.
Jen-Hsun Huang cut his guidance for Tegra revenue in 2012 most because of the loss of Samsung’s business. Samsung was one of NVIDIA’s largest customers last year, but now it appears that Samsung will stick with using their own Exynos processor in the majority of their products. There were also hopes that NVIDIA could land the upcoming, larger version of the Kindle Fire, but rumors suggest that Texas Instruments will maintain that business with their lower-cost OMAP processor.
Having said all that, there are still some bright spots for NVIDIA coming up. Jen-Hsun Huang had a hard time containing his excitement over the heavily-leaked HTC One X. In a response to a question about the competitive landscape, Jen-Hsun said, “And so by partnering with HTC — and they are a fantastic company. I’m not suggesting we announce any products here, but surely, a partner like HTC would be fabulous for NVIDIA to partner with.”
HTC has stumbled recently, but I believe they still have the potential to become the number one manufacturer of Android devices. They recently formed their Studio division to regain their edge and have decided to focus on fewer hero products. All signs tell us that NVIDIA won their flagship device the One X, which is already has orders from 20 carriers around the world. NVIDIA is also rumored to power HTC’s next 10 inch Android tablet, codenamed Quattro (or Vertex or One XL).
In addition to HTC, NVIDIA has also partered with LG and Fujitsu on upcoming Tegra 3 phones. We expect many of these products to be announced at Mobile World Congress 2012, which we have dubbed the quad-core phone show.
No release dates have been provided for any of these Tegra 3 phones, but NVIDIA said they “expect to announce and ship them this quarter.” That means we could see some devices arriving by next month.
Finally, NVIDIA also provided an update on their recently acquired Icera modem. Jen-Hsun showed his enthusiasm for this technology by saying “Icera is going to prove to be one of the smartest and one of the best acquisitions in our history.” NVIDIA will ship Icera modems in mobile devices this year “for sure” and we expect Icera to be integrated into Tegra by early 2013.
I have only owned one Tegra 3 product, the Asus Transformer Prime tablet, but it just so happens to be my favorite Android device. It will be interesting to see how that all day and all night battery life translates over to smartphones.
Mobile World Congress is just weeks away, so we will find out soon.