Nvidia's chief executive officer and president Jen Hsun Huang said his company would become much more aggressive in the market of core-logic sets with built-in graphics going forward and that third-party chipset designers may find themselves in tough situation if they do not develop advanced graphics technologies going forward.
Nvidia to Make IGPs for Intel Chips
Graphics chips and core-logic sets designer Nvidia Corp. said it would offer chipset with built-in graphics core for microprocessors by Intel Corp, which will be a major change in the company's strategy for chipsets, as previously Nvidia concentrated only on high-end core-logic for Intel's central processing units, not on the so-called integrated graphics processors (IGPs) usually found in cost-effective computers.
“With the recent acquisition of AMD, we are in a unique position to offer branded integrated graphics for the Intel processor market. Market demand for our product has been very high. We will respond to market demand and offer our first Intel integrated solution early next year. We expect this will significantly increase our addressable market for MCPs,?said Jen Hsun Huang, Nvidia's chief in a conference call with analysts.
Previously Nvidia's management had downplayed the importance of the market of cost-efficient core-logic sets for Intel processors, saying that it would hardly be able to earn sufficient profits there due to low margins. However, now that ATI is going out of the Intel chipset business and will pose more competition in the market of chipsets for AMD, Nvidia seems to be reconsidering it positions and is planning to change its tactic.
Nvidia: DirectX 10 Will Help IGPs for Intel's Chips to Compete
The strategy does not seem to be conditioned only by the acquisition of ATI by AMD. In addition, Nvidia's chief executive officer suggested that third party core-logic designers ?such as Silicon Integrated Systems Corp. and Via Technologies Inc. ?would not be able to compete against Nvidia going forward, if they do not develop a cost-efficient, yet competitive, graphics core supporting DirectX 10 application programming interface (API), which would mean that Nvidia will be in an unique position to offer DirectX 10-compatible IGP for Intel processors.
Even though it is not obvious that the very first integrated chipset from Nvidia for Intel central processing units will carry a DirectX 10 graphics, Nvidia's chief believes that as soon as his company introduces the appropriate “DX10?core-logic next year, the other chipset makers will find themselves in a tough situation.
“I think our chipset business is going to grow. And the reason for that is partly because of the dynamics I've explained already about Vista and DX10?Vista, DirectX 10 and high-def have just raised the bar, so that second-tier core logic suppliers are going to have a much, much harder time competing in the future. They either would have had to invest already hundreds of millions of dollars to get here with DX10, or they are just not going to be able to compete next year,?Mr. Huang stated.
Nvidia Looking Forward $140 Million of ATI's Intel Chipset Market Revenue
But while DirectX 10 support is important for add-in graphics boards, advanced graphics may not be crucial for graphics cores located inside cost-effective chipsets for low-cost computes. Even to run Microsoft Windows Vista graphics cores should only be compliant with DirectX 9 API, thus, if Nvidia's core-logic sets with GeForce 8 graphics core that features DX10 support are be significantly more expensive compared to products by Intel, SiS or Via, they will hardly be popular on the market.
Nevertheless, even supplying moderately popular nForce IGPs for Intel chips, Nvidia will either be able to sustain or improve its success with its core-logic products even after AMD becomes more aggressive with ATI/AMD chipsets on the market. Given that Intel's microprocessor market share is approximately three times higher than that of AMD, potential revenue that Nvidia may obtain there may reach hundreds of millions of dollars. For example, ATI Technologies blamed lower than expected sales of chipsets (for Intel's microprocessors) in its last quarter for $140 million lower revenues, which outlines how large and significant this market is.
Chipset Market Set to Consolidate ?Former ATI Chief
“I think our core logic business would do very well. I also think that our serviceable market is going to grow dramatically with the branded Intel core logic business. I think that is going to be big for us,?Mr. Huang said.
Although Nvidia's chief executive officer may be overoptimistic about the successful penetration of the chipset market, Dave Orton, the former chief executive of ATI Technologies, said in an interview earlier this year that n a couple of years time there would be two third-party chipset left ?ATI and Nvidia Corp. ?in addition to Intel Corp.
Mr. Orton also expressed belief that given that the demand towards high-performance graphics is only going to rise in future and there are only two developers of truly high-performance graphics processors, other third parties would not be able to offer as powerful graphics cores, as AMD/ATI and Nvidia, thus, will become uncompetitive eventually.
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