Nvidia CEO Jen-Hsun Huang said the chipset maker is bullish on tablets but will not make a larger dent in the smartphone market until it integrates its Tegra application processor line with LTE modems, something it is working on now.
Nvidia acquired cellular modem maker Icera in 2011 but has yet to fully combine its processors with Icera's line of LTE modems. The company is currently selling Icera's stand-alone LTE modems and expects to offer a combined Tegra processor and Icera LTE modem sometime this year.
Huang, speaking on the company's fourth-quarter earnings conference call, explained that Nvidia has had success in tablets with its processors. However, in smartphones, Huang acknowledged Nvidia needs a combined processor-modem product to be successful. Nvidia will face market leader Qualcomm (NASDAQ:QCOM) in smartphones.
"This is an area that we will likely need to have an LTE modem in order to be successful and that's the reason why we work so hard to accelerate our LTE modem to market," Huang said, according to a Seeking Alpha transcript of the conference call. "We're working around the clock and this is--with an LTE modem, the Tegra processor and our software capability, we will be able to address a much larger phone opportunity going forward. And so we'll have some phone success this year, but we're not expecting to have a whole lot of phone design wins until we engage the market with LTE."
In January at the Consumer Electronics Show Huang unveiled the Tegra 4 chip, Nvidia's latest application processor, which the Nvidia chief touted as the world's fastest mobile processor. The company is working to integrate Tegra 4 with its Icera LTE modems.
For the company's fourth quarter, which ended Jan. 27, Nvidia's net income rose to $174 million, up from $116 million a year ago, while sales climbed 16 percent to $1.1 billion.
In interviews after the company's quarterly conference call, Huang reiterated the importance of LTE integration. "There's a segment of the marketplace where connectivity is not needed. But going forward, the largest TAM [total addressable market] is going to be in the LTE-connected device market," he told Barron's. "The baseband has changed from being a separate part. Nearly all our opportunities have been where LTE not required. When we are in situations where LTE is required, it's harder for us to compete for that business because competition has had the edge in that."
- see this Bloomberg article
- see this Reuters article
- see this The Verge article
- see this ZDNet article
- see this Barron's article
- see this Seeking Alpha transcript
Qualcomm, Nvidia and other chipset vendors need to stand out
Nvidia unveils Tegra 4 chipset, calls it world's fastest mobile processor
MediaTek jumps into quad-core chipset race with Qualcomm, Nvidia
Nvidia buying Icera for 3G/4G baseband processor expertise
Broadcom to take on Qualcomm with LTE chips next year
MediaTek unveils low-cost dual-core Android chipset