Nvidia not targeting Tegra 4i - chip with LTE modem - at U.S. market initially

The first products with Nvidia's Tegra 4i chipset, which combines the company's application processor with an LTE modem, will be rolling into the market in the first half of next year, but likely will not be aimed at the U.S. market, according to CEO Jen-Hsun Huang.

Discussing Nvidia's third-quarter earnings on a conference call Thursday with analysts, Huang said "Tegra 4i projects are in development and that we expect unlikely to be announced in Q1 and ship no later than Q2. I appreciate you asking and we didn't announce it, but Tegra 4i has now been certified through AT&T. And we are really excited about that."

Huang has previously said that the reason why Nvidia chose to get its modem certified by AT&T Mobility (NYSE:T) "is because it's the most rigorous and if we get through AT&T, you're pretty much set on just about vastly the Western world's open markets."

Despite that certification, Huang said that investors should not expect Tegra 4i-powered gadgets to come to the U.S. anytime soon. "Well, it's our first voice modem product. And so my expectations are that the devices will be quite terrific and I think people will be delighted by the OEM that it comes from," he said, according to a Seeking Alpha transcript. "It will likely be global, but not U.S. You really need to have CDMA in the U.S. to be successful. And so we are not targeting U.S. with respect to phones, we are targeting outside the U.S. And so let's go then wait and see until Q2 timeframe--Q1 timeframe when it gets launched in Q2 timeframe when it gets shipped. But my expectation is that it should be really wonderful."

One interesting aspect of the Tegra 4i is that is uses software-defined radio technology from Icera, allowing the chip to switch seamlessly between LTE and 3G radio frequencies and be configured for new frequencies even after it is sold to a customer.

Nvidia's absence from the U.S. market could help (NASDAQ:QCOM) widen its lead in the space. As The Verge notes, so far this year Qualcomm's silicon has powered high-profile devices including LG Electronics' G2, Sony's Xperia Z1, the Nexus 5, HTC's One family and even some of Samsung Electronics' Galaxy S and Note devices.

According to research firm Strategy Analytics, Qualcomm, MediaTek, Intel, Spreadtrum and Broadcom captured the top-five revenue share rankings in the cellular baseband processor market in the second quarter. The firm estimated that Qualcomm captured a record 63 percent revenue share in the cellular baseband market in the second quarter, followed by MediaTek with 13 percent revenue share and Intel with 7 percent revenue share.

In the third quarter, Nvidia reported net income of $118.7 million, down from $209.1 million in the year-ago period. Revenue was $1.05 billion, down from $1.20 billion in the year-ago quarter. Nvidia said revenue in the fourth quarter would be $1.05 billion, plus or minus 2 percent, which was just shy of Wall Street's expectations, according to both Bloomberg and Reuters.

Wang and Needham analyst Rajvindra Gill suggested Nvidia should dump its Tegra mobile chip business and stick to more profitable areas such as gaming PCs, automotive and enterprise computing.

"What they should do is try to spin out Tegra or sell the business related to phones and tablets," Gill told Reuters. "Become a much higher margin company and continue to return capital to shareholders."

For more:
- see this release
- see this Seeking Alpha transcript
- see this Reuters article
- see this Bloomberg article
- see this The Verge article

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