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NVIDIA's Risky Mobile Strategy

by Sravan Kundojjala | Feb 22, 2012

Nine months after its acquisition of Icera, NVIDIA officially kicked off its cellular platform strategy by announcing the ZTE Mimosa X, which is the first phone to feature Icera’s ICE8065 HSPA+ baseband. Previously, we have analysed NVIDIA's Icera acquisition in a separate blog post.

NVIDIA is targeting the mainstream smartphone segment with its new cellular platform strategy. We believe that NVIDIA is pursuing a 'risky' strategy (multi-core only) and may have to sacrifice its margins to address the mainstream segment. NVIDIA's competitors Qualcomm, Broadcom, ST-Ericsson, MediaTek and Spreadtrum have single core baseband-integrated apps processors that can address the mainstream smartphone segment with better margins.

It's no secret that every major mobile chipset company is now pursuing a 'complete platform strategy' to capture more value per design-win and NVIDIA still lacks technology pieces such as connectivity ICs (WLAN, Bluetooth, NFC, GPS and FM radio). NVIDIA may have to go for further acquisitions to fill this connectivity chip portfolio gap. Market leaders Qualcomm and MediaTek also pursued acquisitions to fill their connectivity chip portfolio gap.

NVIDIA is currently focusing on the performance smartphone segment but this segment is already cornered by Apple, Samsung and Qualcomm. NVIDIA ranked number six in the smartphone CPU market in 2011, by our estimates. The company should consider releasing a single-core version of its Tegra 2 processor to compete effectively and to increase its addressable market, in our view. NVIDIA is expected to have baseband-integrated Tegra processors ready by end of this year which could potentially allow the company to participate aggressively in the sub-$150 smartphone segment. But NVIDIA should also consider low-cost ARM architectures such as Cortex-A5 to improve its volume market share.

Sravan Kundojjala

Client reading : Smartphone Apps Processor Market Share 2011: Qualcomm Takes the Lead in Units and Revenue ; NVIDIA-Icera Combination Creates a Credible Challenger to Qualcomm

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