Nvidia expects flat mobile chip sales, focuses on LTE

Thu Apr 11, 2013 1:38pm EDT

By Noel Randewich
    SANTA CLARA, Calif., April 11 (Reuters) - Nvidia Corp
 expects its mobile processor business to remain flat
this year as it focuses on upcoming chips with high-speed LTE
technology attractive to smartphone makers, the chipmaker's CEO
said on Thursday.
    As consumers increasingly choose tablets and smartphones
over personal computers, Nvidia has been looking for ways to
diversify beyond its core business of designing graphics chips
for PCs. 
   Jen-Hsun Huang, CEO and co-founder, told investors at a
conference that his company has sacrificed some sales of its
Tegra mobile chips in the near term in order to focus on
integrating Long Term Evolution (LTE) features on upcoming
versions, making them compatible with high-end carrier networks.
    Combined with a slumping PC industry, that strategy is
putting pressure on Nvidia in the first half of 2013, Huang told
analysts at a conference.
    "We're confident that as we go into the second half, growth
will return," he said. "How do we feel about the Tegra business?
 This year Tegra will be about flat."
    Global PC sales plunged 14 percent in the first three months
of the year, the biggest decline in two decades of keeping
records, as tablets continue to gain in popularity and buyers
appear to be avoiding Microsoft Corp's new Windows 8
system, according to IDC. 
    Nvidia made inroads in tablets last year but competition
from Qualcomm has Wall Street concerned it may struggle
to keep its mobile business growing. 
    Its lack of LTE technology has kept Nvidia out of the
high-end smartphone market, dominated by Qualcomm.
    Nvidia's Tegra 3 mobile processor is used in Google's
 Nexus 7 launched last year, one of only a handful of
tablets to make inroads against Apple's iPads. 
    But reflecting growing competition, Google has chosen
Qualcomm's Snapdragon processors instead of Nvidia's latest
Tegra 4 chips to power a new version of the Nexus 7 tablet
expected to launch around July, Reuters reported last week.
 
    The Tegra 3 chip is also used in Microsoft's 
Surface Windows RT tablet, which has failed to capture
customers' interest since its high-profile launch last October.
    Analysts expect Nvidia's revenue to slip almost 1 percent
for the fiscal year ending in January 2014, according to Thomson
Reuters I/B/E/S. 
    Shares of Nvidia were down 2.8 percent at $12.47, in line
with other companies in the PC industry.
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