Nanotech - The Circuits Blog

Updated at 6:40 p.m. PDT, adding Microsoft Windows 7 and Apple Snow Leopard discussion.

Nvidia on Thursday posted a smaller loss than the year-earlier period but the graphics chip supplier is still grappling with costs related to a chip defect first addressed by the company last July.

Shares of the Santa Clara, Calif.-based company were up in after-hours trading.

Nvidia reported a second-quarter loss of $105.3 million, or 19 cents a share, better than the year-earlier period when it posted a loss of $120.9 million, or 22 cents a share.

Revenue was $776.5 million, down 13 percent, from $892.7 million reported in the second quarter of last year.

Excluding items (non-GAAP basis), Nvidia reported a profit of 7 cents a share, better than analyst estimates of a loss of 2 cents a share.

Jen-Hsun Huang, the president and chief executive officer, said the company's "business is recovering. Product demand is improving, and our strategic investments are leading to new growth." Nvidia expects revenue in the third quarter--ending October 25, 2009--to be up 5 to 7 percent over the second quarter.

Gross margin, a critical profit indicator, was 20.2 percent, above the 16.8 percent reported last year.

However, Nvidia's results were negatively affected by an additional net charge of approximately $119.1 million "to cover costs related to a weak die/packaging material set that was used in certain versions of its previous-generation chips. Although the number of units impacted by this issue remains consistent with the company's initial estimates a year ago, the cost of remediation and repair of impacted systems has been higher than originally anticipated," the company said in a statement.

In July 2008, a $196 million reserve was accrued for the purpose of supporting affected customers around the world. The weak die/package material combination is not used in any products currently in production, the company said.

As early as 2007, Hewlett-Packard listed laptop models affected by the defect. In August 2008, Dell also listed affected models. And Apple said in October that it would repair faulty graphics chips.

On a more positive note, Huang said that future operating systems from Microsoft and Apple will "stimulate growth" in 2010 because of new technologies that take better advantage of the graphics processor, making it a "powerful co-processor" that works in conjunction with Intel processors.

Microsoft's Windows 7 and Apple's Snow Leopard will including programming features called Direct Compute and OpenCL, respectively, that accelerate graphics-based processing for everyday computing tasks.

Microsoft has confirmed that the Nvidia "Tegra" chip is inside the upcoming Zune HD, a big win for Nvidia.

Microsoft Zune HD

This was reported earlier at Engadget and follows reports earlier this week.

"There's been a lot of chatter about us possibly putting the Nvidia Tegra chip in the Zune HD," Matt Akers, software development engineer in test at Microsoft, said in a June 19 podcast. "Well, we're going to go ahead and confirm that. Yes, the Zune HD does have the Tegra chip in it."

He added: "So much better battery life, graphics acceleration. This thing's like a mini laptop in your hand."

Tegra is the first processor Nvidia has built for power-frugal handheld devices, a major departure from the large, power-hungry graphics processors that it sells to the gaming rig and workstation markets.

The system-on-a-chip (SOC) uses less than 0.5 watts of power, an attribute the main Tegra processor inherits from its power-stingy ARM parentage. (And a tiny fraction of the 50-watt-plus ratings of the chipmaker's desktop graphics silicon.) The defining feature of the Tegra SOC, however, is the Nvidia GeForce graphics chip.

Nvidia Chief Executive Jen-Hsun Huang said at the company's analyst day on Tuesday that the Tegra processor is expected to account for half of Nvidia's business in a few years.

The rumors about Microsoft and Tegra go back to November. The first round of rumors put Nvidia's Tegra in a Microsoft phone (which some analysts still believe is a possibility).

To date, Tegra has 42 design wins, ranging from media players to smartphones to Netbooks, according to Michael Rayfield, general manager of Nvidia's mobile business unit, who spoke during Analyst Day. Out of those 42, about 18 are smartphones, he said. "You'll start to see those show up toward the end of this year."

The Zune HD--due later this year--comes with a 3.3-inch, 16:9 OLED (480x272 resolution) screen. And also includes an HD (high-definition) radio, HD (720p) video out, Wi-Fi, a Web browser (with tap-to-zoom technology), built-in accelerometer, and a touch-screen QWERTY keyboard.

The rumors appear to be true: Microsoft's Zune HD media player will use Nvidia's Tegra, a processor that will play a pivotal role in the chip supplier's future.

Microsoft Zune HD

(Credit: Microsoft)

PC Perspective reported Tuesday that the Zune chip had been confirmed by Nvidia "staff" at Computex, earlier this month.

Nvidia Chief Executive Jen-Hsun Huang said at the company's analyst day on Tuesday that the Tegra processor is expected to account for half of Nvidia's business in a few years. If this prediction comes true, Nvidia will bear little resemblance to the company it is today: a maker of large, power-hungry chips for gamers and professionals.

Tegra is the polar opposite of the hot, heat-sink-clad graphics processors that power the fastest gaming rigs today. Tegra uses less than 0.5 watts of power (compared, for example, with the Nvidia GeForce GTX 295, which is rated at 289 watts), an attribute the chip inherits from its power-stingy ARM parentage.

Tegra packs two ARM chips. One is the main application processor--based on the ARM11 core--which runs the operating system. Tegra's defining feature, however, is the Nvidia GeForce graphics chip: this is what likely caught Microsoft's eye. In total, Tegra integrates eight independent processors, according to Michael Rayfield, general manager of Nvidia's mobile business unit, who spoke during Nvidia's Analyst Day.

Audio codec technology has been developed by PortalPlayer, which Nvidia acquired in 2006, Rayfield said.

To date, Tegra has 42 design wins, according to Rayfield. "They range from media players to smartphones to smartbooks to Web pads," he said. Out of those 42, about 18 are smartphones. "You'll start to see those show up toward the end of this year," he said.

The smartphones are "household names, household carriers. Names you'll recognize," he said, possibly alluding to Microsoft, among other major brands. A total of 27 manufacturers are working on devices, he said.

Not everybody is impressed, however. "It's surprised me that it's taking as long as it is to get to tier-one (telecommunications carriers)," said Doug Freedman of Broadpoint AmTech. "Tegra has been available for over a year."

The Zune HD--due later this year--comes with a 3.3-inch, 16:9 OLED (480x272 resolution) screen. And also includes an HD (high-definition) Radio, HD (720p) video out, Wi-Fi, a Web browser (with tap-to-zoom technology), built-in accelerometer, and touchscreen QWERTY keyboard.

Updated at 4:30 p.m. PDT adding Tegra, Intel, and Ion discussions.

On Tuesday, Nvidia Chief Executive Jen-Hsun Huang said at the company's analyst day that the graphics processor will be an equal partner with Intel processors, citing Apple as an early trendsetter.

On other fronts, Huang said that the ARM-based Tegra processor is expected to account for half of Nvidia's business in a few years. He also repeated claims about Intel crimping the success of its Ion processor in Netbooks.

Nvidia CEO Jen-Hsun Huang

(Credit: Nvidia)

Huang said that "CPU-GPU co-processing" is the future of computing. (CPU stands for central processing unit. GPU for graphics processing unit.)

"Apple is an early indicator," Huang said during his opening remarks that were streamed over the Web, referring to the importance that Apple is placing on the graphics processor. "The MacBook Pro to the MacBook Air has a GPU," he said. And he waxed eloquent about how the performance and power efficiency of the updated version of the Air has benefited by having co-processors: an Intel CPU and Nvidia GPU.

"Doing the right job with the right tool is more efficient," he said, referring to the Air, which Huang claims runs longer and cooler with a GPU. Typically, ultra-thin laptops like the Air don't have a discrete (separate) Nvidia or ATI graphics processor.

Apple currently uses Nvidia GPUs across its laptop product line and touts the potential for GPUs on its Web site. "OpenCL (Open Computing Language), makes it possible for developers to efficiently tap the vast gigaflops of computing power currently locked up in the graphics processing unit," according to a statement on Apple's Web site.

And at the Apple Worldwide Developers Conference, an Apple executive expanded on this theme, explaining how Mac OS X will support GPGPU--general-purpose graphics processing unit--which lets a graphics chip run some computing jobs in addition to its ordinary job displaying graphics.

Huang also addressed its Tegra chip, which is an ARM-based design that integrates an Nvidia GeForce processor. Tegra is targeted at smartphones and Netbooks. Responding to a question from an analyst, he said that in a few years Tegra may represent half of its business, with the rest divided up between the professional (Tesla, Quadro) and the consumer GeForce markets.

Huang also repeated his assertion that Intel is using pricing--what he called "subsidies"--and "MDF" (market development funds) to prevent Nvidia from selling more of it Ion processors to customers. He claimed the success of the Ion processor would be two to three times greater without Intel interference.

Nvidia has its own grand scheme for Netbooks, the tiny laptops that have gained wide acceptance running on software and hardware from Microsoft and Intel, respectively.

Michael Rayfield, general manager of Nvidia's mobile business unit

(Credit: Nvidia)

At the giant Computex conference starting Tuesday in Taiwan, Nvidia will be showing hardware running on its Tegra processor and Windows CE, the version of Windows used most prominently to date in business-use handheld computers. And, down the road, Nvidia has high hopes for devices based on Google's Android.

Tegra is a system-on-a-chip that integrates a processor based on a design from U.K.-based ARM and Nvidia's GeForce graphics silicon, among other functions. The goal is to bring robust PC-like graphics to small devices such as Netbooks and handheld devices--the latter also referred to as mobile Internet devices.

In a break from Computex tradition, Nvidia will have phone companies in tow. "We're bringing the carriers in. I've got 100 people showing up from carriers at Computex," Michael Rayfield, general manager of Nvidia's mobile business unit, said in a phone interview Friday.

Tegra will be shown at the trade show in devices that manufacturers "are about ready to release into production," Rayfield said.

"The Internet is all about (Adobe) flash and HD (high-definition) now so we've built a platform that can do that," he said. "There are two operating systems we support. Microsoft Windows CE and, as it becomes more interesting for large screens, (Google) Android," Rayfield said.

"We do Android for smartphones and we're working to do hardware acceleration on Android as it goes to larger displays," Rayfield said. In February at the Mobile World Congress in Barcelona, Nvidia announced that it is working with Google and the Open Handset Alliance to get its Tegra processor into phones based on Google's Android operating system.

Android will likely appear commercially in larger devices, such as Netbooks, by the middle of next year, Rayfield said. "Android, as it stands now, does not do hardware acceleration," he said, referring to graphics-based acceleration of video and other multimedia applications. "We've already got 720p acceleration on Android internally," he said. 720p is a lower-resolution standard for high-definition video.

Rayfield continued. "Android has got a roar ahead of it but I think it's three of four quarters from a large-screen device. And the market wants something interesting before that."

Nvidia is looking to its Tegra chip for growth and Windows 7 for new opportunities.

Speaking during the company's earnings conference call Thursday, Nvidia Chief Executive Jen-Hsun Huang said one the company's biggest opportunities is graphics-specific applications on Windows 7. (Nvidia earnings summary here.)

Huang waxed enthusiastic about a technology he called "DirectX Compute"--which taps into the hundreds of processors inside many of today's graphics processors. "Finally it's possible to do video editing...that's not excruciating," he said. "This is going to be one of the major usage models for Windows 7," he said.

Nvidia also released a statement Thursday about DirectX Compute, saying it will boost the "speed and responsiveness" of Windows 7. This is analogous to what Apple and Nvidia have been saying about graphics on Apple's upcoming Snow Leopard operating system.

Huang also made it very clear that Tegra is a big part of Nvidia's future. Tegra is a system-on-a-chip that integrates an ARM applications processor and Nvidia's GeForce graphics silicon, among other functions. The goal is to bring robust PC-like graphics to small devices.

"Of all the products in our company, Tegra long term has the largest TAM (Total Available Market)," Huang said. "We've been investing in Tegra for about four years...There's 500 people working on Tegra."

Huang said--referring to Tegra--that Nvidia has built a "computer completely from scratch that's the size of a penny" that delivers a full high-definition experience and "consumes less than one watt." He added that this is the second computing revolution and "we want to be all over it."

Huang also talked about Nvidia's Ion platform. When Ion was launched in December of last year, the emphasis was initially on boosting graphics performance on Intel Atom-based Netbooks. But Huang said Thursday that Ion applies broadly to any products that use its 9400M GeForce chipset, such as Apple's MacBooks. The bulk of Nvidia Ion chipset revenue is coming from Apple, he said.

In related news, Nvidia released Windows 7 graphics drivers on Thursday, in conjunction with the release candidate of Windows 7. The Nvidia Windows Hardware Quality Labs (WHQL)-certified graphics driver for PC desktops and notebooks is available for its Ion, GeForce, and Quadro products. (Like a number of hardware makers, Nvidia had issues with it Vista drivers.)

Nvidia cited performance testing on Windows 7 at technology Web site Anandtech, which said that "performance was rock solid and the compatibility/stability aspects of the driver far exceeded our expectations."

Samsung's NC20 Netbook shows that Via Technologies' Nano processor can keep up with the Joneses. But will Nvidia be given the chance?

CNET Reviews' Dan Ackerman reviewed the new Samsung NC20 Netbook and found it not wanting in a matchup with the Asus Eee PC 1000HE, packing Intel's latest and greatest Atom N280.

Samsung NC20 Netbook packs a Via Nano processor--not an Intel Atom.

(Credit: CNET Reviews)

Though Nano is a necessary industry antidote to Intel's grip on the Netbook market, in the scheme of market share numbers, Via's chip is a blip at best.

I find it almost amusing when Intel lists Via as one of two competitors (Advanced Micro Devices being the other) in its Form 10-K filings. It's a fair analogy to say it's like a mom-and-pop coffee shop among a dense cluster of Starbucks stores. You may draw a few customers but 99 percent of the market is going to go to Starbucks.

Via helped pioneer the Netbook market in early 2008 by powering one of the earliest high-profile products, the Hewlett-Packard 2133 Mini-Note. In fact, Via was already supplying the inexpensive, low-power Via C7M--Nano's predecessor--in 2005 when the Atom concept was just a glimmer in Intel's eye.

The Netbook market vacuum didn't last long, however. Within months of Atom's arrival, the Via C7M was squashed by the Intel juggernaut, not to rise again. (Largely due to the fact that the C7M was slow, as one reader points out.)

The sober reality is that Via faces the same daunting challenge that Nvidia does: competing with Intel. The largest Netbook vendors--Asus and Acer--are wedded to Intel processors and chipsets, as are most of the other major players. An incremental increase in processor performance from Via won't necessarily tempt PC makers to drop Atom.

Nvidia's predicament is even more difficult because the GPU supplier can offer something that Intel can't: great graphics performance in a Netbook.

Nvidia faces a Catch 22. It needs a lot of Netbook design wins to make decent profit margins but customers won't sign up for Nvidia's Ion in the face of Intel's bundling incentives.

Alas, Nvidia's Ion seems destined only for tiny desktops for now. Nvidia has been shopping its Ion platform (Atom + Nvidia 9400M graphics) around and has had some success with top-tier PC companies looking to design diminutive desktops. But not any success to date in the Netbook space (although some smaller Asia-based Netbook makers are expected to announce Ion-based Netbooks at Computex in June).

Then there's Tegra. This Nvidia chip platform may have more success in the category of so-called "$99" Netbooks that are more akin--in the way they are offered to customers--to cell phones than laptops. These Netbooks, as depicted by Qualcomm, would be always-on and not part of the WinTel (Windows-Intel) ecosystem.

Nvidia went out of its way this week to demonstrate a concept device at CTIA in Las Vegas running Windows CE. Nvidia basically tore out the guts of an Intel-based HP Mini 1000 Netbook and replaced it with Tegra parts, according to a Nvidia spokesman Derek Perez, who attended CTIA this week.

Texas Instruments sent out a little reminder on Monday that it won't be a cakewalk into the smartphone market for newcomers Intel and Nvidia.

While Intel announced LG Electronics as its first smartphone customer and Nvidia hawks its initial mobile phone technology platforms to prospective customers, TI continues to upgrade its arsenal of ARM-design-based processors, which have been shipping for years to cell phone customers. (Samsung and Palm--and the latter's newest Palm Pre--are among TI's customers.)

At the Mobile World Congress in Barcelona on Monday, TI announced a new OMAP 4 mobile chip platform that will allow smartphones to do 1080p video record and playback and integrate 20-megapixel cameras. TI claims the OMAP 4 will deliver 10-times-faster Web page loading times, more than 7 times higher computing performance, and 10 times better graphics performance than its current OMAP processors.

The OMAP 4 processor is based on the dual-core ARM Cortex A9 MPCore supporting symmetric multiprocessing (SMP) and capable of speeds of more than 1GHz per core, according to TI. Basic ARM processor designs are licensed by U.K.-based ARM Holdings to companies like Texas Instruments and Qualcomm that tweak the design and then manufacture the chip.

OMAP 4 platform and development tools are expected to sample in the second half of 2009, with production expected by the second half of 2010.

TI also said Monday that it is adding to the OMAP 3 family with silicon based on 45-nanometer processor technology. (Intel is also using 45-nanometer manufacturing technology for its upcoming Moorestown smartphone chip.)

The OMAP36x series will run at speeds up to 1GHz, offer a dedicated graphics hardware accelerator for 3D gaming, and support 720p high-definition video recording and playback and 12-megapixel cameras.

The silicon is scheduled to sample in the third quarter.

Nvidia is working with Google on Android phones as it veers off from its Windows-Mobile-only strategy.

On Monday, at the Mobile World Congress in Barcelona, Nvidia announced that it is working with Google and the Open Handset Alliance to get its Tegra processor into Android phones. Tegra is a system-on-a-chip that integrates an ARM applications processor and Nvidia's GeForce graphics silicon, among other functions. The goal is to bring robust PC-like graphics to small devices.

Tegra aims at Android phones

(Credit: Nvidia)

"We welcome Nvidia's support of Android on Tegra," Andy Rubin, Google's senior director of mobile platforms, said in a statement.

Since spring of last year, Nvidia has been talking up Tegra as a chip aimed exclusively at Windows Mobile smartphones. Not anymore. "By supporting Android, manufacturers and operators can now easily use a Tegra processor to build mobile phones," Nvidia said in a statement.

Nvidia also said Monday that its Tegra chip will enable a $99, always-on, always-connected mobile internet device (MID) capable of playing back high-definition video and going for "days between battery charges." This would be based on Windows Mobile, according to Nvidia.

The Santa Clara, Calif., company said it has partnered with ST-Ericsson to add 3G communication capability to the Windows platform.