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.
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."
... Read moreAt Intel's investor meeting Tuesday, CEO Paul Otellini discussed how the company is moving to system-on-chip technology in a big way.
Otellini began by saying that the market outlook remains positive. "A little better than we expected. So far, so good." He said he was "more firm in my belief that we will see seasonality in the second half," alluding to Intel's expectation that the PC market should pick up in the second half of the year. Otellini added that Gartner's forecast of a PC sales decline between 9 and 10 percent in 2009 may be too pessimistic.
Intel CEO Paul Otellini answers a question during the Intel investor meeting Tuesday
System-on-chip (SOC) opportunities will be driven by Intel's upcoming 32-nanometer technology. "All that you're doing is reducing (a computer) system to a single chip," he said. Market segments that will benefit from this technology are Netbooks, smartphones, and embedded devices, he said, adding that Netbooks and smartphones each represent a $10 billion market opportunity by 2011.
Otellini talked up Intel's new relationship with Taiwan Semiconductor Manufacturing Co., which involves "deep collaboration" on the Atom SOC chips used in smartphones. It means, he said, "taking Atom and porting it over to the TSMC process, to help further Intel architecture into those new markets."
Traditional PC markets will give way to "targeted micro-segments" such as the high-end desktop gaming segment, exemplified by PCs from Voodoo and Alienware, Otellini said. "The old big, beige, boring desktop is dead." Intel's upcoming Larrabee graphics chip will address this market, in addition to standard multicore processors.
The consumer desktop market will be transitioning to iMac-style all-in-one systems, Otellini said. There will be Atom-based "Nettops," small entry-level computers priced at a couple hundred dollars, he said. The desktop market will see "small growth" as people incrementally replace the 800 million units in use.
Otellini said Intel will mix and match technology across different product segments very quickly now--the number of cores and the type of graphics, for example, will be quickly rejiggered across different product categories.
Intel views its fab (factory) strategy as extremely important. Otellini said that Intel is one of the few companies that has committed to a next-generation 22-nanometer manufacturing process. "Intel was able to create a market for Netbooks faster than the (Nintendo) Wii and iPhone...Only Intel has the (manufacturing) scale to do this," he said.
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."
Intel concept wide-screen mobile device
(Credit: Intel)
Intel smartphone and mobile Internet device concept designs have potential. So, as Intel prepares to enter the smartphone market with LG Electronics and others, will these designs be realized? And would you buy one?
One thing is certain. A re-badged Apple iPhone running Windows isn't going to upset the Apple cart (pun intended).
So, one obvious challenge is for Intel to get its considerable weight behind a new smartphone or mobile Internet device (MID) design that resets the market.
Just so happens there's a design that Intel has been brandishing for a couple of years now (see photos). It's essentially a high-end wide-screen smartphone or MID (choose your favorite device category nomenclature).
A series of videos demonstrating the Intel Moorestown-based mobile device pretty clearly show how--by virtue of the wide screen--the device would be different.
Intel concept device, with virtual keyboard
(Credit: Intel)Now, if that device could run a browser and basic applications faster than my BlackBerry Storm (which I gauge has circa 1995 PC performance) on a bigger screen, that would be enough for me to buy one.
At least one analyst expects big things from Intel in this market. Doug Freedman of Broadpoint AmTech upgraded Intel to a "buy" this week, partially on expectations that Intel may flourish in the system-on-a-chip market as a result of the chip production deal struck earlier this month with Taiwan Semiconductor Manufacturing. Intel's upcoming Moorestown chip--the linchpin of the deal--is a system-on-a-chip that's targeted, not coincidentally, at high-end smartphones, among other devices.
Freedman had this to say in a research note about Intel: "The TSMC (deal) likely opens the door to highly integrated (system-on-a-chip) solutions for target markets such as consumer, wireless, communications and networking infrastructure, and automotive," he wrote. "Though we cannot assign a value to future business opportunities without specific customer announcements or end-market intentions...We note that a minor incremental opportunity would not have triggered a press release event for Intel or TSMC."
Translation: there's probably something pretty big in the works.
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.
Despite being slammed by the financial crisis, Intel is not slowing down. It made this crystal clear in a chip technology briefing on Tuesday, putting rivals on notice that the competition will only get more intense.
The world's largest chipmaker is accelerating introduction of new chips, particularly silicon targeted at laptop computers. Intel is achieving this by moving quickly to processors based on next-generation 32-nanometer manufacturing process technology and investing heavily to keep its most advanced chip factories humming, as CEO Paul Otellini pointed out in a speech in Washington, D.C., earlier today.
In a nutshell, this means Intel may move further ahead of the competition as it uses its deep pockets to advance to the newest generation of processors sooner. It also means a renewed emphasis on packing more features--such as better graphics--into mobile chips, particularly those going into laptops.
Intel is moving graphics into the same package as the processor.
(Credit: Intel)"The trend toward notebooks is one of the most important megatrends," said Stephen Smith, vice president and director of business operations for Intel's Digital Enterprise Group. Smith spoke Tuesday in San Francisco during the chip road map briefing, which was also available via teleconference.
Intel will bring out a 32-nanometer mobile processor code-named Arrandale in the fourth quarter of this year that integrates graphics silicon into the same chip package as the main processor or CPU. This is a first for Intel--which to date had offered graphics in a separate chip package. This 32-nanometer dual-core chip was previously expected to appear in 2010.
Another mobile chip due this year, code-named Clarksfield, will pack four cores. This will use current 45-nanometer technology.
Intel road map
(Credit: Intel)Both chips will be based on Intel's new Nehalem microarchitecture, currently used in Core i7 desktop processors.
Smith also reiterated another important technological thrust at Intel when speaking about these upcoming chips: de-emphasizing raw chip speed--usually stated in megahertz or gigahertz--and focusing on "hyper-threading"--or designing chips to handle more than one task at a time without adding more physical processing cores. A thread constitutes a task.
"Clock speeds will stay about the same (as current chips)," Smith said.
Smith also spoke about Westmere, which is Intel's broader term for the effort to move current Nehalem processors (currently marketed as the Core i7) to 32-nanometer technology.
On the server front, an announcement is "imminent" of its first Nehalem processors for servers code-named Nehalem EP, according to Smith. These quad-core processors are designed for servers that have two "sockets"--providing a total of eight processing cores per server.
Updated at 5:45 p.m. PST with additional comments from Microsoft.
Nvidia's Tegra chip will be used in an upcoming Microsoft smartphone, according to an analyst at Broadpoint AmTech.
The San Francisco-based research firm also is speculating that Apple will eventually use the Nvidia ARM-based chip in a future iPhone.
Broadpoint's Doug Freedman said the Microsoft-branded phone would be the second Nvidia Tegra design win after HTC. "We believe the HTC ramp in '09 is the more material of the two as we have some concerns on the channel for Microsoft's handset distribution given the lack of prior carrier relationships/handset qualification history," he wrote Thursday.
Microsoft has been working with Nvidia on its Tegra chip platform. Shown here is an Nvidia Tegra APX-based prototype device.
(Credit: Nvidia )Though Freedman said that his research note is not based on mere speculation, "it could turn out to be...a reference design Microsoft has used. That could be possible," he said. "But we've also picked up that Microsoft is working on a phone themselves," he added.
Microsoft says otherwise. "Microsoft has no plans to make a phone," said Microsoft's director of Windows Mobile, Scott Rockfeld, in a statement. "Our core focus has been and will continue to be providing software plus services and working with our partners to deliver great phones. Our partners have been integral in our success to date, and we are excited about the innovation we are bringing to the market together."
"We continue to collaborate with Nvidia on the delivery of innovative solutions that move the smartphone industry and the consumer experience forward," he added.
Nvidia said it had no comment.
Freedman, however, said the phone could appear sometime in the next six months and said his information is coming from the "supply chain that's working on the release of the product." (Note: Other reports say the Microsoft phone is a reference design.)
Freedman believes that Tegra could add $100 million to Nvidia's results in the second half of the year, "which is reflected in our published estimates," he wrote.
Nvidia has made it clear in the past that the Tegra platform is targeted at Windows Mobile.
And what does Nvidia bring to the table? The master of faster graphics processors wants to apply its chip know-how to juice up the mobile Internet device market and the Windows Mobile interface. After a decade of pumping up PC performance, Nvidia is betting a big part of its future on boosting graphics performance in smartphones and fit-in-your-pocket mobile Internet devices, or MIDs.
iPhone-style devices with Nvidia's Tegra APX (or Tegra 600) incorporate most of the functionality of a PC. And Nvidia is building all of the core electronics that will run a mobile Internet device, not just the graphics component.
Tegra is different from Intel's Atom processor platform--which is offered as a processor and a separate chipset. Nvidia puts all major device functions onto one piece of silicon. This makes it more akin to Texas Instruments' OMAP processors or Qualcomm's Snapdragon.
Nvidia's goal is to pack as much processing punch as possible into a few-hundred-milliwatt power envelope. Notebook PC processors typically operate in power envelopes between 10 watts and 35 watts.
But to the user, the biggest difference will be Microsoft's Mobile Windows interface and what can happen when there's Nvidia GeForce graphics silicon pushing everything around.
The platform that Nvidia is demonstrating goes far beyond the staid, pin-striped Windows Mobile that is used today. Nvidia has been showing finger-flick-and-roll screens and accelerometer-based reorienting 720p video.
At the International Solid-State Circuits Conference, Intel will present 15 papers, with a renewed emphasis on integrating more functions into one chip--and less focus on gigahertz. Intel is especially focusing on squeezing more sophisticated wireless silicon into small devices.
"The trend of using smaller transistors to build larger microprocessor cores with higher operating frequency is coming to an end," Mark Bohr, an Intel senior fellow, said Wednesday.
The chipmaker will highlight research on what it is proclaiming as the "new system-on-a-chip (SoC) era," which it describes as requiring "a fundamental shift in the way semiconductor manufacturers will innovate to keep Moore's Law alive." An SoC typically integrates a number of separate functions onto one piece of silicon or into one chip package.
As part of the focus on SoC, Intel is riveting its gaze on the integration of radio silicon, as mobile computers--handhelds, Netbooks, and laptops--become increasingly oriented around connectivity. Future SoCs will have "flexible" radios included on-chip that handle Wi-Fi, WiMAX, 3G, Bluetooth and other widely used standards, according to Intel.
Intel is focusing on getting a variety of wireless technologies onto a system-on-a-chip
(Credit: Intel)"The key research challenge Intel is looking at is how to resolve the inherent problems with a growing number of network technologies--WiMax, Bluetooth, Wi-Fi, etc.--that are landing on platforms and in computers," Intel said Wednesday. "How can you support multiple standards in small form factor devices when you have limited space not only for the radio, but also for the antennas."
Intel spelled out some of the key radio requirements:
- Should fit in a variety of form factors from laptops to mobile Internet devices (MIDs) to cell phones
- Increased levels of integration needed
- Convert more analog to digital to take advantage of Moore's law (45 nanometer, 32nm and beyond)
- Users can get 200Mb/s today will want 5Gb/s very soon
- Future radios will need to automatically switch from one network to another with no negative impact to the user
Intel will also discuss optical interconnects for chip-to-chip communications. "The idea of photonics (which is still very much a research idea) is to use optical interconnects to provide the high bandwidth that will be required for some chip-to-chip communications in the future," an Intel spokeperson said Wednesday. This would be an example of another component that could appear in a future SOC, according to Intel.
Intel will also present a paper on a temperature sensor for processors. "Numerous remote sensors are used to measure temperature over the entire multi-core die," Intel said in a statement. "The processor control unit can then work with these sensors and provide accurate temperature information to higher level software components for various housekeeping and optimization tasks."
This will allow better microprocessor performance reliably, with multiple location hot spot temperature measurements and extend the life of processor components by maintaining lower operational stress, Intel said.
On the graphics silicon front, Intel will talk about research into mobile graphics based on SIMD, in which a Single Instruction is applied to Multiple Data elements (such as all the pixels in an image). "With devices becoming smaller and applications becoming more visual, better techniques are needed to do more SIMD processing while using less energy," Intel said in a statement. "Today's SIMD acceleration circuits have high leakage currents and limited power management, and do not scale well to reduced voltages."
For the time being, Intel is not talking about graphics silicon for specific processors. "We are not talking about any specific processor or chip. This is a research effort that would eventually be a component which does the parallel processing within an SOC, CPU or GPU," an Intel spokesperson said Wednesday. (CPU stands for Central Processing Unit; GPU stands for Graphics Processing Unit.)
"This paper is talking about an achievement which would specifically target small devices (i.e. laptops)," the spokesperson said. "We can do SIMD MMX on desktop today, but this research is bringing the technology to small devices." (MMX is a type of SIMD instruction.)
