Nvidia’s Latest Graphics Processor Gives a Fresh Boost to Its Booming Gaming Business
Nvidia (NVDA) - Get Reportcemented its leadership position in the high-end PC GPU market a couple months ago with the launch of its GeForce GTX 1080 and 1070 GPUs, the first consumer offerings based on its new Pascal architecture. By launching a new flagship product, the Titan X, so soon afterward, the company further strengthens its high-end stranglehold and creates an opportunity to increase its margins and average selling prices, or ASPs, within the lucrative segment.
Graphics cards based on the Titan X, unveiled Thursday night and due to ship on Aug. 2, will feature a massive $1,200 maximum suggested retail price, or MSRP. That's respectively $600 and $820 more than what the 1080 and 1070 sell for -- and also $200 more than what was charged for cards based on Nvidia's GTX Titan X GPU when it launched in March 2015. Needless to say, the product is aimed at gamers willing to pay through the nose for unmatched performance.
And that's something the Titan X should definitely provide: It can handle 11 trillion floating-point operations per second compared to 9 trillion for the GTX 1080 and 6.6 trillion for the GTX Titan X. It also contains 3584 CUDA processing cores to the 1080's 2560, and comes with 12GB of video RAM to the 1080's 8GB. Like other Pascal GPUs, the Titan X is made using Taiwan Semiconductor's (TSM) - Get Report advanced 16-nanometer manufacturing process. The GTX Titan X, like other GPUs based on Nvidia's older Maxwell architecture, relied on a 28-nanometer TSMC process.
With benchmarks showing the 1080 delivering about 30% better performance than the GTX Titan X, the new Titan X might yield 50% or greater performance gains relative to last year's model. That, along with Nvidia's catering to relatively cost-sensitive gamers with the 1080 and 1070, apparently has the company confident it can charge 20% more for this year's Titan X.
It also doesn't hurt that GPU archrival AMD (AMD) - Get Report, though having recently strengthened its midrange position through the launch of its RX 480 GPU ($199 MSRP), is virtually a nonfactor on the high-end for now. AMD's most powerful standalone GPU, the R9 Fury X, trails the 1080 and even the GTX Titan X in performance. And a new AMD GPU architecture supporting high-end parts, code-named Vega, isn't expected until 2017.
Investors gave a thumbs-up to the Titan X's unveiling: Nvidia rose 2.7% Friday, making new 52-week highs along the way. Even before its Pascal launches, Nvidia's gaming GPU business was faring quite well in the face of a very weak PC market. During the April quarter, the company's gaming platform revenue rose 17% annually to $687 million, or 52% of its total revenue.
The 1080, 1070 and Titan X should keep this growth engine humming through year's end, and give a lift to Nvidia's gross margin along the way.