Nvidia ( NVDA) is once again on the verge of cracking a mobile device market: smartphones. Mike Rayfield, the general manager of Nvidia's mobile unit says he expects the company's Tegra chip to debut in a phone from one of the top five cell-phone makers as early as the fourth quarter of this year. Rayfield, in an interview at TheStreet.com, wouldn't name the phone maker that will deliver the first device with an Nvidia chip, but industry experts speculate that Samsung or Motorola ( MOT) are probably the most likely. The thinking is that both tech shops have plans to introduce Google ( GOOG) Android phones and Nvidia has been working with Android.
If true, this would mark a long-delayed and hotly anticipated breakthrough for the PC graphics chip specialty shop. Nvidia has spent about five years and $500 million developing a mobile chip business, says Rayfield. He says the company has won a place in 16 devices to be made by 11 manufacturers. The Tegra chip promises low power consumption and high-resolution graphics to help smartphone makers deliver improved devices to a hot market.
Nvidia's Big Opportunity Total available market for mobile processing chips
However, the company has had its setbacks as it tries to expand beyond the high-end graphics chips business, which has been tied to PC manufacturing and the advance of computer video and gaming. As PC sales have slumped, so have Nvidia's prospects, thus its need to find new growth. In 2007 the company introduced a cellphone graphics chip at the GSM wireless show. Last year, Nvidia launched Tegra, a tiny all-in-one computing and graphics processor chip with the promise of powering devices last year or early this year. But no cell phones bearing the chip materialized.
Now, the Tegra seems to have finally found its first win in the handheld device arena. The new HD Zune from Microsoft ( MSFT) will be powered by the Tegra chip, says Rayfield. The Zune multimedia device is expected to arrive this fall. Nvidia also expects a slew of mini computing devices or MIDs coming to the market late this year and early next year. These are sub-netbook sized laptops that will sell for under $200 or free with wireless service contracts. The devices run on Linux, or in Nvidia's case Microsoft Windows CE operating software. The company's Tegra chips will cost manufacturers anywhere between the teens and $30, says Rayfield. Nvidia has been knocking on this door to the mobile market for two years now, and there's little guarantee of success. Other chip giants like Qualcomm ( QCOM) and Texas Instruments ( TXN) stand as just two of the formidable obstacles.