Nvidia ( NVDA) has been blasted by rumors that Apple ( AAPL) was seeking another source for graphics processor chips in its Mac computers. The prospect of getting bounced from the Apple cart helped knock Nvidia's stock down 11% in the past five days. But now, a conflicting report citing "industry sources" says Apple and Nvidia relations are "doing just fine." The truth is probably somewhere in between, as they say. A year ago, Nvidia reported glitches with some of its graphics chips in some Macs due to packaging defects. These errors aren't uncommon and are generally resolved to everyone's satisfaction, at least publicly. But there's no telling what sort of actual shouting and threats were made privately.
So you take some tech disharmony, add some uncertainty and a dash of rumor and you have yourself a fragrant brew of possibility. Unable to decipher fact from fiction, some analysts outlined the impact should a worst-case scenario play out. In this instance, assuming the original speculation is true and Nvidia got booted from Apple, the total impact would add up to about $50 million in revenue a quarter for Nvidia, according to a report Monday from Broadpoint AmTech analysts. This would be painful, but far from devastating. Apple, despite all the buzz, has less than 8% of the PC market, and that stature is shrinking. And to put this in context, Apple represents only about 7.5% of Nvidia's revenue, according to Broadpoint AmTech. The big potential offset here is that Nvidia has growth prospects elsewhere that would minimize any Apple defection, Broadpoint points out.
As TheStreet first reported last month, Nvidia says it expects its new Tegra computing and graphics processing chip to be in a device from one of the top five phone makers later this year. This would be a major breakthrough for Nvidia, which has spent the past five years and $500 million developing a mobile device chip. The first phone is likely to be coming from either Motorola ( MOT) or Samsung, and it is expected to be a Google ( GOOG) Android device, according to industry experts.