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In order to be competitive against Advanced Micro Devices and Intel Corp. in the long-term future, Nvidia Corp. needs to have access to x86 technology or seek partnerships with companies developing various system-on-chip processors, according to an analyst. Among the potential partners are named companies like Via Technologies or Qualcomm.

Starting next year mainstream central processing units from companies like AMD or Intel will have integrated graphics controllers that will be able to render 3D games and accelerate consumer applications. As a result, it will be much harder for Nvidia to maintain its graphics market share due to declining demand towards standalone graphics chips for desktops and rapid depreciation of third-party core-logic sets market. That said, Nvidia will have to either offer system-on-chips akin to AMD Fusion or Intel Sandy-Bridge by taking over Via Technologies or by establishing a joint-venture with the latter since virtually this is virtually the only company that has x86 license and which actually makes microprocessors.

"We believe that NVDA may need to move aggressively and acquire x86 processor capability through licensing or a merger with Via Technologies (Taiwan)," said analyst Krishna Shankar from ThinkEquity market research company in a note to clients, reports International Business Times.

The recent settlement between Intel and the Federal Trade Commission forces Intel to modify its intellectual property agreements with AMD, Nvidia, and Via Technologies so that those companies have more freedom to consider mergers or joint ventures with other companies, without the threat of being sued by Intel for patent infringement; additionally, Intel was obliged to offer to extend Via’s x86 licensing agreement for five years beyond the current agreement, which expires in 2013. Potentially, all of the above allows Nvidia to acquire Via Technologies or form a joint-venture that would sell CPU-GPU hybrid chips compatible with x86 instructions sets.

Nvidia may also merge or partner with other companies, such as Broadcom or Qualcomm in order to provide them graphics technology for their system-on-chip devices. However, this does not seem likely, considering Nvidia's concentration on chip business and very low revenue that technology licensing currently brings to the company.

"Alternatively, Nvidia should explore more radical strategic partnering/mergers with larger competitors such as Broadcom, Marvell Technologies, Advanced Micro Devices (AMD), Qualcomm, etc., in order to compete with Intel. We believe that pursing the status quo may increasingly not be viable. In our opinion, a strategic acquirer may have to pay a premium of 50-100% to acquire Nvidia," said Mr. Shankar.

This is not the first time in the recent years when independent financial analysts claim that Nvidia needs to have access to microprocessor technologies. The company itself admits that in future microprocessors will not disappear and next-generation personal computers, servers and exascale systems will need both serial CPUs and highly-parallel GPUs. As a result, companies like Intel will still have to compete against Nvidia in the field of accelerators.

Tags: Nvidia, GPGPU, , Fusion, AMD, , Intel, Via Technologies, x86

Discussion

Comments currently: 4
Discussion started: 08/10/10 08:38:04 PM
Latest comment: 08/12/10 02:14:02 PM

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1. 
I thought that the licenses these companies have to create x86 products doesn't necessarily transfer to any company that buys them out? Like, even if nvidia did buy Via or someone, they would still not be able to make x86 CPU's without Intel's OK?
0 0 [Posted by: lainofthewired  | Date: 08/10/10 08:38:04 PM]
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2. 
The FTC ruling meant that Intel could not do that anymore from my understanding. I too think that NVIDIA needs to buy out VIA (as they should since VIA's going nowhere without extra help).

It's a win-win situation I think through this merger.
0 0 [Posted by: deltatux  | Date: 08/11/10 04:33:45 AM]
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3. 
Everyone is focusing on what Nvidia will do and who they merge with or make a cooperation with but they don't have very many good options. Via...bad idea. Intel buying NVIDIA or NVIDIA bending over for Intel seems to be the only good future NVIDIA has at this point.
0 0 [Posted by: zjessez  | Date: 08/12/10 09:55:56 AM]
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4. 
The via thing was probably the best thing to come out of the FTC settlement and forcing Intel not to selling below cost was probably the second best thing.
0 0 [Posted by: knowom  | Date: 08/12/10 02:14:02 PM]
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