Nvidia Set to Radically Change Business Model, License Graphics Cores to Others

Nvidia Takes ARM, Imagination Technologies Route, Intends to License Kepler Graphics Tech

by Anton Shilov
06/18/2013 | 07:38 PM

Nvidia Corp. on Tuesday announced plans to alter its business model considerably. From a developer of supplier of chips and products on their base, the company wants to become a technology licensor and adopt business model akin to that of ARM Holdings as well as Imagination Technologies.


PC sales are declining with the rise of smartphones and tablets. Yesterday’s PC industry, which produced several hundred million units a year, will soon become a computing-devices industry that produces many billions of units a year with visual computing is at the epicenter of it all. The consequences of these changes are apparent everywhere. New industry leaders are emerging. Companies differentiate not only on products but on business models. Some create systems from industry-standard chips.  Others are vertically integrated and build their own chips, systems, software and even services. Some do both.

For chip-makers like Nvidia that invent fundamental advances, this disruption provides an opening to expand their business model. Not so long ago, Nvidia only made and sold GPU chips. Five years ago, it introduced Tegra, a system on a chip. More recently, Grid – a complete system that streams cloud games and other graphics-rich content – as well as the Shield gaming portable have been unveiled.

“But it is not practical to build silicon or systems to address every part of the expanding market. Adopting a new business approach will allow us to address the universe of devices. So, our next step is to license our GPU cores and visual computing patent portfolio to device manufacturers to serve the needs of a large piece of the market,” a statement by Nvidia reads.

It is noteworthy that Nvidia has done something similar in the past: it licensed an earlier GPU core to Sony for the PlayStation 3 and receive more than $250 million a year from Intel as a license fee for its visual computing patents. Now, the explosion of Google Android-based devices presents an unprecedented opportunity to accelerate this effort.

“We will start by licensing the GPU core based on the Nvidia Kepler architecture, the world’s most advanced, most efficient GPU. Its DX11, OpenGL 4.3, and GPGPU capabilities, along with vastly superior performance and efficiency, create a new class of licensable GPU cores. Through our efforts designing Tegra into mobile devices, we’ve gained valuable experience designing for the smallest power envelopes.  As a result, Kepler can operate in a half-watt power envelope, making it scalable from smartphones to supercomputers,” said Nvidia.

Kepler is the basis for currently shipping GeForce, Quadro and Tesla GPUs, as well as the next-generation Tegra mobile processor codenamed Logan. Licensees will receive all necessary designs, collateral and support to integrate Nvidia’s powerful graphics cores into their devices.

Nvidia will also offer licensing rights to its visual computing portfolio. This will enable licensees to develop their own GPU functionality while enjoying design freedom under the best visual computing patent portfolio in the world.

Nvidia currently invests more in R&D in this area than any other company in the world – over $1 billion annually and more than $6 billion since its founding. The vast majority of its 8500 employees are engaged in these efforts, and the company has more than 5500 patents issued and pending – the industry’s best visual computing patent portfolio.