Why Qualcomm Isn't Afraid of NVIDIA
Mobile-chip giant Qualcomm (NAS: QCOM) recently saw smaller rival NVIDIA (NAS: NVDA) butt in on one of its long-standing relationships, with Taiwanese gadget-maker HTC. NVIDIA has technically beaten Qualcomm to the punch by reaching quad-core turf first; should Qualcomm be afraid that NVIDIA's invasion will continue?
Not quite. Not yet.
Scoring half of the design win within the HTC One X is a start, and that trend may continue, but right now Qualcomm still has a major lead. At the Mobile World Congress, The Verge recently interviewed Raj Talluri, Qualcomm's head of application processors (including its Snapdragon family) and he added a lot of context to how the two chipmakers' approaches differ -- and why Qualcomm's is better.
Integration is king
There are some advantages that Qualcomm has long boasted over NVIDIA with Qualcomm's specialty in integration. The dual-core Snapdragon S4 that the company is showing off is the only mobile processor on the market that has 4G LTE integrated directly into its chipset. NVIDIA is working to close that gap and bake LTE support directly into its Tegra 3 by year's end.
The S4 is also built on a 28-nanometer processor compared to the Tegra 3's 40 nanometers, which allows the S4 additional power-efficiency advantages. Talluri also highlighted another key advantage that isn't discussed as frequently: Qualcomm has also integrated Wi-Fi, Bluetooth, FM, and GPS directly into the chip. Wi-Fi integration is something that Intel (NAS: INTC) is already working on for its mobile chips, along with building its mobile forces.
Who needs a fifth core?
NVIDIA's quad-core Tegra 3 actually carries a fifth "Companion" core -- which the company now affectionately refers to as a "Ninja core" -- and 4+1 architecture. The reason for its inclusion is to handle processing tasks that don't need as much computing horsepower.
Talluri explains that unlike other ARM Holdings (NAS: ARMH) licensees, Qualcomm doesn't license the CPU core directly. Instead, it licenses only the instruction set, which ensures software compatibility and more, but then builds the processor "from scratch." Each core can be controlled independently, thanks to how Qualcomm designs its memory systems and caches, while the competition has to run all cores at the same clock speeds.
Each Snapdragon core can throttle up and down as needed in a power-efficient manner, so if you throw a low-power task at the chip, it just powers up one of the cores to the necessary speed and gets the job done. This custom approach means that Snapdragons don't need that extra core, and they're better optimized for mobile uses.
On top of that, most apps out there nowadays aren't optimized to fully tap into the potential of all those extra processing cores. This will change eventually as all smartphones migrate to quad-cores, but for now only a handful of apps really utilize the extra power.
A numbers game
The benchmark figures speak for themselves. Anandtech pit the Snapdragon S4 against over a dozen current offerings, including heavyweights like the Apple iPhone 4S, Motorola Mobility Droid 4, Samsung Galaxy Nexus, and Asus Transformer Prime tablet, which sports a Tegra 3.
The S4 trounces the competition by a wide margin in almost every category. The Tegra 3 narrowly took one test, but the S4 took the gold in the other three, and we're talking about a dual-core chip outperforming a quad-core.
Pick your poison: LTE or Tegra 3
Right now, Tegra 3 and LTE don't play well together, which is why it scored only half of the design win in the HTC One X. The iteration destined for the US carries the Snapdragon with integrated LTE support, since Verizon and AT&T effectively require LTE for high-end smartphones currently.
That means that the Tegra 3 is missing out on much of the juicy U.S. market for the time being, but it will be in the international version of the One X. This won't be the case for too long though, since NVIDIA is working with GCT Semiconductor and Renesas Mobile, not to mention its $367 million Icera acquisition last year, to literally get up to speed.
Safe ... for now
As it stands, Qualcomm still has the technological lead over NVIDIA, although NVIDIA is working pretty aggressively to close that gap. NVIDIA just scored its first application processor and discrete baseband win, but it has a way to go before it can start earning a more meaningful share. If it does, NVIDIA investors will be rewarded handsomely, as the company's most promising growth prospects are baked right into its mobile chips.
These two chip players are just some of the winners of the mobile revolution. For even more companies that are cashing in from the inside, don't miss our new report on "3 Hidden Winners of the iPhone, iPad, and Android Revolution." Get the report now -- it's free.
At the time this article was published Fool contributorEvan Niuhas sold bullish put spreads on QUALCOMM and owns shares of Apple, AT&T, Verizon Communications, and ARM Holdings, but he holds no other position in any company mentioned.Click hereto see his holdings and a short bio.The Motley Fool owns shares of QUALCOMM, Intel, and Apple.Motley Fool newsletter serviceshave recommended buying shares of Intel, Apple, and NVIDIA; writing puts on NVIDIA; and creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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