Nvidia is having a good day. Their CEO, Jen-Hsun Huang, is happy, Nvidia’s 2013 fiscal plans look nice and the company’s Tegra chip could be a major part of this.
So what seems to be the concern? Tegra’s potential pretty much lies on the ability of Android tablets to be a major tablet competitor before Qualcomm and Texas Instruments launch competitive products in 2012.
If the major android tablets like the Samsung’s Galaxy Tab and the Motorola Xoom supply volume shipments Nvidia can become entrenched. Add up to the mix Windows 8 tablets that use the Nvidia’s Kal-El chip and you can now see why Huang is optimism.
But how optimistic is Huang? Check out these recent quotes:
Jen-Hsun Huang recently told CNET News that Nvidia’s mobile chip department will have revenue of $20 billion by 2015. But for the 2013 fiscal year, this number should be around $5 billion.
Huang also added:
We’ll be quite a force to contend with…We’re the only person actively on the dance floor with Qualcomm.
When he spoke at a Citi investment conference, Huang said Android tablets are doing great and that sales are up.
The tablets are doing great, frankly, sold out in a lot of different countries. Galaxy Tab is the one I use. I love it. If you haven’t had a chance to try it, you really should. Honeycomb [3.2 has] a huge improvement and this is lighter, thinner, higher resolution, and more powerful than an iPad. This one is more affordable and they’ve discovered a wonderful business model.
The plan for Nvidia is to follow along with the Android tablet makers as well as smartphones. Obviously, Nvidia is really optimistic. The company estimated revenues between $4.7 billion and $5 billion for the 2013 fiscal year, which starts Jan. 30 2012. Wall Street was hoping for $4.45 billion.
A few analysts are following along with Huang’s optimism while investors pushed up Nvidia shares almost 10 %. Patrick Wang, an Evercore analyst, said in one of his research note:
Management factors in $1 billion (in sales) from Tegra versus an estimated $425million this year. NVIDIA continues racking up design wins with 53 smartphones and with 13 tablets; however, many have failed to impress, never reaching volumes. Further, the competitive landscape will intensify in 2012 with refreshed offerings in Qualcomm’s Krait and Texas Instruments’ OMAP4/5.
On the other hand, other analysts are also worried about Nvidia’s Tegra optimism. Macquarie analyst Shawn Webster says:
Given the macro uncertainty and also a Tegra ramp which has been disappointing in recent quarters, we are not changing our estimates.
Deutsche Bank analyst Ross Seymore told us that Nvidia’s outlook looks to be very aggressive. Barclays analyst C.J. Muse noted that Nvidia is hoping Tegra will have 70% of the non-iPad tablet market.
“We are a bit surprised Nvidia is so confident today on its outlook 15 months from now,” said Muse.
For now, Huang is confident about his Tegra chip and android tablet thesis, but a lot of people remain skeptical.
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