IBD - nVidia downgraded on patent license cliff with Intel

[mirana]

Intel (NASDAQ:INTC) and Nvidia signed a six-year cross-licensing settlement in 2011 in which Intel agreed to pay Nvidia $1.5 billion in licensing fees.


Covello says if the licensing agreement isn't renewed, Nvidia will see "a step down in earnings per share (30% of earnings before interest and taxes), GPU (graphics processing unit) growth is likely to decelerate this year given near-term risks to personal computer original equipment manufacturer sales (20% of total) and gaming growth will likely normalize lower."


He expects Intel's final cash payment to be made in January 2016.


Covello says the weakness of PCs could drive investors to re-evaluate Nvidia's progress in diversifying and focus on its core segments tied to PC OEMs, gaming and workstations.

"While we believe the market it giving the company significant credit for its diversification progress, auto remains less than 5% of revenue, compared to the 55% of Nvidia's EBIT that is tied to the PC ecosystem (including PC OEMs)," he said.


http://news.investors.com/technology/032315-744656-nvidia-downgraded-on-impact-of-end-of-intel-licensing-deal.htm

With Intel and Amd coming at the graphics market with CPUs and GPUs and high performance solutions with MIC/Firepros, there is a shrinking market for nV. It surprising that their car sector size is only a few per cent and will have a number of competitors that do not have premium prices on their products.

So in a very short time, nV will have a tremendous negative impact on their revenue and will not be able to absorb heavy losses in their Tegra division.

 

[Genx87]

I have been hearing about Nvidias demise since AMD acquired ATI. Yet Nvidia keeps growing and AMD is on the cliff of bankruptucy.

 

[krumme]

I have been hearing about Nvidias demise since AMD acquired ATI. Yet Nvidia keeps growing and AMD is on the cliff of bankruptucy.

You might work with your "hearing"
In this world there is 2 people of sa talking nv demise. 2 on at forum. And 2 in amdwhatever.com.
Compare that to the 10-50 times as many that sing amd doom.
Each and everyone is easy to spot because if someone mentions nv or intel they always mention amd in their response, although its completely unrelated. They got amd on their mind for some reason.

As for nv economy. This is probably not the biggest surprice ever for shareholders. Should licensing not continue; Take eg 200m out of current anual earning and look at it. Plenty of cost to cut imo for not profitable business. Solid brand. Loads of opportunities and cash to get there.

 

[Gunbuster]

How long has Intel been "coming at the graphics market"?

I've yet to meet an Intel graphics product I would use for even mid-range gaming.

 

[krumme]

How long has Intel been "coming at the graphics market"?

I've yet to meet an Intel graphics product I would use for even mid-range gaming.

Intel has come a long way since the alternative for most was a separate gfx ! 900/950 was gamechangers in that respect. Hd3000 was too for light gaming.
But ofcource what time have shown is; its damn difficult to make efficient and powerfull gpu arch. And especially to develop drivers for it. I understand your argument that next time is always the big step. And then it always is not - but hey its the same tune for apu cpu zen 14nm 10 times as fast gpu skylake whatever. Its part of the show. Better to adjust expectations.

 

[therealnickdanger]

It would be nice if Intel would either:

1. Make a variety of SKUs of CPUs without integrated GPUs
2. Fully integrate the processing power (and cache) of the GPU into all CPU functions (like QuickSync's function, but much more tightly integrated).

 

[Kenmitch]

Intel has come a long way since the alternative for most was a separate gfx ! 900/950 was gamechangers in that respect. Hd3000 was too for light gaming.
But ofcource what time have shown is; its damn difficult to make efficient and powerfull gpu arch. And especially to develop drivers for it. I understand your argument that next time is always the big step. And then it always is not - but hey its the same tune for apu cpu zen 14nm 10 times as fast gpu skylake whatever. Its part of the show. Better to adjust expectations.

As much as most hate to admit it eventually dGPU's will be a niche market. Might still have some shelf life left but eventually they won't be needed to the extent they are today.

AMD and Intel should just do some cross-licensing agreement. AMD gives up some GPU tech and Intel gives up some CPU tech. Not like either would have to give up the latest and greatest to benefit from such said deal.

Would be great if we could some how get back to the days when one only had to worry about which MB instead of which platform. Good old days when one had the choice of Intel, AMD, Cyrix on the same platform....Most likely it'll never happen tho.

Adapt or die in the world of technology effects all the players.

 

[ShintaiDK]

It would be nice if Intel would either:

1. Make a variety of SKUs of CPUs without integrated GPUs
2. Fully integrate the processing power (and cache) of the GPU into all CPU functions (like QuickSync's function, but much more tightly integrated).

1. Done ages ago. Its called LGA2011.
2. Done too isnt it. The GPU sits with L3 access on the ringbus. Its the most integrated solution there is.

 

[jpiniero]

2. Done too isnt it. The GPU sits with L3 access on the ringbus. Its the most integrated solution there is.

I think he means HSA or something similar. I think Skylake is improved in this respect but Intel is obviously not going to promote it.

 

[Cloudfire777]

Nvidia got nothing on Qualcomm, Samsung and Apple in the SOC business. Not a standing chance with Tegra. They can keep their graphic performance to themselves. Mobile phones and 192 core Kepler/Maxwell graphic are totally overkill.

 

[DaveSimmons]

Chances are good that intel's HDxxx line uses nvidia patents, so unless intel plans to stop including IGPUs there is no Dooooommm! in 2017.

Now let's sing the Doom song! - https://www.youtube.com/watch?v=sY278K4ljWs

 

[Hitman928]

1.5 billion over 6 years is an average of 62.5 million a quarter. In 2014 Nvidia reported ~150 million net income per quarter. So if Nvidia were to lose this income, it would certainly hurt, but Nvidia would still be a profitable company and more or less in charge of its own destiny at least in the short term, unlike AMD. Obviously we still don't know what will happen at the end of the agreement, perhaps intel figures out a way around the patents, or they renew the cross licensing without any payments, or maybe intel pays another 1.5B, but whatever happens, this is more something good to know if you are an investor, doesn't really effect consumers much.

 

[AdamK47]

Welcome to the forums mirana.

 

[tviceman]

Intel can't continue to use the licensed IP when their current deal expires without a new deal.

 

[krumme]

As much as most hate to admit it eventually dGPU's will be a niche market. Might still have some shelf life left but eventually they won't be needed to the extent they are today.

AMD and Intel should just do some cross-licensing agreement. AMD gives up some GPU tech and Intel gives up some CPU tech. Not like either would have to give up the latest and greatest to benefit from such said deal.

Would be great if we could some how get back to the days when one only had to worry about which MB instead of which platform. Good old days when one had the choice of Intel, AMD, Cyrix on the same platform....Most likely it'll never happen tho.

Adapt or die in the world of technology effects all the players.

In the good old days when you could plug a cyrix math coprocessor into the mb there was no competition as amd cpu was just intel cpu on a license. Some things get better

But yeaa the fun days of upgrading is kind of gone. But so is the days when it took 4 days to get your game to work because of crazy 3d gfx driver.

 

[krumme]

Nvidia got nothing on Qualcomm, Samsung and Apple in the SOC business. Not a standing chance with Tegra. They can keep their graphic performance to themselves. Mobile phones and 192 core Kepler/Maxwell graphic are totally overkill.

Agree and the financial result shows just that. But they also show nv have a broad portfolio of highly profitable products.

Nv takes chances to develop new products. With the result of some products/technologies that turns a profit. Looking at their history they have imo been far better at that than eg amd and especially Intel.

 

[frozentundra123456]

Intel can't continue to use the licensed IP when their current deal expires without a new deal.

Do you mean Intel would have to stop production of products already on the market that use the cross licensed tech? I cant imagine Intel would ever make such an agreement. It would put them totally at the mercy of nVidia forever if that were true.

 

[VirtualLarry]

As much as most hate to admit it eventually dGPU's will be a niche market. Might still have some shelf life left but eventually they won't be needed to the extent they are today.

Adapt or die in the world of technology effects all the players.

Just like... discrete NICs or sound cards. Sure, they still exist, in places, for the very few people that want them, but for the vast majority of PC consumer, they might as well not exist, because they're entirely unnecessary.

Discrete video cards will, sadly, eventually, likely go the same route.

When that happens, I'll be a bit torn, on which way to go. I like discrete graphics, but in a pinch (non-gaming), integrated is fine for me.

 

[Vesku]

Intel should probably buy Nvidia on Nvidia's next stock down swing. They already use a lot of their graphics technology, hence paying Nvidia on top of the cross-licensing. Intel could certainly use fast and efficient iGPUs based off Maxwell+ as they try to muscle into ARMs mobile territory.

Although I think Jen-Hsun Huang, Nvidia CEO, instituted a poison pill provision to try to ward off this type of scenario so that might require his blessing.

 

[myocardia]

How long has Intel been "coming at the graphics market"

Since 1998, when they made the fastest dedicated GPU you could buy...for a month or so.

edit: Welcome to anandtech, mirana.

 

[nurturedhate]

Just like... discrete NICs or sound cards. Sure, they still exist, in places, for the very few people that want them, but for the vast majority of PC consumer, they might as well not exist, because they're entirely unnecessary.

Discrete video cards will, sadly, eventually, likely go the same route.

When that happens, I'll be a bit torn, on which way to go. I like discrete graphics, but in a pinch (non-gaming), integrated is fine for me.

You bring up two very good examples in NICs and sound cards but we have to look closer at those markets. Discrete NICs are all but dead due to mb integration. Sound cards on the other hand have a much larger market presence. People still want them. I see dGPUs going this route instead of the NIC route and all likely to have an even larger continued market share than even sound cards. AAA games are not going away and they will continue to see releases on the computer. That alone will drive the market. That alone will create a need for the foreseeable future. The demise of the dGPU is grossly exaggerated.

People have been talking about the death of x86 since the 90s.
People have been talking about the death of the desktop since the late 90s.
People like talking about the death of this or that because it makes good headlines and sparks discussion.

It's not happening.

Prediction - we'll have dGPUs long after we stop driving gas power vehicles. You tell me how far that is out.

 

[Rezist]

We will always have video cards just due to the professional aspects alone, however I think the biggest question will be how long they stick around in laptops, I think most laptops to get a decent/better then integrated video card your over 1100$. I could see that easily getting into the 1500$ to 2000$ range once integrated gets good enough.

I think we will have gaming desktops for a very long time as well, but the entry level cards won't be 100$, they'll have to be better performing/bigger chips to justify there existence. Probably up the 200$ mark easy and when volume drops it pushes all the prices up.

 

[ocre]

nvidia is a great stock. see if the drag stock price down they can be bought up cheap. they know after they report their q1 earnings, the stock will jump back up over night. Then it is time to cash in.

Nvidia stock seems to dip very often and then rebounds.

Its a great stock to make quick bucks off of

 

[Keysplayr]

You bring up two very good examples in NICs and sound cards but we have to look closer at those markets. Discrete NICs are all but dead due to mb integration. Sound cards on the other hand have a much larger market presence. People still want them. I see dGPUs going this route instead of the NIC route and all likely to have an even larger continued market share than even sound cards. AAA games are not going away and they will continue to see releases on the computer. That alone will drive the market. That alone will create a need for the foreseeable future. The demise of the dGPU is grossly exaggerated.

People have been talking about the death of x86 since the 90s.
People have been talking about the death of the desktop since the late 90s.
People like talking about the death of this or that because it makes good headlines and sparks discussion.

It's not happening.

Prediction - we'll have dGPUs long after we stop driving gas power vehicles. You tell me how far that is out.

I'll have to disagree on the sound card thing. Integrated mobo sound chips are as about as good as sound gets. So when you see a 250.00 Creative Labs Sound card, I have no idea what you'd be paying for. The sound quality is there on say for example an everyday run of the mill Realtek audio chip.

 

[HurleyBird]

I'll have to disagree on the sound card thing. Integrated mobo sound chips are as about as good as sound gets. So when you see a 250.00 Creative Labs Sound card, I have no idea what you'd be paying for. The sound quality is there on say for example an everyday run of the mill Realtek audio chip.

Integrated motherboard sound is not even in the ballpark of "being as good as sound gets." That said, it's pretty obvious that the sound card is dead. Today people who care about sound quality use external amps and DACs so those components are free from electrical interference from the rest of the electronics in the computer. Add-in sound cards just don't make that much sense.