Nvidia Needs Access to x86 Technology for Long-Term Survival - Analysts

From X-bit Labs: 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.

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