Nvidia Corp. (NVDA) Chief Executive Officer Jen-Hsun Huang said sales of the company’s processors for use in cars will keep doubling every year to reach $1 billion annually as automakers seek to attract consumers with advanced features.
About 30 new models using Nvidia’s Tegra processor will be introduced in the next two to three years, Huang said in an interview yesterday. The company will add U.S. and Japanese automakers to a list of customers that includes Volkswagen AG (VOW)’s Audi and Tesla Motors Inc. (TSLA), Huang said.
The push into automobiles is part of Huang’s efforts to reduce the company’s reliance on personal-computer graphics cards amid the worst slump in PC sales on record. Customizable instrument screens and high-end navigation and entertainment systems, which until now have been the preserve of more expensive vehicles, are going to start appearing in cheaper cars as consumers demand features that match the look and utility of their smartphones, Huang said.
“Until now, it’s been quite slow,” Huang said. “It’s taken us about seven years to build a $100 million business. Now it’s doubling every year.”
Huang, a co-founder, didn’t give a timeframe for when car-chip sales would reach $1 billion. Nvidia has been seeking to boost sales, which grew at a slower pace in fiscal 2013 than the year before. Chips from the Santa Clara, California-based company have started to appear in smartphones and server computers, and Nvidia has unveiled its own handheld gaming device, Shield.
Suji De Silva, an analyst at Topeka Capital Markets Inc. in New York, said Nvidia needs to keep delivering progress in these new areas to stave off competition from Intel Corp. (INTC) and Qualcomm Inc. (QCOM)
“They have to prove out a lot of these stories,” said De Silva, who has a hold rating on Nvidia’s stock. “Every year has been an up story, and a down story, for them.”
Nvidia shares declined less than 1 percent to $14.05 at yesterday’s close in New York, leaving them up 15 percent this year, compared with a 19 percent advance in the Philadelphia Semiconductor Index.
Nvidia began taking orders last month for Shield, which is built on the Tegra processor and runs Google Inc. (GOOG)’s Android mobile operating system. The machine is aimed at boosting sales of other devices using Tegra by increasing the use of games designed for that platform, he said.
“The reception has been great,” said Huang. “If we sell some, that’s fantastic as well, but it’s not the fundamental purpose. The fundamental purpose is to get great games on Android on Tegra.”
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