Nvidia to License Graphics Technology to Other Chipmakers

Photographer: Patrick T. Fallon/Bloomberg

An attendee plays on Nvidia Corp.'s Nvidia Shield handheld game console at the company's booth during the E3 Electronic Entertainment Expo in Los Angeles. Close

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Photographer: Patrick T. Fallon/Bloomberg

An attendee plays on Nvidia Corp.'s Nvidia Shield handheld game console at the company's booth during the E3 Electronic Entertainment Expo in Los Angeles.

Nvidia Corp. (NVDA), the largest maker of chips used in computer graphics cards, said it plans to license technology to other chipmakers, seeking to broaden sources of revenue.

Both current and future graphics technology will be available for customers seeking to build their own products, the Santa Clara, California-based company said in a statement yesterday. The company didn’t exclude competitors as potential licensees.

Chief Executive Officer Jen-Hsun Huang is leading an effort to reduce Nvidia’s reliance on personal-computer graphics cards amid the worst slump in PC sales on record. By selling licenses for the know-how behind its products, Nvidia will be able to get its technology into a broader array of devices, according to the statement. A shift to licensing may also indicate that Nvidia isn’t getting enough demand for its Tegra applications processor for smartphones and tablets, according to Jim McGregor, an analyst at Tirias Research.

“It’s the result of changing market dynamics with a rather bleak outlook for the traditional PC market,” McGregor said. “Tegra has not secured the high-volume design wins.”

Nvidia is also targeting Tegra at information and entertainment systems in cars, converting graphics processors for use in server computers and selling handheld gaming devices built on the mobile processor. Licensing revenue would make it possible for Nvidia to keep funding those efforts, according to McGregor.

Ken Brown, a spokesman for Nvidia, said each generation of the Tegra processor has done better than its predecessor. The company “firmly believes that Tegra is gaining momentum,” he said in an interview.

Nvidia shares rose 1.7 percent to $14.65 at 9:39 a.m. in New York. They had advanced 17 percent this year through yesterday, compared with a 25 percent advance in the Philadelphia Semiconductor Index.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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