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iPhone and the Future of Nvidia

Posted on Monday, Apr 30th 2007

I have spent many years in the semiconductor eco-system, and one of the first thoughts I had when the iPod bonanza started, was, “Someone must be making a killing off this on the chip side!”

Today, ofcourse, it is a well-known fact that a whole company got built because the iPod took off the way it did: PortalPlayer. They supplied the original iPod chips for a while, until, they were booted out of the iPod Nano, in favor of Samsung. But PortalPlayer does still remain seated in the production of the fifth-generation video iPod.

Meanwhile, Nvidia acquired PortalPlayer for $357 Million, most certainly hoping to capitalize on its success with Apple. So, what’s the story with the iPhone? Do they have a chip in there? If the iPhone takes off the same way the iPod did, would Nvidia fly as well?

EE Times reported back in November, that PortalPlayer, the media processor company that famously lost a key socket in the next-generation iPod nano earlier this year, has secured an applications processor design win in the forthcoming iPhone from Apple. At the time, the iPhone was not yet announced.

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Analyst firm FBR expects combined Nvidia-PortalPlayer music player revenue of $280 million in 2007, following the close of the acquisition, “with the potential for further revenue from an enhanced Apple relationship in the future,” according to the note.

FBR believes that Nvidia plans to develop an integrated processor containing the applications processor, audio decoder and video decoder, with the goal of having it designed into a next-generation iPod for 2008, according to the note. Saying that the design win is not a certainty, FBR said it believes Apple has agreed to work with Nvidia on the concept and that it was a factor in Nvidia’s decision to acquire PortalPlayer.

The projected $280 million in combined Nvidia-PortalPlayer music player includes $150 million from the iPhone, $100 million from the new video iPod, and $30 million from non-Apple MP3 players, FBR said.

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Apple certainly has designs against the Xbox in the future, based on its experiments with Nvidia, Apple-TV, etc. and in the iPod, vPod, and iPhone, the Nvidia relationship will simply get tested, strengthened and hopefully, broadened over the next 3 years. It will also educate Nvidia, and their attempt at the combined CPU+GPU chip could become a formidable piece of innovation, although, I’m not sure if they know enough about low power design to pull this off.

Meanwhile, other analysts are predicting that neither Nvidia nor Broadcom has any chip in the iPhone, and that Samsung has the main processor. Rebecca Runkle of Morgan Stanley offers a list of initial component suppliers:

* Manufactuer: Foxconn
* Application/Media processor: Samsung
* Camera Module: Foxconn
* Case: Foxconn
* Baseband: Infineon (IFX)
* RF Transceiver: Infineon
* Bluetooth: CSR
* Wi-Fi: Marvell (MRVL)
* Memory: Samsung primary; Toshiba secondary supplier
* Battery: Sony, others
* O/S: Apple. Duh.
* Display: Sharp, others.

It’s amazing to me how Apple manages to keep this stuff secret!

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what i deduce from Rebecca’s list is that iPhone does not have nvidia or broadcom as any one of its chips, but samsung.maybe apple was not looking for any obliagtory relationship with Nvidia and decided to cut it out, even after Nvidia bought out portalplayer.(this is in view to the fact that both these companies have solid brands of thier own in the same region,USA, and that too the bay area)
on the other hand samsung is headquartered in seoul , north korea and I would not deny the market share it has, but maybe it oomphs for a relationship with apple.
companies like fbr make such statements because they are paid for it, and we listen to them like we seek google results.
please correct me if i am wrong Sramana.just trying to kick off a debate here.

Pawan Sahay Monday, April 30, 2007 at 11:42 AM PT

Pawan,

Broadcom does have a chip in the iPhone. A vital one. Read today’s post. Samsung & iPhone – coming up later in the series. Stay tuned.

I am sure we’d confirm all these speculations against facts as soon as the iPhone hits the market, and someone has had an opportunity to take it apart.

Meanwhile, enjoy the analysis.

Sramana

Sramana Mitra Tuesday, May 1, 2007 at 4:00 PM PT

[…] Analysts believe that the Nvidia-PortalPlayer combination will contribute $280 million this year including $150 million from the iPhone, $100 million from the new video iPod,…. […]

Nvidia Riding the Graphics Boom - Sramana Mitra on Strategy Thursday, September 20, 2007 at 8:16 AM PT