Neonode (NEON), in its typically understated (has to be a Swedish thing) and cryptic fashion, announced (in its 1Q earnings release, see: http://goo.gl/iBmZM ) last week that it has "Entered into partnership with a Tier One PC Semiconductor OEM to jointly develop a PC reference and automotive platform".
While management deflected questions as to precisely which OEM this agreement is with, I believe the partner is most likely NVIDIA (NVDA), as they are the only Tier-One PC semiconductor OEM with both a well-known focus on touch (NVIDIA Direct Touch is integrated into Tegra 3, see: http://goo.gl/axzkl ) AND an ARM-based automotive solutions product line (see: http://goo.gl/RxRqV ).
This unnamed Tier-One PC semiconductor partner cannot be Advanced Micro Devices (AMD), who divested its IMAGEON applications processor business (that it inherited from its 3Q06 acquisition of ATI) at the end of 2008, when it sold it to Qualcomm (QCOM). AMD now only makes PC semiconductors, and does not claim to have an automotive solutions segment.
Although it is certainly possible that Intel is Neonode's anonymous partner (they technically have an Atom-based automotive product line, see: http://goo.gl/o6EN6 ), I believe this is less likely, as Intel is likely invested in Uni-Pixel (UNXL) and is definitely behind FlatFrog (see: http://goo.gl/NAvVj ), which is a privately-held Swedish competitor to Neonode.
FlatFrog markets a very expensive LED-based optical touch solution targeted at 20+ inch screens. FlatFrog's solution does not employ inexpensive lightguides (light columnization via a plastic lightguide is one of the key patented methods by which Neonode enables its disruptively-priced and lowest power solutions), and thus, is only suitable for large-and-wired implementations, for it requires multiple processing and controller chips from Dialog Semiconductor (DLGNF.PK).
Meanwhile, NVIDIA is the leading supplier of PC graphics chips (GPUs) with ~60% market share (Kepler brand). In addition, the company's Tegra application processors are dominant in the small-but-growing non-iPad tablet space, and are making significant inroads into smartphones and automotive infotainment displays.
Considering that 82% of NVDA's revenues come from GPUs, it makes perfect sense for them to collaborate with an emerging lowest-cost touch-solutions provider like Neonode, in order to enable NVIDIA's OEM customers to deliver attractively-priced Windows-8-certified laptops.
With Intel's Haswell and Windows-8 both requiring touch screens for certification, PC OEMs, along with their microprocessor/graphics suppliers, such as Intel (INTC), NVIDIA, and AMD, are likely freaking out (and wincing) at the $70+ added cost of an ITO-based capacitive touchscreen. Thus, PC OEMs and their CPU/GPU suppliers, are increasingly focused on the low cost touch alternatives like UNXL (~$25 total touch system cost) and NEON (<$15 total system cost) ... to ensure that PC/laptop market volumes do not shrivel up (they were already down -4.5% in 2012, to 194 million units).
Meanwhile, with Tegra (11% of revenues) being the linchpin to NVIDIA's long-term growth prospects, they have to be extremely motivated to integrate Neonode's disruptively-priced solutions into their Tegra-based reference platforms. This is especially true in auto, where NEON seems to be quickly gaining momentum (recently announced their 3rd Top-Ten licensing agreement), and is severely disrupting the market with its "dollar per diagonal inch" cost profile (and order of magnitude better than the competition).
Moreover, as it stands, Intel seems to be in the Uni-Pixel camp, along with Dell (DELL) and Kodak (EKDKQ), and thus, I imagine NVIDIA is likely increasingly motivated to make NEON its strategic touch partner.
Considering that NVIDIA loves to make best-of-breed, tightly integrated, power-sipping, and well-priced reference platforms for its OEM customers, along with their Taiwanese ODMs, I cannot think of a better partnership. For example, in 2012, NVIDIA announced its KAI reference platform for tablets, which was built around its Tegra 3 applications processor, and enabled tablet OEMs like Google (GOOG) to deliver its Nexus 7 tablet to consumers at an attractive $199 price point (see http://goo.gl/JWn2r). I would imagine that NEON's optical touch could take KAI down to below $169.
With a Tier-One branded (likely NVIDIA) reference platform on its way... I have to think that PC, tablet, and smartphone OEMs, along with their powerful Taiwanese ODMs, will be considerably more inclined to adopt Neonode's new and disruptive touch technology. There is nothing like having a premier off-balance-sheet militia, like the NVIDIA sales force, selling on Neonode's behalf.
When I contemplate the revenue possibilities for Neonode, if its MultiSensing technology were to become NVIDIA's preferred touch solution (i.e. being incorporated into an NVIDIA-promoted reference design), I easily see an incremental opportunity that eclipses $30M per-annum. I get there by conservatively assuming that the global laptop market declines to 175M units in 2014 (down -10% from 194M in 2012). In addition, if NVIDIA can maintain its mobile discrete graphics market share at about ~65% (according to Mercury Research), and if the overall Notebook GPU attach rate remains at ~40% (according to Mercury), then the "NVIDIA 2014 opportunity" would equate to ~45M units. If NEON can capture merely one-third of that volume, and garner a $2 royalty (which should be more than reasonable)... then 2014 PC royalties for NEON could be worth $30M, or about $0.75 per fully-diluted share.
Thus, I wonder what type of multiple the Street would place on a PC-revenue prospect of this size, layered on top of NEON's 2014 revenue-diversification prospects like autos, printers, children tablets, and handsets.