On Nvidia's earnings conference call held last night, President and CEO Jen-Hsun Huang commented on how AMD's recent acquisition of rival video chipmaker ATI will affect Nvidia going forward:
Thanks, Marv. On July 24, AMD announced that they were acquiring ATI. Once the acquisition is completed, NVIDIA will become the only GPU and platform technology company that supports Intel and AMD processors. Our company focus is to be the innovation partner for leaders of the computer and consumer electronics industry, to build high-brand, high-image, market-defining products.
GeForce is the No. 1 GPU brand. nForce is the No. 1 core logic brand. Quadro is the No. 1 professional and workstation brand, and SLI is the No. 1 multi-GPU brand. Each and every one of these brands is sought out by end-users of both Intel and AMD processors. AMD’s pending acquisition of ATI only enhances our strategy.
The GPU is becoming increasingly important in all digital platforms. Our strategy is to extend the utility of GPUs to all types of multimedia processing and establish the GPU as the DSP of the digital media era. As we want to expand the reach of GPU into all computing devices, from PCs to servers to phones to automobiles, and in each of these markets we will support Intel or AMD CPUs, or ARM or PowerPC or Cell. Our strategic focus is the GPU.
Devan Moodley - Scotia Capital
A general question in relation to the AMD ATI situation. Do you think it creates any input cost advantage for you guys down the road, with potentially maybe the fear from the pure play foundry guys that AMD might take some of that business in-house?
I don't know if that is specifically the reason. Our focus is to be a strategic and a meaningful partner of the partners we work with. TSMC is our largest-single partner, and a terrific partner, and they've done a great job for us. Our job is to make sure that we can be as large and bring as much business as we can to this relationship. Typically, when you bring a lot of business to a relationship, there's some benefits. So my sense is that that is going to continue to be a dynamic that makes sense, and that's our focus.
We will continue to partner closely with both processor companies and we will absolutely continue to provide MCPs for AMD as well as Intel processors. We will continue to invest around the AMD processors and continue to work with them to bring our brands to our mutual customers.
We also see increased opportunities in serving Intel’s core logic segment, particularly since it is unlikely that AMD will do so. We have many exciting growth drivers ahead of this year. With the leadership position of our GPU, MCP, workstation and handheld GPU, we are positioned to continue to take share. We expect the grade three processing demand of Vista’s new UI will increase the adoption of discrete GPUs in notebook and desktop PCs. The ramp of Blue-ray and HD DVD will play into a significant advantage we have with PureVideo HD. The highly anticipated launch of PlayStation III later this year and with the pending acquisition of ATI, the new PC industry dynamics puts us in a unique position.
At the core of our growth is the continuing shift in focus of the industry to build products that are multimedia centric and consumer experience centric rather than a traditional focus on mix and megabytes. As the GPU is essentially the experiential processor of digital platforms, we see tremendous growth opportunities as we extend the reach of our GPUs into all digital devices.
Chris Caso – Friedman, Billings, Ramsey
Okay and just as a final question, just, you know, kind of speaking strategically with the AMD acquisition, what can you guys tell us about any kind of discussion or programs you guys have running with Intel right now. Just maybe you can kind of give us some sense of what you think that relationship might be going forward?
Well, you know we have developments and collaborations going with both companies and we’ll continue to invest around the AMD processors. Now, with the new industry organization, obviously it’s unlikely that AMD will be designing core logic for Intel and so we see that as a pretty significant opportunity for us to participate in that. But we have so many collaborations going on with both companies, there’s not really anything that we can talk about here.
Simona Jankowski - Goldman Sachs
Jen-Hsun, you touched on the collaboration with Intel on the MCP side as a result of the AMD announcement. Can you maybe also comment if there is any opportunity or possibility for collaboration on the GPU side, whether marketing or otherwise -- maybe specifically, if you have noticed any change in the trajectory of your design wins alongside Conroe before and after the announcement, for GPUs specifically?
Thanks for the question. I would say that we're the only standalone GPU supplier in the world today, and we are CPU-neutral. We could be a partner for either company. I think we're a much more natural partner for either company today than ever before. I think you could derive from that that we're much more a natural partner today working with Intel than AMD would be working with Intel, in collaborating to build markets and otherwise. So I do think that's a very significant advantage.
Simona Jankowski - Goldman Sachs
Just a quick follow-up on the MCP side. Given the different margin structure historically in AMD Core Logic versus Intel Core Logic, would you expect any meaningful change in your gross margins long-term as that mix shifts just a little bit more to Intel than AMD?
Marv Burkett, Nvidia
No. I think that the difference in gross margins in the MCP business is more related to whether it's an integrated chipset or discrete. And whether it's AMD or Intel, discrete chipsets have good margins and integrated have lower margins.