Reports are swirling that NVIDIA (NVDA) will exit the motherboard chipset business. However, these reports have not been confirmed by any motherboard manufacturers or NVDA.
AmTech does not believe this exit is likely to happen, as the business is much too large and important for NVIDIA to throw away:
- Loss of chipset business and less exposure to mobo makers would add risk to SLI support in Bloomfield CPU platforms and other new Intel platforms, which requires mobo makers to add an extra nVidia chip in addition to the Intel (INTC) chipset. (SLI is the ability to scale multiple GPU graphics cards in a single system)
- Chipsets are in the media and communication processors unit (MCP) which was $195M or 17% of revenue in the April quarter.
- Whether a chipset exit occurs or not, we believe there is an increased focus at nVidia on improving gross margins and an increased likelihood of headcount reductions.
AmTech maintains BUY on NVIDIA (NVDA), target $26.
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