NVIDIA targets Android, iPhone 4G with Tegra 2

SAN FRANCISCO, USA: After hitting a milestone with the launch of Microsoft’s Kin phones, where Nividia's Tegra processor was used for the first time in a smartphone, the graphic chip maker is planning to strengthen its presence in the smartphone segment.

It is now planning to bring the second generation of Tegra, which could be used in Android.

Nvidia CEO Jen-Hsun Huang made this comment on Thursday following Nvidia’s first quarter earnings, which was better than the market expectation.

“We’re pretty excited about Tegra, as you can imagine. Our first generation strategy we wanted to focus on one operating system. It was our new player in this marketplace. And we focused all of our energy around the Microsoft Zune and Microsoft WinMobile. And I’m delighted with what we’re able to build,” he said.

“On the second generation, we were able to expand to focus a lot of our energy around Android. And although it made sense for the first generation Androids to use available phone processors — the follow-on generations of Android are really going to go after performance.

And iPhones are out there; the iPhone 4G is coming. The iPad is obviously a revolutionary product,” he added.

Though Nvidia reported better-than-expected results, the graphics chipmaker's sales forecast for the current quarter was below Wall Street's target, and shares fell 3 in extended trading on Thursday.

Nvidia said it swung to a net profit of $137.6 million, or 23 cents a share, in the fiscal first quarter ended May 2, versus a year-ago net loss of $201.3 million, or 37 cents a share.

Revenue surged 51 percent to $1 billion, versus Wall Street's target of $986.2 million.

Nvidia said sales were led by its high-end Fermi processor, which saw strong consumer demand.

For the July quarter, Nvidia forecast that revenue would fall 3 to 5 per cent from the previous period, implying sales of $950 million to $970 million. That compares with Wall Street's estimate for revenue of $990 million.

Nvidia forecast gross margins of 46 percent to 47 percent, which was above the consensus target of 45 percent. But analysts said the sales forecast and Nvidia's inventory level, which rose 17 percent, spooked investors.

Nvidia dominates the graphics market for desktop and notebook computers along with rival ATI, which is owned by AMD. Now, its executives say a tablet computer powered by the company's chips should arrive in the second half of the year.

Nvidia is also embroiled in a lawsuit with Intel over Nvidia's right to produce chipsets - collections of chips on a board that connect a microprocessing brain to other parts of a computer. The suit prompted Nvidia to halt development of chipsets, which make up close to 30 percent of its sales.

The company is instead shifting its focus to high-performance computing and mobile chips for devices such as tablet computers, while maintaining a core business selling graphics chips designed for games, high-definition video and advanced photo editing.

(With inputs from Reuters)