Nvidia expands business, offers graphics licensing

Nvidia plans to offer graphics core licensing to expand the chip maker's future markets and revamp its business model in the 'post-PC' era.

Speaking at the Reuters Global Technology Summit in San Francisco on Tuesday, Nvidia chief Jen-Hsun Huang said that he will be introducing a new side to the company's business: graphics technology licensing to other firms.

Licensing will allow Nvidia to further exploit the mobile device market as the company's core PC business slides in favor of tablets and smartphones.

Such licensing deals may potentially also include working in the future with tech giants Apple and Samsung, although the electronics makers are more often using their own processors in smartphones and tablets. In addition, the shift in business model will pit Nvidia against U.K.-based Imagination Technologies, which supplies graphics technology for devices including Apple's iPhone and Samsung's Galaxy S4.

Huang commented:

"The bottom line is the world has changed and we're expanding our business model to serve markets that we historically could not serve by selling chips alone. We will target customers where their capacity and desire to build their own application processors is great.

This is a way for us to engage customers who don't like to buy chips because they like to create their own, because they have the capacity, creativity and now the scale to build their own."

Graphics core licenses and visual patent deals are ways to tap markets that cannot currently be reached by the sale of branded chips alone, although this will put Nvidia in competition with rival companies including the much larger Qualcomm. To try and compete with the company, Nvidia recently outlined plans to roll out the 4G LTE processor Tegra 4i, which has kept Nvidia out of the high-end smartphone market dominated by U.S.-based Qualcomm.

Nvidia's Tegra 4i has 60 cores, a quad-core CPU with ARM's R4 Cortex-A9, an integrated modem and better battery life than previous chips.

When asked at the summit if Nvidia could eventually rely solely on royalties and licensing, the chief executive noted:

"I think the shape of companies in the future will look increasingly hybrid. Microsoft licenses software, they sell devices, they have services. All of the above. I think you'll see more and more companies that are like that."