Nvidia's Future Is Unclear

For experts in the field of graphics, the prospects of Nvidia in the future seem very vague. The sales of PC graphic chips are Nvidia's core business. But since its rival Intel and AMD began to integrate drawing functionality into their chip produsts, Nvidia's this business continued to be in a shock state.

In view of this, in order to stimulate business growth, NVIDIA bring new Tegra chips into smart phones and tablet PC market. The introduction of this chip indeed has brought a pleasant surprise. The Tablet PC which is first based on Google's Android operating system has adopted the chip in the early period of design.

Therefore, the market is huge and Nvidia's stock price has also soared in the earlier of this year. NVIDIA second-quarter adjusted net profit was $193.5 million. The results topped analysts had expected. The chips designed by the company will be used Samsung Electronics, Motorola and Android Tablet PC and mobile phones manufactured by LG Electronics in this year.

However, this chip has insufficient capacity. Affected by this the stock price also will drop. One problem is that the iPad still dominate the market, so few consumers will buy Android tablet PC. At the same time, Nvidia also faces competitors such as Qualcomm that will enter the smart phone chip market. In the first and second quarters, the sales of Tegra chips have no growth. It is expected that this quarter it will difficult to change.

But there is good news that discrete graphics chip does not disappear as some people expected. On the contrary, many manufacturers use Nvidia chips in built-in graphics PC in order to improve the display quality. It is expected that the sales growth of Nvidia graphics chip will be slightly faster than the overall PC market growth. In 2011 the growth rate will be around 10%. However, for consumers who do not need to improve the display effect, they may choose other PC with lower the price. So this is a risk factor.

In addition, NVIDIA's second-quarter earnings report also revealed some alarming signs. Although NVIDIA quarter earnings are better than expected, it is mainly due to the promotion of non-core products. In addition, although the second-quarter gross margin appears to grow, but the seasonal gross margin declined actually. Analysts of the industry say that NVIDIA's future Is unclear for now. In summary, investors need to invest Nvidia after its prospects for the future is clearer.