Nvidia Loses Next-Gen Nexus 7 Contract to Qualcomm

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It looks like things aren’t going so well for Nvidia this year. Digitimes is reporting that they’ve apparently lost the next-gen Nexus 7 contract with Google, which could cost them 8 million sales in 2013, considering the Nexus 7 sold 6 million in 2012, and analysts are expecting even better sales for the next-gen Nexus 7 this year.

The second-generation Nexus 7 is expected to launch in May and without the orders, Nvidia may lose almost eight million processor shipments in 2013, the sources noted.

With a proper launch this year, and with a higher quality tablet with a 1080p resolution, I think Google could sell a lot more than 8 million, probably even double what they sold last year. That would only mean an even bigger loss for Nvidia. What’s worse for them is that this contract will go to a company that is already the biggest chip maker on the market (Qualcomm), and this will only make them bigger. We should be expecting an S4 Pro or S600 chip inside the next-gen Nexus 7.

Nvidia only shipped 10 million Tegra 3 units in 2012, so the Nexus 7 made a majority of those sales. The loss of this contract is going to be quite a blow to their revenues. It doesn’t help that they targeted their Tegra 4 chip at tablets, instead of making it optimized for phones, too. Part of that optimization for phones includes supporting LTE, too, but Nvidia will only have LTE integrated in their Cortex A9-based Tegra 4i chip. Unfortunately, it seems that chips wasn’t ready for the next-gen Nexus 7 on time.

The sources believe pricing is not the reason Asustek turned to place orders to Qualcomm as Nvidia’s and Qualcomm’s chips have a similar price level and is likely because of the chips’ communication chip integration process. Although Nvidia has released the Tegra 4i with an integrated 4G LTE chip, the processor was not able to catch up with the second-generation Nexus 7’s launch schedule.

I doubt Nvidia is going to recover this year with Tegra 4, the way things are looking for them right now. Besides the loss of the next-gen Nexus 7 contract, they haven’t announced any other major contract wins with other companies either (although we may see a couple of surprises by the end of the year).

That’s why it’s so vital for Nvidia to launch a very impressive ARMv8 (64 bit) chip next year, with a next-gen unified Maxwell-based GPU architecture, and my guess is they are going to make a custom CPU, too, instead of using stock cores from ARM. But whatever they are launching with Tegra 5, it needs to be very impressive, not just in performance like Tegra 4, but also in energy consumption, so it can be put in millions of smartphone units, too.