NVIDIA to get Sony's PS3 GPU deal?

[Uttar]

Hello everyone,

As you might have noticed, NVIDIA's stock value has increased by more than 25% after rumors that they're getting a deal with Sony, probably in relations to the PS3.
Those rumors were started by UBS, saying they believe NVIDIA is in a good position for such deals ( paraphrase here )

While UBS doesn't seem too reliable, this PS3 rumor is perfectly plausible.
It is obviously much harder to get information on such deals, for that they are much more secretive than even proprietary hardware details.

I believe that such a deal is not out of the question, and that it is certainly much more likely than a XBox 2 deal.

Another reason UBS increased NVIDIA's target to $40 is that their FX 5200 line is "doing better than expected".
I can say that the FX 5200 yields are good and that NVIDIA still hopes for increased market penetration in multiple segments from this product in the hopefully near future ( probably including the workstation market, because loads of features and the possibility of very high quality renderings are major poins for this market )

Is NVIDIA overevaluated? I don't think so. For now, they're just about at the right price IMO. Should the PS3 deal ( or another big Sony deal ) hold true, $35 or $40 is perfectly reasonable.

If anyone can ( or cannot, but still wants to ) confirm anything, well, you know what to do :angel:
Of course, I generally prefer NV40 info to this kind of stuff, but hey, you can't have EVERYTHING either :)


Uttar

[R.Carter]

I, personally don't think so. However, Nvidia might own some IP that Sony needs to license for use in the PS/3.

There is another thread about this here (http://www.nvnews.net/vbulletin/showthread.php?s=&threadid=12149).

EDIT: I recall hearing reports that the Nvidia CEO commented that the CELL design of the machine would pose big hurdles and cost Toshiba-Sony a absolute fortune. So who knows...

[Uttar]

Yeah, the IP thing is also another possibility.

I'm aware there's another thread, but this thread is more related to the UBS statement, so IMO, it deserves a new thread.

Furthermore, a 25% increase in stock value ( or even rather 30% now ) is certainly worth a big look.


Uttar

[mikechai]

Originally posted by Uttar
Yeah, the IP thing is also another possibility.

I'm aware there's another thread, but this thread is more related to the UBS statement, so IMO, it deserves a new thread.

Furthermore, a 25% increase in stock value ( or even rather 30% now ) is certainly worth a big look.


Uttar

Could it be a rumour in purpose to inflate NVDA stock value?

[Hanners]

Originally posted by mikechai
Could it be a rumour in purpose to inflate NVDA stock value?

Isn't doing that illegal?

[Uttar]

Originally posted by Hanners
Isn't doing that illegal?

Finance's a shabby business, and it always has been.
Heck, proving such a thing is really to inflate the stock is nearly impossible - so such things do happen, from time to time. I doubt it should be taken as such, though.


Uttar

[Richthofen]

well something is going on there i guess.
The stock increased by 60% over the last months.
The volume during some days was pretty high.
I don't know whether this is related to a PS3 deal or x-box2 deal or whatever or to a recovery in the core business.
The FX line is ramping, the enthusiast crown is back in the Nvidia department the mainstream versions are available the new FX5600 Ultra performs well and overall is slightly better than the 9600pro. The FX5200 is doing extremly well.
If you read all the reviews and add them together the FX5200 offfers the better gaming experience, the better tv-out and dual head feature and it is a DX9 class card.
The 9200 is no competition in that field.

I expect Nvidia to overtake the DX9 class GPUs sold crown in about 1 or 2 months. That means by that time they will have more DX9 GPUs in the market than their competitor and the gap will get larger in favor of Nvidia as long as ATI has no DX9 low cost gpu. Last but not least nForceII is doint very well. Nvidia right now is doubling its chipset market share and revenue every quater.

So maybe the stock performance is more related to a recovery in the core business but it could also be that there is something going on behind scenes

[SurfMonkey]

Originally posted by Uttar

Another reason UBS increased NVIDIA's target to $40 is that their FX 5200 line is "doing better than expected".


[Off Topic]
I must admit it's the fastest, from preview to shopfront, card I've seen in a long while. Already our local high street stores are stocking the Creative Blaster 5 5200 in quantity. And they're selling them very quickly @ £78. I guess lots of MX owners are upgrading at that price.

The odd thing is that all the Radeon based products have dissapeared from the shelves. Either they sold exceedingly fast or they cleared stock to make way for new products...
[/Off Topic]

As for the Sony Nvidia deal, I would think they are well placed for getting the license. Especially now they have a firm link with IBM. If they get it I only hope that they get the balance of engineers right this time and don't screw up the NV40. I also hope the recent events don't sour any potential relationship, though ATI may have a problem with Sony anyway due to its links with Nintendo.

[Uttar]

NV30/XBox: Well, I think nVidia figured out the trouble with the XBox / NV30, and wouldn't do the same mistake again.

IMO, part of the problem is that when they acquired 3DFX, they had to rethink the NV30. And little NV30 work was already done.

Now, even though the NV40 didn't even tape-out yet, nVidia is already working on the NV50. They're making sure this time that whatever happens, even if they got to cut some stuff out of the NV50, they'll still have a very competent product.

Also, as I said before, I believe the NV4x will be used for about 24 months, thus 6 months more than before. That gives more time for the NV50 too.


As for the FX 5200. I'm sure nVidia did a great decision using 0.15u and having a fully CineFX/DX9 compliant part with it. It means they've got quantity, and monstruous marketing power.
While nVidia weren't satisfied of the NV30/NV31, I certainly think they are satisfied of the NV34 right now :)


Uttar

[SurfMonkey]

Slight update!


Nvidia to split orders 20/80 between IBM and TSMC
Tsering Namgyal, DigiTimes.com, Taipei [Friday 30 May 2003]


As Nvidia sees more opportunities in the multimedia sector, its key foundry partner Taiwan Semiconductor Manufacturing Company (TSMC) may benefit from more outsourced orders, according to a report by Alex Gauna, US semiconductor analyst at UBS Warburg.

The introduction of Sony’s PSX, a follow-up to the hugely popular PlayStation 2 (PS2), will likely lead to increased orders for graphics chips from Nvidia, the report said.

IBM, which is scheduled to deliver within the next two months its first tranche of Nvidia orders, estimated at about 3,000 wafers, is unlikely to steal much business away from TSMC, he predicts.

“While Nvidia has engaged IBM for foundry outsourcing, we think IBM still needs to prove itself in commercial volume production at the advanced technology node,” Gauna wrote. “Under our worst-case scenario, we estimate the order to be split between IBM and TSMC to be 20/80 on a longer-term basis.”

Meanwhile, Nvidia, which derives approximately 15-20% of its revenues from Xbox generated solutions, is well positioned to capitalize on the emerging multimedia opportunities, thanks to its heavy investment in next-generation foundry device production, the report said.

Nonetheless, Nvidia will leverage IBM to negotiate price with TSMC, given the chip designer’s cost-cutting focus, the report said. In technology, Nvidia currently has no plans to design in 90nm as it remains far from volume ramp and it still remains focused on 130nm, it said


How and why would an increase in PSX and PS2 sales make nvidias sales increase also? Or am I just missing something here?

Source (http://www.digitimes.com/NewsShow/Article.asp?datePublish=2003/05/30&pages=PR&seq=205)

[R.Carter]

I guess the idea is that Sony's aggressive moves with the PSP and PSX devices will, most likely, expand the potential number of product categories for Nvidia products in the long term.

For example, Microsoft could launch a new console that uses their chips so that will help Nvidia to compete against the PSX.

Sony has historically made their own silicon while Microsoft does not.

I suppose you could think that long term upside potential in new product categories for devices competing against PSP and PSX type devices from other vendors.

I would imagine Microsoft will have to respond to the Sony offersing at some point, if they wish to continue to be a serious player in the console market.

So there might be more people looking to buy stuff from Nvidia.

I guess...

[Nv40]

mmm.. a Playstation3 with Nvdia Gpus ,will really make NVidia
VERYYYYY happy.. i think i have read somewhere that Sony sold
near 16millions of PSX2 consoles.. thats its far more sales 2xtimes?
than Nintendo and Xbox sales at the same time.

it would be great a PSX3 with an NV50 as Gpu ,with 500 millions transistors effects beyond (MSDIrectX10) ,like radiosity and insane cool new visual technologies .. manufactured by IBM at .9 process :D

but i will like more an Xbox2 with Nvidia hardware (very unlikely)
because most popular Japanese games ,are not in my prority list.

whatever happens , it doesnt look like MS or nitendo will ever match SOny PSX3 hardware.. even NVidia CEo told ,(in similar words) that what SOny was looking to do in the PSX3 is nothing less than a "miracle mirabilis" with the technology.. many people still are skeptics about the posibilities of SOny to design the powerfull console they want.
a combination between IBM,SONY and NVIDIA is something i will really
like to see someday.. :) if the rumors are true ,the only thing i want to
know where to pre-order my PSX3 . :D

[GlowStick]

Hm, sony dose sell alot of consoles but, i still think that since Sony has allways used eahter an in house chip design, or toshiba or motorola, i do find it hard to beleive they would buy a chip from nvidia because i would think it would raise cost.

I dont think there will be a new Xbox so soon becuase the current one hasent really ran out of power yet, so to speak.

[Star_Hunter]

Originally posted by Nv40
mmm.. a Playstation3 with Nvdia Gpus ,will really make NVidia
VERYYYYY happy.. i think i have read somewhere that Sony sold
near 16millions of PSX2 consoles.. thats its far more sales 2xtimes?
than Nintendo and Xbox sales at the same time.

it would be great a PSX3 with an NV50 as Gpu ,with 500 millions transistors effects beyond (MSDIrectX10) ,like radiosity and insane cool new visual technologies .. manufactured by IBM at .9 process :D

but i will like more an Xbox2 with Nvidia hardware (very unlikely)
because most popular Japanese games ,are not in my prority list.

whatever happens , it doesnt look like MS or nitendo will ever match SOny PSX3 hardware.. even NVidia CEo told ,(in similar words) that what SOny was looking to do in the PSX3 is nothing less than a "miracle mirabilis" with the technology.. many people still are skeptics about the posibilities of SOny to design the powerfull console they want.
a combination between IBM,SONY and NVIDIA is something i will really
like to see someday.. :) if the rumors are true ,the only thing i want to
know where to pre-order my PSX3 . :D

Nvidia makes next to nothing on the chip it sells for the xbox

[Richthofen]

Originally posted by Star_Hunter
Nvidia makes next to nothing on the chip it sells for the xbox

You mean they don't make any profits?
Well thats pretty wrong :)
After the arbitration was over the margins increased to the originall level - about 30 to 35%.
Nvidia would not state it officially but i think they won the arbitration. There was really not much room for MS because contract is contract. They signed the contract some years ago and now they will pay what was agreed on back in those days for every chipset.
There was really not much room for a different interpretation.

They still make a lot of money in that business and a lot more than ATI makes with its Nintendo deal.
Well of course MS pays a lot and that contract was not so good for them but to be hones i think they can afford that :)

[Uttar]

Actually, I guestimate nVidia's margins on the XBox are currently more like 25% - I remember nVidia saying the margins are lower on that than on most of their other products, and their overall gross margin is of about 30%.

Furthermore, my guess about the arbitrati's results are that MS won't get a price cut now, but that all cost-cutting measures done by nVidia will mean they'll also have to pay less ( although not to the full extent of the cost cutting measure, otherwise nVidia wouldn't have any reason to do any )

Just guesses, of course.


Uttar

[Browndog]

Hmm Major share price movements and Sony rumours?
If its true then it will be one hellava console.:angel2:

[Richthofen]

Originally posted by Uttar
Actually, I guestimate nVidia's margins on the XBox are currently more like 25% - I remember nVidia saying the margins are lower on that than on most of their other products, and their overall gross margin is of about 30%.

Furthermore, my guess about the arbitrati's results are that MS won't get a price cut now, but that all cost-cutting measures done by nVidia will mean they'll also have to pay less ( although not to the full extent of the cost cutting measure, otherwise nVidia wouldn't have any reason to do any )

Just guesses, of course.


Uttar

well in the conference call of Q4 they statet that overall margins are about 33 to 35% and x-box was well below that because MS hold back money and payed less. Now due the arbitration results MS had to pay that money back (40 Mio in Q4 for the period since the conflict started) and now they are paying the original price.
In the last conference call they stated that overall margins decreased about 2% because of higher costs in the NV31 department and they said that x-box margins are now about the same. So that means they are about 31 to 33%.
Of course if Nvidia can decrease costs they will also have to cut their price. So in the end margins on x-box chips will remain at slightly above the 30%. Quite good and they can live with that.
Expect revenue and profit gains in the next 2 quaters due to larger x-box chip shipments.

[Slappi]

I sold a fifth of my shares of nVidia stock at 22.70 last week. :banghead:

But I keep the rest of them when I was about to sell them.


If this plays true then NVDA will go over 100 a share within a year.:thumbsup:

[suburbanguy]

Jen-Hsun Huang sounded very impressed with PS3 as you know. He said that he / nVidia would be willing to work with any of the three console makers on the next generation. he said PS3 / Cell is a "mircale machine".


Nvidia already scored the Xbox deal this generation. getting Xbox2 would not be "moving up in the world" for nVidia.


moving up in the world for Nv would be scoring the PS3 deal.


nVidia wants "to power every pixel on every platform"


IBM fabbing some nVidia GPUs -

IBM-Sony-Toshiba making Cell-PS3


hmmmm :D

[GlowStick]

Originally posted by suburbanguy
Jen-Hsun Huang sounded very impressed with PS3 as you know. He said that he / nVidia would be willing to work with any of the three console makers on the next generation. he said PS3 / Cell is a "mircale machine".


Nvidia already scored the Xbox deal this generation. getting Xbox2 would not be "moving up in the world" for nVidia.


moving up in the world for Nv would be scoring the PS3 deal.


nVidia wants "to power every pixel on every platform"


IBM fabbing some nVidia GPUs -

IBM-Sony-Toshiba making Cell-PS3


hmmmm :D

Actually i think its "To Power every Pixel"

[suburbanguy]

Actually i think its "To Power every Pixel"



Meh. I was close enough:)

[Skynet]

Personally I think Sony is going to fall flat face down with the PS3. The timing is right for Sony to come up empty, striking Gold 3 times in a row is very rare in any business. My prediction is they will design a visual processing system that is so complex it can never be built as designed, so major compromises will ensue, the product will end up late, and by then another competitor will have beat them with better technology and most importantly, smarter and innovative design. Of course this is all wild speculation on my part, but so is most everyone elses opinions in this thread. When the mighty fall they fall hard.

[GlowStick]

Originally posted by Skynet
Personally I think Sony is going to fall flat face down with the PS3. The timing is right for Sony to come up empty, striking Gold 3 times in a row is very rare in any business. My prediction is they will design a visual processing system that is so complex it can never be built as designed, so major compromises will ensue, the product will end up late, and by then another competitor will have beat them with better technology and most importantly, smarter and innovative design. Of course this is all wild speculation on my part, but so is most everyone elses opinions in this thread. When the mighty fall they fall hard.

Hm, lets see,

Ps2 was regarded as 'too complex' sony had to initate code shareing to lure devleopers

Ps2 was LATE and when it did come out, not nearly enough units

Competator has easier to program hardware, thats more powerfull Xbox

Id say all of that happend with PS2, but whos makeing more money? PS2

[StealthHawk]

Originally posted by GlowStick
Hm, lets see,

Ps2 was regarded as 'too complex' sony had to initate code shareing to lure devleopers

Ps2 was LATE and when it did come out, not nearly enough units

Competator has easier to program hardware, thats more powerfull Xbox

Id say all of that happend with PS2, but whos makeing more money? PS2

Several points. PS2 was the first next-gen console out by far, it didn't matter if it was late or not. And Sony dominated the previous generation sales with a great console, building support and loyalty. Making PS2 backwards compatible with PS1 games sure didn't hurt anything either.

If Xbox and GC came out before PS2, would things be the same? The way things were, developers were kinda "forced" into learning and producing games for PS2, because that was the new console that everyone was buying.