NVIDIA-AMD Graphics Chip War Redux (NVDA, AMD)

By Jon C. Ogg Updated Apr 28, 2:57AM EDT · Published Mar 25, 9:28AM EDT

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It has been some time since we have seen any new declarations of war in the market of graphics chips. That may be about to change. Nvidia Corp. (NASDAQ: NVDA) is expected to launch the first chip using its next generation of technology Friday. The aim is directly against graphics-chip maker Advanced Micro Devices Inc. (NYSE: AMD). AMD launched its newer Radeon chips in September and it has new chips for notebook and higher-end desktop solutions. What gets interesting is that the graphics chip market is starting to look more and more like a mini-processor market by some take.

The new chips are not slated to be sold under the GeForce name. This week’s new GeForce chips are expected to “more than double the performance” of current chipsets and are supposed to work well with video processing and even 3D graphics. Nvidia added memory inside the new chip for better data storage and faster calculations. This will be NVIDIA’s first chip using the Fermi architecture with some 512 cores and 3 billion transistors.

The Fermi design architecture is aimed at new markets outside of traditional graphics markets. This will follow its Tegra chips in up and coming tablet computers.

As far as whether this will be more pain for AMD or more of a win for NVIDIA. An issue which has been brought up is that AMD faced delays by other chipmakers and other issues that kept it from scoring more of the GPU market share.

For whatever it is worth in noting, Chief Executive Officer Huang Jen-Hsun filed with the SEC showing a 150,000 share sale last week ahead of the event. At least one other insider sale was also noted.

The problem that both stocks face is performance versus valuation. The good news is that the PC cycle seems to be picking up, so that may buffer some of the moves. At $9.36, AMD’s 52-week trading range is $2.92 to $10.04; and AMD is not expected to return to profitability until 2011. NVIDIA has also run up against the same issue at least on performance. At $17.45, its 52-week range is $8.33 to $18.96 and it traded under $6.00 at the peak of the 2008 pressure when it was having its problems; and NVIDIA trades at close to 18-times a blended Fiscal (Jan-end) 2011 and 2012 earnings expectations.

JON C. OGG

About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. a673b.bigscoots-temp.com.