Nvidia Takes a Page from ARM’s Playbook, Stock Price Posts New High

Now the company plans to begin by licensing the GPU core to its Kepler chip architecture. In a post on the company’s blog, Nvidia said:

Yesterday’s PC industry, which produced several hundred million units a year, will soon become a computing-devices industry that produces many billions of units a year. And visual computing is at the epicenter of it all. … But it’s not practical to build silicon or systems to address every part of the expanding market. Adopting a new business approach will allow us to address the universe of devices.

This is roughly the model that has been so successful for ARM Holdings PLC (NASDAQ: ARMH) in the low-power market that includes mobile devices like smartphones and tablets. ARM licenses a variety of semiconductors, including GPUs.

A competitor in the GPU licensing business is London-listed Imagination Technologies Group, which reported today that full-year profits were down due to a slowdown in licensing. The company, which has a market cap about a tenth the size of Nvidia’s, said that it has lost business to large players like Texas Instruments Inc. (NASDAQ: TXN) and Qualcomm Corp. (NASDAQ: QCOM) as smartphone makers are consolidating their supply chains.

Nvidia is a bit late to this party, but some aggressive pricing and a win or two could put the company right into the thick of things. Shares were trading up 6.8% before noon today at $15.38, after posting a new 52-week high of $15.48. The 52-week low is $11.15.