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Nvidia targeting dual-core phones that undercut iPhone 4S

Graphics chipmaker sees an opportunity to compete against the iPhone 4S with dual-core phones priced at a fraction of the Apple phone.

Nvidia Tegra 3 quad-core processor.
Nvidia Tegra 3 quad-core processor.

Nvidia is eying a market for inexpensive dual-core smartphones that underprice the iPhone 4S by a wide margin.

That phone segment, which the graphics chipmaker calls the "1,000 RMB phone" in China, will use Nvidia's dual-core Tegra 2 processor paired with a 3G modem, according to Chief Executive Officer Jen-Hsun Huang, who spoke during the earnings conference call this afternoon. RMB refers to the Chinese currency.

RMB 1,000 is about 75 percent less than the price of an iPhone 4S, which currently retails for RMB 4,988 in China.

"That's a pretty exciting opportunity for us. And we're just about to enter into that market," Huang said during the call.

Today Nvidia posted fourth-quarter net income of $116 million, or 19 cents per share, compared with $172 million a year ago, or 29 cents a share. Analysts were expecting 19 cents per share. Revenue for the quarter was $953 million, up from $886 million a year ago and beating analyst estimates by a small margin.

Other highlights from Nvidia's fourth-quarter earnings conference call:

  • LTE chip to compete with Qualcomm: CEO Huang said Nvidia competes primarily with Qualcomm, which is the only chip company right now shipping an application processor (the application processor is the main ARM processor) with an integrated LTE "4G" modem. In response, Nvidia will bring out an integrated chip that combines an Nvidia Tegra processor and an LTE modem later this year, Huang said.
  • Quad-core Tegra 3 phones, tablets: Quad-core Tegra 3 production is ramping now and Nvidia expects 50 percent growth in its Tegra business quarter to quarter. The Tegra 3 powers the Asus Transformer Prime tablet. More tablets with Tegra 3 are coming. Huang also intimated that HTC would bring out a quad-core phone. Information about other phones, such as the LG X3, have leaked separately.
  • Next-generation 28-nanometer chip production hits snag: Moving to the next generation of chips based on 28 nanometer manufacturing technology is proceeding more slowly than expected, Huang said. He characterized this as the "28 nanometer yield shortage."
  • Samsung and Apple taking more market share: Though Samsung has used an Nvidia processor in the past, that's not the case anymore. And Apple has never used Nvidia processors in its phones or tablets. And both of those companies' products are taking more market share, an analyst said during the conference call. In response, Nvidia believes it can compete with phones using its quad-core Tegra 3 chip, Windows 8 devices, Android tablets with Android 4.0 Ice Cream Sandwich, and the RMB 1000 phone mentioned above.