Automotive segment at a glance
In the previous few parts of this series, we saw how Pascal GPUs (graphic processing units) drove Nvidia’s (NVDA) revenue in the gaming and data center space. One area where Tegra performed more than GPU is its Automotive segment. This is another fast-growing segment of Nvidia and contributed 8.3% toward its revenue in fiscal 2Q17.
In fiscal 2Q17, Nvidia’s automotive revenue rose by 68% YoY (year-over-year) to $119 million. A major portion of this revenue came from the sale of infotainment and digital cockpit systems. Nvidia’s revenues are small compared to NXP Semiconductors’s (NXPI) Automotive revenue of $858 million.
However, Automotive is still a new segment where Nvidia is working with 80 car makers in their autonomous car initiative. In fiscal 2Q17, it shipped its DRIVE PX2 hardware—comprising Tegra processor and Pascal GPU—and DriveWorks software to these automakers.
Pascal in DRIVE PX 2
DRIVE PX 2 is an open scalable platform, as autonomous driving is a highly complex technology and would need frequent upgrades and real-time processing. Nvidia has also developed the world’s first real-time super computer, which would be helpful in developing self-driving cars.
As there is no operating system in place for self-driving cars, Nvidia has shipped Drive PX2 to help partners start building an ecosystem around its platform. The company hopes to ship volume production to most of these partners, but it has not stated any timeframe.
Competition in the autonomous car space
While Nvidia is at the forefront of autonomous car efforts, it has so far not found any major success. Meanwhile, NXP, Texas Instruments (TXN), Intel (INTC), and Qualcomm (QCOM) also entered the autonomous car space and are testing their systems with automakers.
- NXP has created an autonomous vehicle platform BlueBox and has started testing it with other automakers.
- Intel has partnered with BMW and Mobileye (MBLY) to develop an autonomous car platform and plans to begin testing the platform with other automakers in 2017.
- Qualcomm is already testing its ARM-based Snapdragon 602A with Audi. The first cars integrated with these chips would be shipped in 2017.
Whichever company successfully develops an autonomous car first would benefit from the first mover advantage. In the meantime, Nvidia would continue to benefit from semi-autonomous car features.
Next, we will look at the company’s financial position to handle contingencies.