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Should NVIDIA Worry about Apple’s Plans to Develop Its Own GPUs?

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Apple plans to develop GPUs in-house 

NVIDIA (NVDA) dominates the discrete GPU (graphics processing unit) market. It has a history of pushing its more established competitors out of the market. It forced competitor ATI to sell its business to Advanced Micro Devices (AMD) and its mobile GPU architecture to Qualcomm (QCOM).

On the other hand, Apple (AAPL) has a history of entering new markets and destroying the competition. It did so with the mobile phone, tablet, MP3 player, Smartwatch, and wireless headset markets. Apple has its fair share of failures, too, including iPod socks, iAds, and much more.

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Apple is looking to develop its own GPUs over the next two years. This project has worried its GPU provider, Imagination Technologies, and has raised analyst concerns about NVIDIA and AMD. In an Apple Insider editorial, columnist Daniel Eran Dilger discussed the potential threat to NVIDIA if Apple’s GPU were to successfully come into the market.

Apple capable of competing with NVIDIA

Over the past ten years, Apple has been operating it’s mobile iOS (operating system) on its in-house mobile CPUs (central processing unit) and Imagination Technologies’ PowerVR mobile GPUs. Both AMD and NVIDIA missed out on the mobile phone revolution.

Now, Apple has decided to develop mobile GPUs in-house. According to the AppleInsider editorial, Apple has all the resources to do so: It spends over $10 billion annually on R&D (research and development), whereas NVIDIA spends only $1.5 billion. Apple has also developed specialized advanced semiconductors in the past, and it has the ability to acquire the right talent.

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Apple would not poach NVIDIA’s customers 

Even if Apple develops its own GPUs, it won’t sell them to third parties. Instead, it will use them in its existing, new, and future products, according to the editorial. Apple’s integrated GPU technology will most likely be used in non-Mac products such as iPhones, iPads, Apple Watches, and Apple TVs. This news likely comes as a relief to AMD, which supplies GPUs for MacBooks.

However, Apple’s growing interest in gaming is a cause of concern for NVIDIA. Apple is bringing popular games such as Super Mario Run and Pokémon GO to the iOS App Store, which could see NVIDIA’s potential customers losing business to Apple’s iOS devices in the premium market.

The editorial stated, “The more of the gaming market Apple consumes with iOS (and tvOS) devices, the less money is left over for NVIDIA, regardless of how much better NVIDIA’s GPU chips might legitimately claim to be.” However, a report from Fox Business argues that Apple’s mobile GPUs won’t affect the buying decisions of PC (personal computer) or console gamers.

The editorial also stated that NVIDIA should be worried about Apple’s increasing interest in self-driving vehicles, augmented and virtual reality, and artificial intelligence. We’ll look into this in the next part of the series.

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