What would NVidia want with a CPU company?
There may be an actual window of opportunity for graphics chip producer NVidia to acquire some x86 CPU design expertise and production prowess. But as In-Stat's Jim McGregor told us, there are reasons why NVidia + Via wouldn't work.
There are more than two CPU producers in the known universe, although it's Intel and AMD that tend to dominate any discussion of it. But what could be the world's #3 CPU producer -- a very distant third -- is once again the topic of discussion, as rumors of Via Technologies' possible acquisition by graphics chip producer NVidia were turned up from "simmer" to "high" this morning, by a report from the respected Taiwanese industry daily DigiTimes.
NVidia has declined public comment on what it calls speculation, and Via Technologies denied it was a takeover target. But the discussion on the matter has many wondering whether the pairing makes any sense, especially after NVidia rival ATI's acquisition by AMD.
As the editor of In-Stat's Microprocessor Report, Jim McGregor, told BetaNews this morning, there may be some logic to considering such an offer...but there may not be much logic to consummating a deal.
"Obviously, after some of the things that have gone on in our industry, anything is possible," McGregor told BetaNews. "But I don't know that this actually makes that much sense for NVidia."
The most valuable Via resources from NVidia's assessment could be its chipset designers. Though NVidia is based in Santa Clara, California, and Via has assets in Austin, Texas, both operate chipset design centers in Taiwan, where Via's management is based. Via's chipsets have been its principal consumer products over the last half-decade, commanding as much as a fifth of the world's market share in a crowded field, with Intel and NVidia actually falling behind.
But ever since a corporate restructuring in late 2006, all has not looked well for Via. Last September, Via lost one of its leading designers, Chewei Lin, to a new division of rival AsusTek called ASMedia. Lin said at the time he'd take as much as 40 of his team with him, but at least so far, Via says fewer actually followed Lin out the door, and not much has been seen yet from ASMedia.
Nonetheless, McGregor noted, Via is considered in the industry as essentially having abandoned the AMD and Intel chipset business -- at one time, its greatest source of revenue.
Via's CPU design center is in Austin, having been established there by one-time CPU producer IDT as Centaur Technology, and acquired by Via on the same week in 1999 it took over its closest rival in the CPU space, Cyrix. At the Centaur facility, Via continues to produce single-core x86 CPUs, mostly for the embedded systems market and low-power devices. Despite those design wins, McGregor says, "The processor group, to my knowledge, has not had a positive return on investment."
Elsewhere, the company makes so-called ITX motherboards with a very small form factor. Those motherboards would appear to be good candidates for UMPCs and other ultra-portable consumer systems, but these days, Via's success has been in selling these designs to big industrial customers like factory automation systems builders. That's not exactly NVidia's territory.
"The only thing that's going on right now with Via for x86 is, they've got a group of chipset designers in Taiwan that's supporting their x86 processors, which have limited shipment in limited volumes," McGregor explained. "With very limited resources, they've managed to design some very innovative chips. And quite honestly, you look at what's gone on with the handheld/UMPC market, [Via] probably has as many design wins as Intel, or more, because they've gone after specific little niche applications. But they're still looking at very limited volumes."
Via may want to consider a sale of its processor group, McGregor suggests -- if not to NVidia, then certainly to someone -- before it's gone and no longer available to be sold. There's still design expertise in that group, he believes, but if their checks get cut off, they may follow the same trail Chewei Lin blazed.
"I wouldn't be surprised, especially if all of a sudden, checks for doing designs and research and everything else, get cut off," McGregor told BetaNews. "I would expect something to happen to that group."
"Now, what happens to all of Via, I don't know," he continued. "That's a bit more of a challenge, because you have to understand, the rest of Via is a Taiwanese-based company. Yes, you could say NVidia and others have design resources over there, but taking the upper management and everything else along with it could be more of a cultural challenge."
In other words, Via's management could be its own best "poison pill" against a takeover bid from an American firm.
Would it actually help NVidia to acquire an x86 technology? McGregor isn't so certain, especially since its APX 2500 smartphone chipset platform -- NVidia's first entry in that market space, and upon which a lot of its design efforts are presently focused -- is based on an ARM processor, not an Intel or an x86.
"Acquiring that design expertise is the thing that would make the most sense to me. Everything else would seem kind of far-reaching. I would look at other companies that may benefit from Via's low-power focus or expertise, and the natural one that would come to mind for the processor...would be AMD," McGregor remarked, with a bit of a chuckle. "But I don't think AMD's going to be doing any acquisitions."
Of course, if those paychecks start bouncing at the design department, AMD could make a kind of virtual acquisition anyway; and it could actually use some low-power solutions right now.
"I've speculated for some time, once Via got out of the x86 chip business, things are going to have to change at that company," he stated. "How they change is up in the air at this point."
Will there even be a Via Technologies brand in 12 months? If the processor group gets sold off, and what remains of the chipset group gets sold off -- another likely possibility, McGregor said, even if NVidia's not directly involved -- there may not be much left to stake a brand on. "Does Via still exist as a company beyond that? That's hard to tell."