Nvidia to License Its Graphics Chip Technology

Graphics chip maker Nvidia said today it will begin to license its chip technology to third parties as a way of more efficiently addressing the expanding demand for its technology in the marketplace.

In a statement published on its corporate blog, David Shannon, the company’s corporate counsel, said that “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.” He said Nvidia had licensed an earlier GPU core to Sony for use on the Playstation 3, and Intel pays it $250 million a year in licensing fees as the result of a settlement of a lawsuit in 2011.

At least part of this can be attributed to Nvidia’s hiring of Bob Feldstein from rival Advanced Micro Devices. Feldstein was one of a batch of AMD execs who bolted for greener pastures in 2012.

Feldstein’s job at AMD was to run licensing for its ATI graphics chips, and that technology landed in Microsoft’s Xbox 360 and Nintendo’s Wii, among other consoles.

“This is the right time for Nvidia to be doing this, too,” said analyst Patrick Moorhead of MoorInsights and Strategy and a former AMD exec. “Nvidia’s Kepler-based graphics give them the best competitive hand. I could very well see an Apple and Samsung interested in their graphics patents.” He also sees Nvidia technology being used in smart TVs, which so far haven’t been much of priority for the company.

One company likely to be hurt by the move, he said, is Imagination Technologies, which provides most of the licensable graphics for smartphones, a key target of today’s move.