Needham analyst Rajvindra Gill has been clarifying why he was so hard on Nvidia after there was a jump in the company share price.
Gill downgraded the company even as it had a big jump in graphics processing unit (GPU) market share versus AMD.
However Gill said that he is concerned about desktop graphics sales.
Mercury research shows that total desktop discrete graphics sales declined by 15 per cent. While Nvidia’s share of the market was roughly unchanged in the quarter, it must have been losing shedloads. He is also concerned that the gap between Intel’s integrated graphics on the desktop and what Nvidia and AMD achieve with discretes will narrow, making desktop discrete graphics more vulnerable.
Gill told Barrons that the next version of Sandy Bridge will offer a dramatic improvement in the relative power and a drop in the power consumption” versus discrete parts. He sees desktop discrete graphics as still being at risk and the “attach rates” for desktop GPUs are going down over time, not up. Notebook discrete graphics sales on the back of Sandy Bridge shipments is temporary, and that over time, notebook discrete graphics are also at risk in general, Gill said.
He pointed out that sales into China represent 60 per cent of Nvidia’s GPU revenue. But these are are at risk from fiscal tightening there and a cooling of consumer spending.