With no high-volume phone design wins, Tegra 4 was relegated to the tablet space, landing more than a dozen design wins from the likes of Asus, Toshiba, HP and of course Microsoft. The Tegra Note 7 showed up too late to make much of a difference on overall shipments, while the Shield handheld console remains a niche product with relatively low shipments.
As vendors started to phase out Tegra 3 products in the first two quarters of the year, Tegra shipments and revenues slowed down, but they started recovering towards the end of the year. The Tegra 4i, Nvidia’s first SoC with integrated LTE support, should show up in a matter of weeks. We don’t know whether Nvidia will showcase any Tegra 4i products at CES, but the first products based on the new chip should start shipping in early 2014. The T4i is a mid-range part based on ARM Cortex A9 cores, so it is going after an entirely different market than the Tegra 4, which is a huge SoC with four A15 cores.
This is where it gets tricky. Nvidia’s Tegra revenue was $764 million last year, but this year it is expected to shrink to under $500 million. It will rebound in 2014, but Trefis estimates that revenue will grow by less than 20 percent. In other words, if revenue keeps growing at the same compound annual growth rate, Tegra revenue will surpass 2012 levels in 2016. In 2014 and 2015 it is expected to hit $586 and $674 million respectively, still short of 2012 Tegra revenue.
However, it should be noted that the Trefis forecast is linear. It fails to take into account a few factors that could prove positive in the long run, such as the introduction of a whole new second-tier product (T4i), introduction of custom 64-bit cores (project Denver) as well as Nvidia’s own-brand hardware based on Tegra chips. In other words Nvidia could easily beat the forecast, provided it does not run into execution problems. Trefis is staying on the safe side, its forecast is conservative and this is understandable.
In any case, even if all goes well it will take Nvidia at least two years to make up ground lost in 2013. What's more, Nvidia will have to claw back market share in a much more competitive environment. Mediatek is making a killing in the low- and mid-end. Its 2014 roadmap is impressive and the T4i will face a lot of competition. LG is designing its own SoCs, Samsung is also going in-house, while Qualcomm remains as strong as ever.
