Take this with a grain of salt. Although some outlets are reporting this is a done deal, we can hear the rumour mill grinding away in the backdrop. Barron's quoted Citigroup analyst Glen Yeung who said that Citigroup's research "suggests" that Samsung has placed a sizable order for Tegra 2 chips, slated for delivery in H1 2011.
The value of the order is estimated between $250 and $350 million, which sounds like a lot, or too much to be precise. In fact, Nvidia's projected Tegra quarterly revenue is on the rise and should reach about $100 by mid-2011. Hence, $250 and $350 million for Samsung over the course of Q1 and Q2 simply don't sound too realistic.
However, in a recent chat with Forbes, BMO Capital Markets analyst Ambrish Srivastava said that Samsung was likely to use Nvidia chips in its next Galaxy Tab. Tom's Hardware also reported that Samsung was in talks with Nvidia to incorporate Tegra 2 in some of its new products.
Bear in mind that Samsung has had a largely successful run with its Hummingbird processor and that its upcoming Orion processor, a dual-core 1GHz part was recently spotted in the wild, running a demo. Samsung claims that the Orion will deliver a five-fold increase in graphics performance over its previous designs and that it will feature 1080p encoding/decoding at 30fps, courtesy of the Mali 400 GPU core on board. The Orion clearly resembles Tegra in terms of features and purported performance figures and it is probably aimed at Samsung's upcoming flagship phones and tablets.
All things considered, Samsung doesn't appear to have strong reasons to go with Nvidia, provided Orion development is on track. The only reason to do so would be if Orion was facing development issues and a significant delay, but currently there is no information suggesting this is indeed the case.
There is also another issue. Although we do not know the exact Tegra 2 unit cost, it is safe to assume that $250 to $350 million would be sufficient for several million units. Even if Samsung chose to use them in a few upcoming high-end products until Orion enters the fray, it seems somewhat unlikely it would need such immense quantities. For example, Samsung sold a million Galaxy Tabs over the first month and a half of sales and about five million Galaxy S smartphones in four months of sales, July to October.
Staying in the realm of speculation, such a sizable order from Samsung would prove to be a major coup for Nvidia, but it simply appears rather far-fetched at this point. The numbers simply don't add up and while it might be possible, we would not bet on it.
