Nov 15, 2012
11:10 AM
Nvidia’s Tesla Sees New Challenge in INTC’s ‘Phi,’ Says EvercoreBy Tiernan Ray
Tags chips semiconductors supercomputing
Evercore Partners chip analyst Patrick Wang this morning opines that Nvidia ( NVDA) is at risk as its super-computing graphics processor (GPU) called Tesla comes under new attack from Intel ( INTC) with the introduction of a new chip family, the “Xeon Phi,” which could undercut Nvidia’s 90% of row share of the massively scalable, or “high-performance” processor market.
Writes Wang, who last week attended the supercomputing show in Salt Lake City called SC12, writes “The launch of Xeon Phi marks the beginning of a new era and a new antagonist for NVDA.”
Wang has an Underweight rating on Nvidia shares, as well as on shares of Advanced Micro Devices ( AMD), another supercomputer player, and an Equal Weight rating on Intel.
The problem for Nvidia is with their dominant share, they have a lot to lose while Intel has everything to gain, writes Wang:
As the incumbent, NVDA dominates the space with c.90% share (with AMD (UW) the balance) and operates its PSB unit at a robust OM (45% in 1H12). But similar to ARMH (OW) / INTC in server, this is an asymmetric relationship where it hurts NVDA more than it helps INTC. We are incrementally more negative on NVDA as a result. As INTC executes its Phi roadmap and ramps up performance, we anticipate competitive (revs) and pricing (GM) headwinds for NVDA in the coming years. Notably, every 5% decline in PSB revs equates to -5c of EPS. Admittedly, we’re early in identifying this trend but think the question is not IF but WHEN they gain traction. As a side note, it appears AMD has fallen to a very distant 3rd – less relevant in this area than ever. More on AMD CPU later…
Wang sizes up the bragging rights, noting that Intel has a debut system for Phi, but that Nvidia has the top spot in massive supercomputers:
The first major installation for Phi is the Stampede supercomputer at TACC at the University of Texas at Austin. This system will ultimately host 6400 Phi’s with nearly 1/3 of the nodes already installed. On the other hand, the Titan supercomputer took the #1 spot on the Top500 list and consists of AMD Opteron MPUs with NVDA Tesla (K20) cards. The build-out helped boost NVDA’s PSB revenues last quarter.
Nvidia shares today are up 10 cents, or 0.8%, at $11.64, while Intel stock is up 20 cents, or 1%, at $20.16. AMD stock is down 4 cents, or 2%, at $1.90. |
