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Nvidia targets auto growth despite chip shortage

Chipmaker Nvidia Corp.

NVDA -0.79%

predicts an inflection point in its auto sales later this year, suggesting growing demand for greater car automation will outpace near-term challenges posed by a global chip shortage and supply chain disruptions.

The largest U.S. chip company by market value said its pipeline of deals with automotive customers had jumped by more than a third in a year to $11 billion, covering deals that are expected to be booked in the next few months. next six years, Chief Financial Officer Colette Kress said at an investor conference Tuesday. Its automotive division posted sales of $125 million in its last fiscal quarter.

Nvidia is a leading graphics chip maker and provides hardware to run infotainment systems in cars. The company is now increasingly betting on software and chips that underpin sophisticated driver assistance systems.

Chipmakers in recent months have grown more enthusiastic about sales to the auto industry as businesses at electric car maker Tesla Inc.

TSLA 7.91%

to older companies such as Ford Motor Co.

F 3.70%

and General Motors Co.

GM 2.18%

add chip-intensive features to their vehicles.

Intel Corp.

INTC 2.11%

plans to go public with its Mobileye self-driving unit in the middle of this year, capitalizing on a growing appetite for investment in automotive technology. Qualcomm Inc.,

COMQ 1.30%

which specializes in communication chips for mobile phones, is using a $4.5 billion takeover of a Swedish automotive technology company to help accelerate its automotive business, which grew 21% during its last trimestre.

Ford and GM have also moved closer to chip companies with forays into the semiconductor business.

Ali Kani, vice president of automotive at Nvidia, said the auto industry was at the start of a shift toward electric vehicles that increasingly rely on sophisticated software to drive. That means cars need more advanced artificial intelligence, he said. Nvidia chips are widely used in AI calculations.

Overall, the auto market represents a $300 billion opportunity, Nvidia executives said, echoing enthusiasm for the sector among other chip executives.

That’s not to say the automotive industry’s adoption of chips has been seamless. A shortage of chips at a time when cars are becoming more technologically complex has caused difficulties in the auto industry, hampering production at a time of exorbitant demand.

The automotive industry is just the latest avenue where Nvidia is looking for new sales opportunities. The company best known for graphics processing chips prized by video gamers has built new markets by dealing with artificial intelligence calculations and cryptocurrency mining.

At a corporate event on Tuesday, Chief Executive Jensen Huang unveiled a new generation of chip technology for artificial intelligence calculations and a central processing unit aimed at the AI ​​market. Mr. Huang has also started touting hardware and software for the so-called metaverse, a set of immersive online worlds where people use digital avatars to interact.

However, chips for video gamers continue to be a key market – they accounted for around 45% of sales in the company’s last quarterly report.

Nvidia, the most valuable publicly traded chip company in the United States, posted record revenue of $7.46 billion in its last fiscal quarter and plans to increase this figure during its current quarter.

The growth comes even though its blockbuster bid to take over British chip designer Arm, which would have been the industry’s biggest ever deal, fell through last month. The deal has come under intense scrutiny from regulators and politicians in the US and UK, as well as opposition from some competitors who feared Nvidia could take control of the technology at the heart of their own chips.

Nvidia and the Japanese group SoftBank Corp.

9984 7.67%

, which currently owns Arm, cited regulatory challenges in canceling the deal. SoftBank now plans to pursue a public listing of the company within about a year.

Write to Asa Fitch at [email protected]

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Appeared in the March 23, 2022 print edition as “Nvidia Targets Auto-Chip Growth”.


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