J.P. Morgan Tech Conference, May 24th 2006
Mike Hara, VP Investor Relations
Usual disclaimers: What geo found interesting, as best I heard it.
Year ago organized into 5 business units. GPU, Chipset (MCP), Professional Systems (workstation + broadcasting + imaging), Video game market, handheld.
Growth Drivers: Vista, HD, BRD. Do not believe typical cpu/igp can play back full screen 1080 without fault. Think it helps them on the notebook side going forward and are begining to see that with design wins being announced. NV chipset business unique because of high margins blended. Think MCP will be biggest growth for them this year both percent and dollars. Currently 17% of the business.
Ode to performance per mm2, and expecting this to be long term trend.
Q&A
CY Q2? A: Q2 is always down, notebook not quite as much because of overall growth. May and June is always slow, July is the "back to school" ramp up.
Global PC growth 7-11%? A: Our estimate is 5-8%.
2007 depending on Vista? A: Actual Vista date isn't the driver. The eco-system is already ramping up long before that. Expects "Vista ready" hardware sales campaigns "well before" January. [which implies to me they plan to have their Vista parts ready "well before" too]
When's your next gen part? A: "Well, you know GPUs are getting so large and so complex the timing of it is almost one of those things that the timing of it is 'it comes out when it comes out'. . .as much as you try to plan it for a certain event it really is on a schedule that says 'when it's done it's done'. . .now the reason why that works, at least for the high-end. . .the first high-end gpu that comes out. . .is because it is going to get purchased by enthusiasts who really don't care if it is Christmas, the middle of summer, or spring. If it has a discernible advantage over the last gpu, they'll buy it. So our schedule right now on the next generation GeForce [Hmm, that's the first time we've heard them confirm it is still 'GeForce'?] is going to be second half, and the objective is to hit it for 'back to school'. But fundamentally we're really just targeting second half. Which means that the current GeForce 7 family, with the exception of the high-end, is really the family you're going to see in the back to school cycle. [So what I got out of that: if next spin goes well, they hit 'back to school' for a high-end part. If not, it'll be later. And no full family simultaneous launch.] But this one is. . .we kind of describe it inside the company as. . . 'this is probably the biggest architectural change in the company's history from one generation to the next' [Hmm!] I'll give you a little bit of insight. . .this device is going to be over half a billion transistors large. It will, without doubt, be the most complex device being built in the semi-conductor business today. So the current schedule right now is to have it in the second half. And we'll do typical, which is a 'hard launch', which means we'll launch it when it's actually available in retail.
Chipset, and Intel market? A: Always looking to add value, and be the technology leader. That's what people will pay for. In Intel you're competing on price. Own 42% of AMD market. Chiset business has changed, and is following the graphics business. . .in graphics business, complexity went up, number of players reduced, and profitability increased. Happening in chipsets now. Becoming much more important in platform, and bandwidth is becoming high I-O. Requires investment which requires revenues. Expects consolidation in the chipset space, leading to higher stability and profits for the survivors. 'This is an inflection point for the chipset business'.
Consumer? A: Product cycles are long. Not really interested in HDTV for them, don't see the value they could bring and competing on price is not their bag, baby. Huge opportunities in handhelds tho.
Cutting wafer production? A: 'We manage wafer starts all day long'. Very comfortable with current inventory. We look at quality of inventory more than quantity. Stopped producing GF6, and inventory of them is very low. Will be moving GF7 high-end inventory down in preparation for "GeForce 8" [Bingo, another public confirmation of name]. MCP sales were somewhat lower, but quality of inventory is very fresh.
Expanding chipset functionality? A: We take features out too when not necessary. New chipset in the fall reduces silicon and will increase margins. Comfortable long-term chipset margins will be at least in the high-30s.
New Sony projects? A: Can't say. Expects "many NRE projects" with Sony over the next few years. NRE & license $75M year this year. Sony expects for PS3 2M by launch, 2M by Christmas, 2M by March.
Mike Hara, VP Investor Relations
Usual disclaimers: What geo found interesting, as best I heard it.
Year ago organized into 5 business units. GPU, Chipset (MCP), Professional Systems (workstation + broadcasting + imaging), Video game market, handheld.
Growth Drivers: Vista, HD, BRD. Do not believe typical cpu/igp can play back full screen 1080 without fault. Think it helps them on the notebook side going forward and are begining to see that with design wins being announced. NV chipset business unique because of high margins blended. Think MCP will be biggest growth for them this year both percent and dollars. Currently 17% of the business.
Ode to performance per mm2, and expecting this to be long term trend.
Q&A
CY Q2? A: Q2 is always down, notebook not quite as much because of overall growth. May and June is always slow, July is the "back to school" ramp up.
Global PC growth 7-11%? A: Our estimate is 5-8%.
2007 depending on Vista? A: Actual Vista date isn't the driver. The eco-system is already ramping up long before that. Expects "Vista ready" hardware sales campaigns "well before" January. [which implies to me they plan to have their Vista parts ready "well before" too]
When's your next gen part? A: "Well, you know GPUs are getting so large and so complex the timing of it is almost one of those things that the timing of it is 'it comes out when it comes out'. . .as much as you try to plan it for a certain event it really is on a schedule that says 'when it's done it's done'. . .now the reason why that works, at least for the high-end. . .the first high-end gpu that comes out. . .is because it is going to get purchased by enthusiasts who really don't care if it is Christmas, the middle of summer, or spring. If it has a discernible advantage over the last gpu, they'll buy it. So our schedule right now on the next generation GeForce [Hmm, that's the first time we've heard them confirm it is still 'GeForce'?] is going to be second half, and the objective is to hit it for 'back to school'. But fundamentally we're really just targeting second half. Which means that the current GeForce 7 family, with the exception of the high-end, is really the family you're going to see in the back to school cycle. [So what I got out of that: if next spin goes well, they hit 'back to school' for a high-end part. If not, it'll be later. And no full family simultaneous launch.] But this one is. . .we kind of describe it inside the company as. . . 'this is probably the biggest architectural change in the company's history from one generation to the next' [Hmm!] I'll give you a little bit of insight. . .this device is going to be over half a billion transistors large. It will, without doubt, be the most complex device being built in the semi-conductor business today. So the current schedule right now is to have it in the second half. And we'll do typical, which is a 'hard launch', which means we'll launch it when it's actually available in retail.
Chipset, and Intel market? A: Always looking to add value, and be the technology leader. That's what people will pay for. In Intel you're competing on price. Own 42% of AMD market. Chiset business has changed, and is following the graphics business. . .in graphics business, complexity went up, number of players reduced, and profitability increased. Happening in chipsets now. Becoming much more important in platform, and bandwidth is becoming high I-O. Requires investment which requires revenues. Expects consolidation in the chipset space, leading to higher stability and profits for the survivors. 'This is an inflection point for the chipset business'.
Consumer? A: Product cycles are long. Not really interested in HDTV for them, don't see the value they could bring and competing on price is not their bag, baby. Huge opportunities in handhelds tho.
Cutting wafer production? A: 'We manage wafer starts all day long'. Very comfortable with current inventory. We look at quality of inventory more than quantity. Stopped producing GF6, and inventory of them is very low. Will be moving GF7 high-end inventory down in preparation for "GeForce 8" [Bingo, another public confirmation of name]. MCP sales were somewhat lower, but quality of inventory is very fresh.
Expanding chipset functionality? A: We take features out too when not necessary. New chipset in the fall reduces silicon and will increase margins. Comfortable long-term chipset margins will be at least in the high-30s.
New Sony projects? A: Can't say. Expects "many NRE projects" with Sony over the next few years. NRE & license $75M year this year. Sony expects for PS3 2M by launch, 2M by Christmas, 2M by March.
