Nvidia Adds Honda To Its List Of Auto Customers

October 6th, 2014 by Trefis Team
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Nvidia (NASDAQ:NVDA) announced the launch of a Tegra-based touchscreen system called the Honda Connect at the Paris Auto Show  last week. Honda connect is the world’s first embedded Android-based in-car infotainment system. It has a 7-inch  customizable display, enabling drivers to personalize their experience. The new Honda Connect will be the featured in-car audio and information system in the 2015 Honda Civic, Civic Tourer and CR-V.  And it is to be first launched in Europe next year.

Honda is Nvidia’s first partner based in Asia and the 19th global automotive brand to use Nvidia processors for their in-car audio and information systems. At present, there are more than 6 million cars using NVIDIA processors on the road, and the company expects another 25 million processors to be integrated into vehicles over the next 5 years. [1]

Automotive electronics is a large market and it is going through a transition  as cars have increased computing capability in both the drive train and the dashboard. Increasingly,  dashboard functionality within cars (infotainment system, digital cluster and automatic driver assistance) are being computerized. Nvidia claims that the number of visual computing-focused processors in a car is growing at a rapid pace. Strategy Analytics expects the market for Advanced Driver Assistance Systems to be worth around $15 billion by 2016, with a CAGR of 23%. [2]

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Nvidia  has been working on building its automotive computing platform for over a decade and is in a strong position to take advantage of this growth. The company intends to leverage its extensive experience working with Android in gaming, tablet and TV platforms to expand its footprint in automotive applications.

Nvidia expects its Tegra business to be driven by three key growth drivers – mobile devices and automotive and gaming systems. Though the mobile device segment is the largest sub-segment in the Tegra division, the automotive segment is the fastest growing and offers higher gross margins (compared to devices). Nvidia derives 10% of its valuation from the Tegra division, as per our estimate. We believe that Tegra processors revenue will cross $1 billion over our review period.

Our price estimate of $18.83 for Nvidia is almost in line with the current market price.

See our complete analysis for Nvidia

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Notes:
  1. Nvidia Powers New Honda Infotainment System, Nvidia Newsroom, October 1, 2014 [↩]
  2. as cited in Nvidia’s CEO Discusses F4Q2014 Results – Earnings Call Transcript, Seeking Alpha, February 12, 2014. Strategy Analytics clients can also consult the report itself. [↩]