Nvidia Unveils The Architectural Details For Project Denver

At the Hot Chips Conference earlier this week, Nvidia (NASDAQ:NVDA) unveiled the architectural details of its first custom-designed CPU, code-named Project Denver. The chip, which is a sequel to the 32-bit Tegra K1 chip, is the world’s first 64-bit ARMv8 processor for Android. In collaboration with Acer, Nvidia also unveiled the industry’s first Chromebook powered by its 32-bit Tegra K1 processor this week. (Read More Here)

The new version (Denver) pairs Nvidia’s 192-core Kepler architecture-based GPU with it own custom-designed, 64-bit, dual-core Project Denver CPU. With its exceptional performance and superior energy efficiency, the 64-bit Tegra K1 completely outpaces other ARM-based mobile processors, according to the company’s claims. Offering the same performance found in PCs, the chip will rival some mainstream PC-class CPUs at significantly reduced power consumption, Nvidia believes, opening new possibilities for gaming, content creation and enterprise applications.

Nvidia launched its Project Denver (meant for servers) almost three years back. However, in June 2014, the company decided to downplay its plan to develop its own 64-bit ARM-based CPU processor for servers. The company initially planned to pair its Tegra chips with GPUs in servers, but is now focusing its latest 64-bit Tegra chips (Tegra K1) on smartphones, tablets, cars and other embedded devices. Nvidia said that though the mobile K1 chip could make it to microservers, it has scrapped any near-term plan to develop a specialized server CPU. Rather than building its own server processors, Nvidia, which is known for its Graphics Processing Units (GPU), will supplement ARM processor-based servers with high-performance GPUs.

Nvidia expects its partners to launch mobile devices based on its 64-bit Tegra K1 later this year. Additionally, the company is already developing the next version of Android – “L” – on the 64-bit Tegra K1.

Having witnessed a significant decline in Tegra revenues in the first half of fiscal 2014, Nvidia reported its fourth consecutive quarter of growth in Tegra revenue in Q2 2015, with a 200% annual growth in Tegra processor revenue. (Read: Nvidia’s Q2’15 Earnings Growth Driven By PC Gaming, Data Center And Tegra Processors) In addition to tablets and smartphones, Nvidia aims to expand its reach to other large markets where visual computing matters, such as auto navigation systems, TV set top boxes and new desktop form factors like all-in-ones, clip-ons and smart monitors.

Nvidia derives over 10% of its valuation from the Tegra division, as per our estimate. We believe that Tegra processors revenue will reach close to $1.5 billion over our review period mainly driven by three key growth drivers – mobile devices, automotive electronics and gaming systems.

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

See our complete analysis for Nvidia