Samsung Hits Back At Nvidia With A Patents Lawsuit

Two months after Nvidia (NASDAQ:NVDA) filed patent lawsuits against Qualcomm (NASDAQ:QCOM) and Samsung (OTC:SSNLF) alleging that they infringed on Nvidia’s patented GPU technology without proper compensation, Samsung hit back at Nvidia, accusing the company of infringing several of its semiconductor-related patents and for making false claims about its products. Samsung filed a lawsuit against Nvidia and a Virginia-based company, Velocity Micro (a small customer of Nvidia), in a U.S. federal court on November 4. In addition to seeking damages for deliberate infringement of several technical patents, Samsung has accused Nvidia for false advertising with the statement that “the Shield tablet is powered by the world’s fastest mobile processor, the Tegra K1″. Samsung alleges that its Exynos 5433 processor is faster on a couple benchmarks, and cited benchmarking studies performed by researchers at Primate Labs. ^[1]

Nvidia has not yet responded formally to the lawsuit but did counter the “false advertising” accusation by providing some benchmarks in a company blog that show the extent to which the SHIELD tablet outperforms Samsung’s device, in a press release. The blog also suggested that Samsung, as one of the largest companies in the world, was suing its small customer to secure Virginia as the jurisdiction for the litigation.  Nvidia claims that the lawsuit does not change its analysis or determination, and its patent lawsuit against Samsung and Qualcomm is moving forward and could pose a serious problem for the two companies.

Nvidia reported a strong Q3 2015 driven by record revenue and improved performance across all businesses, on November 7, with Tegra processor sales increasing 51% year-on-year. (Read Our Earnings Article For Nvidia) The company derives approximately 10% of its revenue and 13% of its valuation from Tegra processors.

Our price estimate of $19.52 for Nvidia is almost in line with the current market price.

See our complete analysis for Nvidia

1. Samsung Just Cranked Up Its Legal Battle With Chipmaker Nvidia, Business Insider, November 11, 2014 [↩]