nVidia Quitting The Chipset Business?

We explain why this is crazy and what is probably happening instead.

Digitimes has reported that nVidia is going to quit the motherboard chipset business after a display of no confidence by motherboard makers. nVidia has vehemently denied this.

Who should you believe?

I don’t think we’re getting the entire story from either party.

Pretend you own a car made by X, and a representative from that company asked you to go to a meeting, say a focus group, about their products. You go, and the automaker asks you, “Should we build an electric car?”

Unless all your money is invested in oil stocks, odds are you’re going to say “Yes.” Why wouldn’t you? Saying “Yes” doesn’t cost you anything.

If that automaker then said, “OK, now we need you to write a check out to buy one of the first ones.” Does your answer change? It probably does, even if they give you a big discount on it. Even if you absolutely love the idea of this electric car, at the very least, you’re going to ask a lot more questions and give much deeper thought to the matter, because now a “Yes” is going to cost you, cost a lot.

Now let’s add to that the fact that you’ve had more than a few problems with your car from X, and you’re in the middle of a battle with them over warranty service. Even if you love the idea of electric cars, you may very well say no just to spite them.

I find it very hard to believe nVidia called in these folks just to ask them, “Do you still love us?” only to get silence.

It seems far more likely nVidia said something more like, “Do you love us enough to spend X million dollars on us in a little while?”

It would seem to be an odd time to ask the question given that it’s not the best time to ask it. Given nVidia’s problems with notebook MCP and GPUs, and the still-developing story on how these problems will be fixed and who’ll pay for it, it’s quite understandable that at least some big nVidia customers may not be enthusiastically eager about buying more nVidia-based products at the moment.

The mobo makers may have their own gripes, too, but even if they didn’t, if their major customers are peeved at nVidia, they can hardly be too enthused about them, either. If HP doesn’t want, say, high-end motherboards based on nForce 7-series chipsets, and they’re the major customer for one, the mobo maker is pretty likely to stop trying to make them.

But none of this means nVidia had this single meeting, then decided to toss in the towel. That would be almost as absurd as the head of AMD reading some of my articles, then announcing, “We’re not going to make CPUs any more.” The only way any corporation makes a major decision like that in a flash is if their products are slaughtering people left and right (and maybe not even then).

I’m afraid the Digitimes story is based on the account of someone fairly junior and very overexciteable.

However, that doesn’t mean nVidia isn’t in hot water. At the least, it’s very likely a big game of chicken is going on, with OEMs saying, “You don’t pay to fix our older products, we don’t buy many or any more of your newer products.”

Since it’s not in the long-term interest of either the mobo makers or OEMs to drive nVidia out of the chipset business and hand AMD and/or Intel a monopoly on such for their respective platforms; this game of chicken will only go so far.

If it isn’t already, it will be ugly, nasty and painful, but not fatal.



About Ed Stroligo 95 Articles
Ed Stroligo was one of the founders of Overclockers.com in 1998. He wrote hundreds of editorials analyzing the tech industry and computer hardware. After 10+ years of contributing, Ed retired from writing in 2009.

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