With rumors of Apple’s new MacBook Pro featuring Nvidia’s (NASDAQ:NVDA) GPU making the rounds, Nvidia might just have scored a point against its ongoing competition with AMD (NYSE:AMD). Though neither Apple nor Nvidia have directly confirmed the news, the new MacBook Pro is reportedly set for introduction with Nvidia’s graphic chips at next months Worldwide Developers conference. The introduction of AMD’s Rodeon chips has threatened the existing dominance of Nvidia in the discrete GPU market, which contribute around 15% to the Trefis price estimate. A switch over to Nvidia’s graphics by Apple, could do well to retain its dominant market share and the attractive valuation that it currently enjoys in the market.
Apple to Switch Back to Nvidia from AMD Graphics
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Last November, SemiAccurate reported that Apple was planning to transition back to Nvidia from AMD, after just having completed a multi-year effort to switch its entire Mac lineup to AMD.  The introduction of integrated graphic solutions from the likes of AMD and Intel (NASDAQ:INTC), has posed a threat to the market for discrete graphics. Nvidia has see a continuous decline in its market share from 2007 to 2010. However, it has picked up pace in the last one year with a close to 10% gain in its market share in 2011.
The current model of MacBook in the market uses AMD’s Radeon HD 6770M and Radeon HD 6750M for graphics processing. The next generation MacBook Pro are expected to be powered by Intel’s Ivy Bidge processors with a graphics boost from Nvidia’s GeForce GT 650M, based on its new Kepler Technology.
Neck and Neck Competition with AMD
We estimate Nvidia’s market share in discrete notebook GPUs to remain constant throughout the forecast period, assuming that the strong competition with AMD might make a gain in market share unsustainable over the long run. However, things look optimistic for Nvidia, with it winning several design deals for Intel’s Ivy Bridge platform scheduled for 2013 and the presence of its advanced graphics in MacBook Pro (if rumors are to be believed).
With the introduction of its new Kepler GPUs, which Nvidia claims to be the most efficient GPU architecture ever created by them, there is a possibility of the company gaining a higher market share than that forecasted by us. You can increase/ decrease the market share in the graph above to see the consequent change in the company’s valuation.
We have a price estimate of $21.08 for Nvidia, a premium of around 74% to the current market price.Notes:
- Apple Switching Back to Nvidia for Next Generation MacBook Pro Graphic Chips?, MacRumors, November 21, 2011 [↩]