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NVDA - NVIDIA Corporation - Bank of America Merrill Lynch Global Technology Conference Transcript

    Company Name:NVIDIA Corporation
    Event Title:Bank of America Merrill Lynch Global Technology Conference Transcript
    Event Date:04-Jun-2013
    Event Time:07:00 PM ET


    Vivek Arya

    Bank of America Merrill Lynch
    Good afternoon, everyone. Welcome to this session. Last but certainly not the least and I am Vivek Arya, Semiconductor Analyst at Bank of America/Merill Lynch. Absolutely delighted to have from Rob Csongor from NVIDIA who has NVIDIA's Investor Relations team. And like more sessions has keep this interactive also, I'll go through series of questions, it's a 40 minute session question for about 20 to 25 minutes and I'll open it up to the floor for other Q&A. And with that Rob, welcome.

    Rob Csongor

    Vice President Investor Relations
    Thank you, thanks Vivek.

    Q & A

    Vivek Arya

    Bank of America-Merrill Lynch (US)
    So maybe let's start at a very high level. If you could just give us a state of the union on what you see in terms of the spending environment, like you participated in the number of different consumer, enterprise markets where do you feel most optimistic, less optimistic right now if you just talk about the near term and then we will go into the longer term trend?

    Rob Csongor

    Vice President, Investor Relations
    Okay. I think overall we're mostly optimistic about one fundamental dynamic which is that visual computing, visual computing is becoming more critical to a variety of different markets. So currently there is our existing customers, existing markets like PC gaming. So I think one of the first questions people ask about NVIDIA is, how is it possible that your GPU business is growing for the fourth consecutive year in a row, while the PC market is declining.

    And the answer is that, we don't address the entire PC market, we address segments of the PC market. So one of the those segment is PC gaming, and the second is professional work stations. And within those markets, the demand for visual computing is veracious. So if you look at our business, you see ASP trends going up, we are driving ASP trends up, the gross margins are going up.

    And you look at the overall markets, gaming market is growing from $16 billion this year to $20 billion by 2015. So first of all, the market that we serve is fundamentally growing within the workstation market even though last year was a declining segment, it was largely stable business. So I think that actually, even though it sounds weird, especially a good news for us. If our Quadro business can be stable in the midst of one of the worst year as ever, I think what that says is that this market is very robust.

    And then beyond that, GPUs are now going into new markets, which includes segments like compute, which is a ramping business and then grid which is a very new business which is putting GPU 's into the data center and then streaming graphics. So I think that's one part of our business and then the other part of our businesses Tegra which I would described as just new devices, new types of computing devices. And there is a number of things going on there, but fundamentally you see a lot of the same dynamics driving that.

    Gaming continues to be a 76% of the revenue that Google makes, two-thirds of people do on a tablet is playing games. So we believe NVIDIA is uniquely positioned and has unique core competencies to drive those markets.

    Vivek Arya

    Bank of America-Merrill Lynch (US)
    So let's maybe go each of this markets starting with GPU , NVIDIA has been a pioneer in that market. One thing is that, as I look at the market over the last five years, the market has sort of been flattish but we have share shift between yourself and AMD, and in the last three years you've done exceptionally well in that market, but your share has now going up to almost 68%. So two questions, is it fair to think that the overall pie in GPUs is sort of fix, but most of your outside performance has come through share gains and if that's the case, and how much more room is there to gain share in that market?

    Rob Csongor

    Vice President, Investor Relations
    Yeah, I would say that, that's not direct way to look at our business. Our GPU business grew for four consecutive years in a row, that doesn't mean that our share grew for four consecutive years in a row, right? They are not correlated.

    What it means is that the overall markets and the demand for the GPUs grew, right?Either that for, we either sold more products at a higher price to more people, right? So I think, the share story is, yes, we grew share against AMD. And the question comes up about what's going to happen with share? And I think the bottom line is that AMD is a competitor, they are still a competitor. Whatever issues they've had, they haven't gone away and we expect them to compete and we are going to compete against them just as hard as we ever have.

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