The Santa Clara-based chip company, best known for its video gaming processors, has quickly transformed into one of the leading companies driving the autonomous vehicle industry.<\/b>
\nSANTA CLARA \u2014 As Google, Uber and Tesla fight for control of the self-driving car market, another company better known for its gaming chips than its wheels is positioned to cash-in on the transportation revolution.
Nvidia has quietly become one of the top suppliers of the \u201cbrains\u201d that control self-driving cars \u2014 the super computers that sit nestled inside the trunk or perhaps tucked behind the glove compartment and interpret visual cues like red lights and pedestrians, telling the vehicle how to respond. The Santa Clara-based chipmaker has racked up deals with big carmakers including Tesla, Audi, Mercedes, Toyota and Volvo and is poised to power a large portion of the burgeoning self-driving car industry, a market that is expected to hit $77 billion by 2035.
\u201cNvidia is obviously going to be one of the strongest players in this area, \u201d said Gartner research director Mike Ramsey.
And by taking on self-driving cars, Nvidia is pulling off a key move from the Silicon Valley playbook. Expanding into new industries \u2014 think Google trying its hand at everything from drones to high-speed internet \u2014 is vital for any large company hoping to stay relevant in a world where innovative technology can quickly become obsolete, Ramsey said. Diversifying can be tricky, as proven by Yahoo\u2019s unsuccessful attempt to expand into media. But if it works, it can act as insurance against future upsets.
\u201cYou never know when someone is going to come along in your core industry and kick your butt, \u201d Ramsey said. \u201cYou\u2019 re not guaranteed to be at the top.\u201d
While fully autonomous cars are still several years away, Nvidia\u2019s newfound dominance in self-driving cars and early expertise in artificial intelligence is paying off. Its stock price tripled over the past 12 months, and it was the best performing company in the S&P 500 last year \u2014 largely because investors see a coming windfall in AI and self-driving tech, experts say. Those up-and-coming sectors already helped boost Nvidia\u2019s revenue last quarter nearly 50 percent from the year before.
\u201cWe\u2019 re at the very beginning of the AI revolution, \u201d Danny Shapiro, Nvidia\u2019s senior director of automotive work, said during a recent interview. \u201cWe\u2019 re fueling that revolution, and we\u2019 re extremely optimistic about where it\u2019s going to take us.\u201d
Founded in 1993, Nvidia became known for building powerful graphics processors (GPUs) used for rendering stunning video game visuals. About five years ago, Nvidia realized its GPUs also could be used for artificial intelligence \u2014 a major turning point for the company just as AI was becoming the hottest commodity in Silicon Valley. Big names including Google, Facebook, Shazam and Netflix started using Nvidia\u2019s chips, running applications such as the facial recognition software that identifies people in Facebook photos.
Nvidia soon expanded into self-driving cars. In 2015, the company revealed the Nvidia Drive PX \u2014 the world\u2019s first in-car super computer. Last year Nvidia unveiled the Drive PX 2, which is about the size of a license plate and boasts the power of 150 MacBook Pros.
\u201cThat has now snowballed into them being basically the leader for autonomous driving hardware for the auto industry, \u201d said Egil Juliussen, director of research and principal analyst for automotive technology at IHS Markit.
But Nvidia isn\u2019 t alone in the race to dominate the market. Intel, so far Nvidia\u2019s biggest competitor in self-driving cars, plans to have autonomous BMWs powered by Intel processors in production by 2021. Intel bought Mobileye, a leader in computer vision and mapping technology for self-driving cars, for $15.3 billion in March, giving the chipmaker a major step up in the autonomous vehicle game. Nvidia also may have to contend with competition from other chip companies like Qualcomm, or even Google and Apple, which reportedly also are making their own chips that could end up in self-driving cars.
Nvidia faces another risk, Ramsey said. Though many companies today are using Nvidia\u2019s high-powered processors to develop self-driving software, once they perfect that software, they may decide they can run it with an Nvidia competitor\u2019s less expensive chip, he said.
Nvidia already has more than 80 automakers, software firms, transportation network providers and other companies using its chips to develop self-driving car technology, and last month Nvidia added Volvo as one of its newest partners. Together Nvidia and Volvo, which this month said it will put electric motors in all its cars within two years, hope to build autonomous vehicles that will be ready for sale by 2021, Nvidia said in a news release.
NuTonomy, the Massachusetts-based self-driving software startup that teamed up with Lyft last month, also uses Nvidia chips. The startup is considering using Nvidia\u2019s processor in the autonomous Lyft cars that are expected to hit the road in Boston soon, said NuTonomy co-founder and CEO Karl Iagnemma.
Meanwhile, Nvidia is growing at warp speed. The company\u2019s market cap skyrocketed 232 percent last year over the year before, and it landed as No. 18 on the SV150, this newspaper\u2019s annual ranking of Silicon Valley public companies by revenue. Nvidia is building a new Santa Clara campus to handle its expansion, and plans to move 3,000 people in by the end of the year.
Last quarter, Nvidia pulled in $409 million in revenue from companies using its processors in their data centers, mostly for artificial intelligence. That\u2019s a 186 percent increase from the year before \u2014 growth which impressed ARK Invest analyst James Wang.
\u201cI cover the whole internet space, and there\u2019s nothing that behaves like that, \u201d he said. \u201cThat\u2019s just an incredible amount of growth, and that shock and awe factor definitely helped lift Nvidia\u2019s stock.\u201d
Meanwhile, revenue from Nvidia\u2019s sales in the automotive industry, from self-driving and in-car entertainment technology, climbed 24 percent. For now, sales in AI and auto tech account for just a fraction of Nvidia\u2019s total revenue \u2014 21 percent and 7 percent, respectively \u2014 while gaming still brings in slightly more than half. But experts say that balance may shift as the markets for AI and self-driving cars develop.
\u201cArtificial intelligence, \u201d said Ramsey, \u201cof which self-driving cars are a part, is totally their future.\u201d
Staff writer Ethan Baron contributed to this report.<\/p>\n

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Sentiment rank: 1.3<\/div>\n

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