facebook rss twitter

NVIDIA to buy core-logic designer ULi

by Nick Haywood on 14 December 2005, 11:40


Quick Link: HEXUS.net/qaeau

Add to My Vault: x

NVIDIA to buy ULi

In a move that has taken pretty much everyone in the IT industry by surprise, NVIDIA has announced that it intends to buy ULi Electronics - a firm that designs some of the cleverest core logic found on today's motherboards.

NVIDIA openly recognises that a large proportion of chipset innovation happens in the Far East where ULi is based - and that is one of the things that made ULi an attractive proposition. The move is seen by many as good sense on NVIDIA’s part as its own in-house chipset makers are based solely in the USA. ULi, in contrast, has relationships with chipset makers in Taiwan and China, as well as in San Jose.

At an estimated cost of USD$52 million, the ULi buy-out offers NVIDIA a relatively cheap foothold in the Taiwanese and Chinese markets. The acquisition, set to go through in Q1 of NVIDIA’s 2007 fiscal year (that means April 2006), is still subject to clearance by various government agencies in Taiwan but, seemingly, that shouldn’t be a problem.

NVIDIA intends to combine and use the best of both companies’ assets - including ULi’s engineering, expertise and contacts. With ULi’s pedigree of innovative chipset design, NVIDIA should be a better position to create and sell core logic for motherboards that use Intel CPUs - a sector where NVIDIA currently has core-logic real estate on just one high-end product. The expansion of the Intel core-logic side of NVIDIA's business could be crucial given that the company recently lost to ATI a massive deal with Intel for integrated graphics chipsets.

Speaking to HEXUS.net this morning, Adam Foat, Product PR Manager for NVIDIA said:

The acquisition of ULi will significantly enhance NVIDIA’s core logic and MCP design team and, potentially, its overall business. It will also significantly strengthen NVIDIA’s sales, marketing and customer engineering presence in Taiwan and China which is a critical business and engineering hub for the PC industry. NVIDIA will acquire a suite of products and technologies that are complementary to our current MCP business

NVIDIA will also continue to support all ULi’s current product range while the acquisition goes through and into the future - developing new products using its newly-acquired assets.

Check back soon for more information and reaction from the industry on this story.

We've now had the chance to gather some reaction from the industry but are awaiting more.

Our first port of call was ATI - logical we thought when NVIDIA and ATI are the two big graphic companies and massive rivals -  the more so given ATI's own recent success in securing that important deal to supply integrated graphics chipsets for Intel motherboards.

Chris Hook, ATI Head of Public Relations, EMIA,  had this to say:

“ATI have a really strong platform and product road map for the future. ATI’s success does not rely on third party technology or expertise”

Thanks Chris - most helpful. Cough! So ATI looks like it was also caught out by the news, otherwise something rather more damning would likely have been ready. That said, we can understand ATI thinking that the NVIDIA/ULi deal doesn't threaten anything it has in the pipeline. ATI, though, has regularly bought in technology it needed for its chipsets and there's every reason to think it will do so in future if the need again arise. NVIDIA's move amounts to much the same thing and will, if the integration of ULi goes smoothly, help fill in some of the gaps in its capabilities and product offerings.

An industry veteran of some 30 years was somewhat less diplomatic than ATI (or, perhaps, a little better prepared):

“You only buy a sandwich when there’s a hole in your stomach! This appears to be a clear admission by NVIDIA that they have serious deficiencies in their existing chipsets and they need to make this kind of investment if they are to stand any chance at all in the future. Defective armour is only one of a string of embarrassments for their in-house chipset team. Let’s hope for the sake of their customers that this acquisition is not a massive white elephant. When Intel were looking for a chipset partner for their DX9 products, NVIDIA couldn’t cut the mustard.”

We’re still waiting for comments from AMD, Intel and others and will bring you those as soon as we can. What we did receive, though, were the off-the-record comments of a significant interested party - comments that were highly dismissive. To us, though, that suggests not that NVIDIA's move is of no consequently but, rather, that it is a cause for concern by the company's rivals and those rivals' allies.

We think that the NVIDIA buy-out of ULi is a sensible and rather astute move. The acquisition may give NVIDIA not just a major leg up in the Taiwanese and Chinese markets in general but also on the world stage. ULi's undoubted expertise can only benefit NVIDIA and lead, we expect, to better and more trouble-free NVIDIA products.

With only one high-end NVIDIA-based Intel-CPU motherboard currently in existence, we're expecting NVIDIA to shortly announce new products that will allow it to make significant inroads in that sector. Those products, most likely, will be aimed at makers of lower-budget motherboards - with the aim of capturing a proportion of the Intel market similar to that NVIDIA already holds for motherboards using AMD CPUs.

It is interesting to note the comments from industry folk quoted above. Disparaging as they first appear, could it be that reactions of this sort, particularly the refusal to comment, mask the concern of those parties? It remains to be seen what NVIDIA does with the technology and expertise it will gain from ULi. But, since NVIDIA was smart enough to make the move in the first place, it's a good bet that it will have already have figured out some equally smart ways to make use of its newly-acquired assets.