NVIDIA 2003 Annual Report Download - page 33

typically required to qualify assemblers and testers, we could experience significant delays in the shipment of our
products if we are required to find alternative third parties to assemble or test our products or components. Any
delays in delivery of our products could harm our business.
Risks Related to Our Competition
The 3D graphics industry is highly competitive and we may be unable to compete.
The market for 3D graphics processors for PCs in which we compete is intensely competitive and is
characterized by rapid technological change, evolving industry standards and declining average selling prices.
We believe that the principal competitive factors in this market are performance, breadth of product offerings,
access to customers and distribution channels, backward-forward software support, conformity to industry
standard APIs, manufacturing capabilities, price of graphics processors and total system costs of add-in boards
and motherboards. We expect competition to increase both from existing competitors and new market entrants
with products that may be less costly than our 3D graphics processors, or may provide better performance or
additional features not provided by our products. We may be unable to compete successfully in the emerging PC
graphics market.
Our primary source of competition is from companies that provide or intend to provide 3D graphics
solutions for the PC market. Our competitors include the following:
• suppliers of integrated core logic chipsets that incorporate 3D graphics functionality as part of their
existing solutions, such as Intel, Silicon Integrated Systems, ATI Technologies Inc. and VIA
Technologies, Inc.;
• suppliers of graphics add-in boards that utilize their internally developed graphics chips, such as
ATI Technologies Inc., Creative Technology and Matrox Electronics Systems Ltd.;
• suppliers of mobile graphics processors that incorporate 3D graphics functionality as part of their
existing solutions, such as ATI Technologies Inc., Trident Microsystems, Inc. and the joint venture of a
division of SONICblue Incorporated (formerly S3 Incorporated) and VIA Technologies, Inc.; and
• companies that have traditionally focused on the professional market and provide high end 3D solutions
for PCs and workstations, including 3Dlabs (a Creative Technology company) and ATI Technologies
Inc.
If and to the extent we offer products outside of the 3D graphics processor market, we may face competition
from some of our existing competitors as well as from companies with which we currently do not compete. We
cannot accurately predict if we will compete successfully in any new markets we may enter.
We may not successfully compete with Intel in the integrated chipset product line.
It is projected by analysts that integrated chipsets are likely to become a majority share of the PC graphics
market. We have recently introduced and begun shipment of the nForce2 platform processor, our second
generation integrated 3D graphics chipset. The nForce platform processor is initially designed to support
microprocessors produced by AMD. Intel is the dominant supplier of integrated 3D graphics chipsets. Intel has
significantly greater resources than we do, and the nForce platform processor, or other 3D graphics products that
we may introduce, may not compete effectively against Intel’s current chipset products or its future products,
either in terms of price or performance.
In addition, due to the widespread industry acceptance of Intel’s microprocessor architecture and interface
architecture, including its accelerated graphics port architecture, or AGP, Intel exercises significant influence
over the PC industry and over companies developing products for such architecture. Any significant
modifications by Intel to the AGP, the microprocessor or core logic components or other aspects of the PC
microprocessor architecture could result in incompatibility with our technology, which would harm our business.
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