BUSINESSWEEK ONLINE : JUNE 19, 2000 ISSUE
COVER STORY Nvidia's Invasion How it climbed to the top in graphics chips Not all kids are battle-tested like Jen-Hsun Huang. The co-founder and CEO of graphics chip superstar Nvidia Corp. was only 10 years old when his Taiwanese parents shipped him and his 11-year-old brother across the Pacific Ocean to a private school in Oneida, Ky. Problem was, unbeknownst to the parents, the place was a home for troubled kids. ''I spent a year and a half with a bunch of juvenile delinquents,'' Huang says with a laugh. ''It taught me to be really tough.'' Tough enough to survive near-failure and to succeed in the notoriously competitive graphics chip market. In a business known for shooting stars such as Cirrus Logic Inc. and Tseng Labs, which delivered breakthrough chips and then flamed out, Huang has kept Nvidia on keel through more than seven years of intense struggle. Now, it vies with ATI Technologies Inc. for the top spot in 3D graphics chips, the thumbnail-sized slivers of silicon that draw fast, detailed images on PC screens. That has earned it the highest ranking for a semiconductor company on the Info Tech 100--No. 4 overall--in the heady company of Nokia, Siebel, and Oracle. ''Nvidia is an overnight sensation that took seven years,'' Huang crows. That doesn't make Huang's success any less sweet. From just $29 million in 1997, Nvidia's revenues surged to $452 million in the last 12 months. By 2002, figures Morgan Stanley Dean Witter, they'll top $1 billion, while profits will hit $125 million, up from $50 million in the last four quarters. Investors certainly like what they see: Since the Santa Clara (Calif.) company's Jan. 22, 1999, initial public offering, its shares have soared more than seven-fold, to $131. Now, Huang is setting his sights on moving beyond Nvidia's desktop PC stronghold. He's set to roll out the company's first chips for laptops and Apple Macintoshes and has struck a deal with Silicon Graphics Inc. to move into high-powered graphics workstations. His biggest coup, though, is a deal to supply the graphics chips used in Microsoft Corp.'s upcoming Xbox videogame console, which is expected to ship in 2001. Much of the credit for Nvidia's success goes to Huang. A Stanford University-trained engineer, he spent the early years of his career at chipmakers Advanced Micro Devices Inc. and LSI Logic Corp., before deciding at age 30 that he was ready to be a chief executive. He co-founded Nvidia in late 1992. But the company's first product in late 1995 was ''a carnage of massive proportions,'' Huang says. The problem: Nvidia tried to cram in too many slick features, hurting performance. ''We hit the wall so hard it left a permanent stain on my body.'' By mid-1997, Nvidia had regrouped and delivered the industry's fastest graphics processor. It was a smash hit. Since then, the company has churned out winning products like clockwork. That predictability has earned Nvidia the trust of computer makers. Its chips are used in every major brand of PCs, giving Nvidia about one-third of the 3D chip market. Not to mention Microsoft's business. At first, when the software giant approached Huang, he turned down the deal because the terms weren't good enough. Then, in a testament to Nvidia's clout, Microsoft came back with a better offer. Most execs would have grabbed at the first deal. But then, they aren't as tough as Jen-Hsun Huang. By Andy Reinhardt in San Mateo, Calif. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS The Sweet Smell of Semiconductors TABLE: Top of the Chips Nvidia's Invasion INTERACT E-Mail to Business Week Online

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