This May Be NVIDIA's Biggest Driverless-Car Threat

By Markets Fool.com

NVIDIA has been on the forefront of driverless car technology for the past few years. The company's first-generation Drive PX autonomous car platform has been used by dozens of automakers and Tier 1suppliers to bring varying levels of automation to cars over the past few years.

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But recently chipmakerNXP Semiconductors N.V. made a big step into the driverless car world with its new BlueBox autonomous car system.

BlueBox is an open-source, Linux-based system that allows automakers to add Level 4 autonomous driving technology to their vehicles. It includes important sensors like radar, lidar, vehicle-to-everything (V2X) communications, and NXP's semiconductors.

The company's basing BlueBox's level of automation on the Society of Automotive Engineers' (SAE) standards(link opens PDF), which says that Level 4 automation is just one step below fully driverless systems (where a person isn't responsible for any driving functions).

One of the most important advantages that sets BlueBox apart from other driverless car technology is that it's one of the only systems that provides such a high level of automation in one complete package.

NXP says that some of its largest customers have been testing BlueBox since September of last year, and that four out of the five largest automakers are now in possession of it.

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NXP's goal with BlueBox is to help automakers bring driverless cars to the road by 2020 -- and it could do so at the expense of NVIDIA's system.

How this threatens NVIDIA
NVIDIA's Drive PX 2 is already used by more than 80 automakers and automotive suppliers.The system can process up to 24 trillion operations per second, and learns based on its experience (a type artificial intelligence called deep learning) and packs that all into a box the size of a lunchbox.

The company also recently released a cloud-based supercomputer, called DGX-1, that can be used a server for processing real-time autonomous car data in collaboration with the Drive PX on-board system.

NVIDIA has as lead in the space right now, as the company's on its second version of Drive PX, but NXP some distinct advantages.

First, NXP sold 30 million processors to carmakers for their advanced driver assistance systems (ADAS) to date, and eight of the 10 largest carmakers use its ADAS processors. ADAS is at the core of driverless systems, as these technologies (like assisted braking and lane departure warning, etc.) are the building blocks for autonomous systems. With NXP already knee-deep in this tech, the company likely knows how to expand that into a fully driverless system.

Second, and most important, NXP offers up a complete driverless system -- from silicon to sensors -- for automakers. This means that carmakers can essentially take BlueBox's computer, sensors, and other components and plug them into their cars to make them driverless. That may be a bit oversimplified, but it's a much more comprehensive system than NVIDIA's Drive PX, which lacks its own sensors and components.

Who will win?
Earlier this month, I compared NXP and NVIDIA's driverless car prospects (before the BlueBox announcement) and concluded that NVIDIA had the advantage over NXP. But Blue Box might change this.

NXP Semiconductors is offering a plug-and-play system that will essentially propel carmakers' vehicles into the driverless market. It's too early to tell what level of driverless systems automakers will be able to actually be able to release by 2020, because of U.S. laws, but NXP is certainly pushing the industry forward.

It appears NVIDIA and NXP are both poised to benefit from the driverless market, but the NXP's dominance in the automotive chip space, along with off-the-shelf driverless solution it just released makes me believe the company could easily eat into NVIDIA's driverless goals.

Remember that NXP earns at least 36% of its revenue from automotive technology, compared to NVIDIA's 8.6% in the most recent quarter. That gives NXP every incentive to succeed with BlueBox. Driverless car tech is expected to become a $42 billion industry by 2025, according to Boston Consulting Group, and it's clear NXP is well on its way to grabbing its fair share of that.

The article This May Be NVIDIA's Biggest Driverless-Car Threat originally appeared on Fool.com.

Chris Neiger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends NVIDIA and NXP Semiconductors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.