NVIDIA Corporation (NVDA) Just Dropped a Wonderful Bombshell

I recently noted a few ways NVIDIA Corporation (NASDAQ:NVDA) is striving to become indispensable to the gaming world.

To be sure, the thriving graphics specialist had just used its company blog to outline several reasons game developers rely heavily on NVIDIA’s technology to differentiate themselves, and it also recently announced support for its PhysX and APEX software development kits on Microsoft Corporation (NASDAQ:MSFT)‘s next-gen Xbox One console.

Of course, considering the ongoing rise of mobile devices as the world’s preferred tech medium, the gaming industry is just tip of the iceberg for NVIDIA Corporation (NASDAQ:NVDA)’s GPU technology.

“The IT World is being upended”
Now, NVIDIA stock is trading up more than 6% as of this writing and set a new 52-week-high this morning after the company’s executive vice president, David Shannon, dropped a wonderful bombshell on the chip industry.

More specifically, Shannon took to the company’s official blog to announce NVIDIA Corporation (NASDAQ:NVDA) will begin licensing its Kepler-based GPU cores and visual computing patent portfolio to device manufacturers “to serve the needs of a large piece of the market.”

The post, which began with the words, “The IT world is being upended,” led up to the announcement by highlighting the fact PC sales are declining with the rise of HD display-enabled smartphones and tablets, the latter of which “will soon become a computing-devices industry that produces many billions of units a year.”

As a result, NVIDIA Corporation (NASDAQ:NVDA) has watched industry leaders emerge, with some companies creating systems from industry-standard chips, while others have chosen to remain “vertically integrated and build their own chips, systems, software, and even services.”

Of course, it’s no wonder other companies may want to take advantage of NVIDIA’s work; NVIDIA currently invests more than $1 billion in research and development every year to improve its visual computing technology.

But while NVIDIA Corporation (NASDAQ:NVDA) excels at pushing the envelope and improving the graphics and computing technology other companies require, Shannon also admitted that “it’s not practical to build silicon or systems to address every part of the expanding market. Adopting a new [licensing] business approach will allow us to address the universe of devices.”

In short, licensing should allow NVIDIA to more effectively permeate the current mobile computing revolution on a scale that’s simply not possible through its current business model — and NVIDIA should be able to profit handsomely in the process.

As Shannon also reminded us, NVIDIA Corporation (NASDAQ:NVDA) isn’t completely new to the licensing game. Remember, they licensed a specialized GPU core to Sony Corporation (ADR) (NYSE:SNE) for the Playstation 3, and Intel Corporation (NASDAQ:INTC) has been paying NVIDIA more than $250 million a year as part of a six-year, $1.5 billion settlement to use its visual computing patents beginning in 2011.