When Jen-Hsun Huang, co-founder and CEO of nVidia announced that he expects to see Tegra capturing 50% of nVidia’s revenue within the next couple of years, a lot of people thought that this is a smoke screen to sway the attention from its battles against AMD and Intel.

Incredibly how it may sound, from what we are hearing nVidia is dead on achieving its course. With a very aggressive approach, the company managed to sway not just Microsoft with the Zune HD multimedia player  [based on Tegra APX 2600] or Samsung’s BeatPlayer M1 [also known as YP-M1], but also a long-time IBM and ATI customer – Nintendo.

Launched in 2004, the Nintendo DS and its two latter redesigns [DS Lite and DSi] sold in massive 111.49 million units. With almost 40 million handheld consoles sold in United States alone, Nintendo DS owns 68.3% of worldwide market share.

As the time passed by, Nintendo started to work on the successor of its handheld console with a debut planned for late 2010 [Tokyo Game Show 2010?]. According to our confidential sources, Nintendo is going to use Tegra System-on-Chip processor for the successor of DS/DSi handheld console. Unlike the current design, nVidia offered a single-chip proposal to Nintendo, a company famous for keeping the hardware platform absolutely simple.

Given the fact that current Nintendo DS hardware is based upon two ARM cores [ARM7 and ARM9 series], it looks like Next-Gen DS could be backwards compatible with the DS application library, courtesy of ARM11 core inside current Tegra SoC products. According to our sources, "all of the apps that came for old DS can run on a single ARM11 core – yet alone the CorTex A9-based next-gen Tegra, leaving graphics subsystem to do "something smarter". In any case, the hardware is now much more potent and should easily enable developers to push the envelope even further.

Currently, we have no information what exact chip is being used [just that nVidia won the contract], but with the debut set for February 2010, the second generation of Tegra chips could make an excellent base [to be launched at Mobile World Congress in Barcelona].
The question of power consumption and performance is quite an interesting one. Gen2 Tegra offers quite a graphics punch;GeForce 9 based hardware [CUDA-enabled design] should offer immense experience on small screens – we see no reason why you could not have 4x Anti-Aliasing and 8x Anisotropic filtering on a dual-screen system. If Nintendo picked the current gen hardware, i.e. Tegra 600 or APX 2600 – it will be getting 65nm chips. If they go with 2nd gen parts, they will get 40nm chips offering even higher performance and lower power consumption. The moment we learn about the exact hardware going into Nintendo’s next-gen console, we’ll inform you.

Thus, it is not hard for us to imagine that Tegra could outship GeForce boards just like Intel’s Atom CPU shipped in more units than expensive Nehalem processors. Naturally, the profit ratio is significantly different, but something in the range of $4-5 per chip would mean nVidia could earn half a billion USD from a single deal [over the course of life for the Nintendo's next-gen part].

Now, the billion dollar question is: if Nintendo chose nVidia for the handheld console, does that mean nVidia may have an entrance into the lucrative Wii business? Bear in mind that Wii console was sold in 53.97 million units, taking almost half of current console market [48.4%, according to VGchartz.com]. Also, we wonder what is going to be in next-generation PlayStation Portable…

Update October 14, 2009 17:14 GMT - In order to clean up any confusion, we have clarified the article with two major updates.
1) Nintendo DS uses two 32-bit ARM cores. However, ARM7 core was used predominately for 16-bit instructions via Thumb instruction sets [as our source clarified to us].
2) Current Gen Tegra APX series uses ARM11 core. Next-gen Tegra uses dual ARM CorTex-A9 cores. That information was confirmed to us by nVidia and should not be regarded as a rumor.