Nvidia Challenges Intel With PC CPU

Graphics chip designer Nvidia Corp said it will begin designing central processors for personal computers, pushing back against growing pressure from Intel Corp. The company, which is developing the product under the code name "Project Denver," said it obtained the rights to develop the central processor, or CPU, using ARM Holdings. It said the processors will be integrated on the same chip as its graphic processor and will be aimed at everything from workstations to supercomputers. "We are designing a high-performing ARM CPU core in combination with our massively parallel GPU cores to create a new class of processor," said Jen-Hsun Huang, Chief Executive, Nvidia.

Nvidia's decision to build central processors comes as Intel attacks Nvidia's own graphics business. Intel has just unveiled its line-up of chips that closely integrate graphics processing, which could reduce demand for Nvidia's lower-end graphics chips. To diversify, Nvidia has already begun branching into smartphone and tablets, combining its graphics chips with ARM-based processors for mobile devices. Nvidia said that LG Electronics Inc will use its Tegra 2 processor in its Optimus 2X phones.

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Analysts warned that Nvidia's plan to build PC CPUs will be a gamble and would take years to pay off. "The questions we need to ask now is how quickly and what level of support these products will get from PC and handset original equipment manufacturers?" said Gleacher & Company analyst Doug Freedman.