MOBILE FAIR-Nvidia mobile chief bets all on smartphones

By Georgina Prodhan, European Technology Correspondent

BARCELONA, Feb 15 (Reuters) - Nvidia Corp (NVDA.O: Quote, Profile, Research, Stock Buzz), the biggest maker of graphics chips, is betting half the world's cellphones will be computer-like smartphones by 2012 and sees the market for processors for such phones at $6 billion by then.

Mike Rayfield, who runs Nvidia's mobile business, told Reuters the future of his unit depended on the single processors his unit is developing to run smartphones with sophisticated graphics and said he had stopped development of graphics chips for mass-market cellphones.

"I think there's been a dramatic shift in what's needed in the market," he said in an interview at the Mobile World Congress wireless fair in Barcelona on Thursday.

Rayfield said his unit's sales had dropped to below $100 million of Nvidia's total annual sales of $4.1 billion, a bigger decline than expected due to the rapid demise of handset maker Motorola Inc (MOT.N: Quote, Profile, Research, Stock Buzz), its biggest customer.

He said he had hoped sales of Nvidia's separate graphics chips still on the market that sit alongside the central processing engines in cellphones would have gone further to funding research and development for the new processors.

But R&D was continuing unabated, although drawing more resources from the rest of the company than planned, he said. "It's hundreds of millions of dollars that we've bet and we'll continue to bet."

The move to add graphics functions onto the central processor that is a phone's "brains" brings Nvidia closer to competing with Intel Corp (INTC.O: Quote, Profile, Research, Stock Buzz), the world's biggest maker of so-called central processing units.

Rayfield said Nvidia's new low-power applications processors, based on the ARM processor platform of British chip designer ARM Holdings Plc (ARM.L: Quote, Profile, Research, Stock Buzz), would include a high-definition video processor.