Nvidia sees no slowdown, eyes boom in ultra-small PCs

By Sheena Lee

TAIPEI (Reuters) - Nvidia Corp (NVDA.O), the world's top graphics chip maker, said it sees no signs of a consumer slowdown, and expects sales of powerful, but smaller devices that can display high-definition video and games to drive growth.

The U.S. company said that the most powerful chips designed to display graphics on a computer -- once the preserve of gaming enthusiastics -- are increasingly going into smartphones and other mobile Internet devices. Nvidia announced on Sunday a line of new processors, called 'Tegra', for these compact mobile Internet devices.

"Every application needs visual now. People want to load videos on their iPods and download pictures to create scrapbooks," Rob Csonger, Nvidia vice president of corporate marketing, told Reuters in an interview at Computex, the world's second largest computer show.

With consumers feeling the pinch from the subprime crisis, economic slowdown and rising prices, smaller computing devices that can surf the Internet and play complex, graphics-heavy games, are expected to see strong sales.

Asustek Computer Inc's (2357.TW) Eee, a 9-inch PC which costs only around $500, is set to sell 5 million units this year, and 10 million units next year.

Intel (INTC.O) has said it would not be surprised to see sales of what it calls Netbook PCs such as the Eee PC and others top 50 million by 2011.

"Consumers are now demanding visually rich PCs for their applications without spending more money," said Mike Rayfield, general manager of Nvidia's mobile business. Nvidia said it also sees demand for its high-performance graphics products from aerospace, film, energy, science and healthcare sectors.

For example, researchers can run virus simulations for cancer study on specialized, high-performance computers using Nvidia graphics chips.

Established in 1994, the Santa Clara, California-based company competes with Advanced Micro Devices Inc's (AMD.N) ATI graphics processor unit, as well as Intel, which offers integrated graphics.

Nvidia, with 60 percent of the global graphics card industry, is expected to see its profit slip just under 3 percent in its current fiscal year to $774.89 million, according to 13 analysts surveyed by Reuters Estimates.

Nvidia's mobile phone clients include the likes of Motorola Inc (MOT.N), Samsung Electronics Co Ltd (005930.KS), Sony Ericsson (6758.T) (ERICb.ST), LG Electronics Inc (066570.KS) and Kyocera Corp (6971.T).

In the notebook PC sector, Nvidia cooperates with top sellers, such as Dell Inc (DELL.O), Hewlett-Packard (HPQ.N), Sony Corp (6758.T), Taiwan's Acer Inc (2353.TW) and Asustek.

Shares in Nvidia rose 5 percent to $24.70 on Friday in New York, outpacing a 0.6 percent gain in the Nasdaq .IXIC.

(Editing by Louise Heavens)