SAN FRANCISCO Chip maker Nvidia's (NVDA.O) stock surged on renewed optimism about its mobile processor as its appearance in new gadgets offset concerns that Apple's (AAPL.O) hot-selling iPad 2 would sideline tablets using its processors.
After slumping 21 percent through most of March, shares of Nvidia jumped 8.4 percent to $19.30 on Thursday as investors set aside worries that sales of the Motorola Xoom, which uses Nvidia's Tegra 2 chip, might be suffering due to the iPad 2's popularity.
"People are still a little worried about that, but Tegra is more about smartphones than tablets -- that's really the volume opportunity," said Craig Berger, an analyst at FBR Capital Markets.
Attracting fresh attention to Nvidia, T-Mobile TMOG.UL earlier this week introduced LG's (066570.KS) upcoming G2x smartphone and G-Slate tablet using Tegra 2 chips.
Also this week, AT&T said it will start selling Acer's Iconia Tab A501 tablet, which uses a Tegra 2 processor, sometime in the second quarter.
There was such huge interest in the iPad 2, which uses a processor made by Samsung (005930.KS), that after going on sale this month with hundreds of customers lining up outside retail stores, many were then turned away due to low supply.
Nvidia's share gain outpaced broader gains in semiconductor stocks, which has sold off this month following a six-month rally through February. The Philadelphia Semiconductor Index .SOX was up 2.59 percent.
Nearly two weeks after Japan's 9.0 magnitude, earthquake and nuclear crisis, electronics manufacturers are struggling to get back up to speed as factories grapple with power cuts, crippled infrastructure and a shortage of parts.
U.S. memory maker Micron (MU.O) jumped 8 percent after executives on its quarterly conference call late on Wednesday were upbeat about the outlook for prices of NAND memory, used increasingly in tablets and smartphones. Competitor Sandisk SNDK.O gained 2.69 percent.
(Reporting by Noel Randewich; Editing by Bernard Orr)