Nvidia to design central processors for PCs

LAS VEGAS (Reuters) - Graphics chip designer Nvidia Corp said it will begin designing central processors for personal computers, pushing back against growing pressure from Intel Corp.

Nvidia shares rose 7.7 percent after the announcement and closed at $16.98 on the Nasdaq.

The company said the processors will be integrated on the same chip as its graphic processor. The company, which is developing the product under the code name “Project Denver,” said it had obtained the rights to develop the CPU using ARM Holdings has expanded into Nvidia territory with its latest chips, which closely integrate central and graphics processing.

The trend toward combined central and graphics processing could lead to lower costs and increased efficiency for computers.

Analysts called the move positive for Nvidia but were uncertain whether the chipmaker’s bet on the new technology would 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.

With Intel threatening its PC graphics chip business, Nvidia is already moving into the fast-growing mobile market, combining low-powered processors designed by ARM Holdings with its own Tegra brand graphics processors for mobile devices.

The company also announced on Wednesday that LG Electronics Inc will use its Tegra 2 processor in its Optimus 2X phones. It said it would debut other smartphones at CES but could not provide details.

Separately, Microsoft Corp said on Wednesday it will introduce a version of its Windows operating system compatible with chips designed by ARM Holdings.

Additional reporting by Liana B. Baker; Editing by Steve Orlofsky