Nvidia to launch its first graphics chip for laptops

The move pits Nvidia against ATI Technologies, a rival chipmaker that has dominated the graphics market for several years but has seen its earnings and market share erode amid increasing competition.

ATI has seen its fortunes dip in the desktop market in particular, analysts say. Up till now, however, the laptop arena has remained a more profitable haven for the company.

"ATI is the company in the crosshairs," Peter Glaskowsky, an analyst at MicroDesign Resources, said Wednesday.

Marketing materials from Santa Clara, Calif.-based Nvidia tout the chip's launch at a Nov. 12 event at the Comdex trade show in Las Vegas. The materials do not say which segment of the laptop market the company will target. Nvidia representatives did not return repeated calls seeking comment.

Meanwhile, Thornhill, Ontario-based ATI is not standing still. On Monday, the company introduced the M4 Mobility chip, which is now shipping in some new laptops from Dell Computer and others. ATI is also sampling mobile versions of its Radeon chip, which it expects will begin showing up in notebooks by early next year.

"It's a very important market for us," said ATI marketing director Reuven Soraya, adding that ATI controls more than half of the notebook market--a segment that is growing faster than the one for desktop PCs.

Glaskowsky, who has not seen details of the new chip, said that Nvidia could have a strong product for the bulk of the notebook market just by adapting, for example, its midrange Geforce 2MX chip to consume less power.

"That chip should be perfectly competitive for a lot of the notebook market," Glaskowsky said.

Soraya said ATI is already seeing some competition from Nvidia in the battle for design wins for future notebooks, mostly at the high end of the market. ATI has a big advantage, he added, by being able to offer a full range of laptop chips: low-cost versions for consumers, high-performance chips for models aimed to replace desktops, and low-power chips for the ultraportable market.

"We have a rainbow of products," Soraya said.

The graphics chip industry has been consolidating rapidly, with a number of players getting bought out or reinventing themselves. S3, which is selling its graphics business to Via Technologies, said today that it is changing its name to Sonicblue as it looks to re-emerge as a vendor of Internet appliances and communications gear.

In addition to S3, four other companies have dropped out of the graphics chip business or sold their graphics units this year, including NeoMagic, Intergraph, ArtX and Gigapixel.

Along with consolidation, there has been a move to integrate graphics chips onto the chipset, the collection of chips on a PC motherboard that serve as an intermediary between a computer's processor and other components such as memory.

Intel and Via have been leading this charge, and Nvidia has already said it intends to compete in the integrated chipset market. The company is getting experience with a series of chips it is developing for Microsoft's Xbox game console. Glaskowsky said Nvidia should have no trouble moving that effort into notebook PCs.

"The chipset they are doing for Xbox would be perfectly fine almost immediately for big notebooks," Glaskowsky said. With some tweaks along with advances in chip technology, Nvidia could also move into smaller notebooks.

"There will definitely be a significant percent of the mobile market using integrated graphics over the next several years," Glaskowsky said.

The one area that Nvidia is steering clear of, Glaskowsky said, is graphics chips for very high-end workstations, a market dominated by 3Dlabs.