Nvidia Targets Wider Role for New Chip

SAN FRANCISCO -- Seeking to extend its reign in its core market, Nvidia(NVDA Quote) unveiled its latest graphics engine Monday.

The new chip, which features 240 processor cores and double the number of transistors from the previous generation, continues Nvidia's tradition of delivering the so-called bleeding-edge graphic processing muscle treasured by video game enthusiasts, while also positioning Nvidia to extend its significance beyond the province of games and into computing.

It's a bold bet by Nvidia. But it also underscores the multiple threats facing the company which could eat into its business.

"Nvidia is really faced with a slightly different set of constraints" than Advanced Micro Devices'(AMD Quote) ATI unit, the industry's other large graphics chipmaker, explains David Kanter, an analyst at Real World Technologies.

Microprocessor makers Intel(INTC Quote) and AMD have both put the graphics processing business in their crosshairs. Nvidia's new GTX 200 processor, which the company is billing as two chips in one, is Nvidia's attempt to fight a two-front war.

Nvidia shares are down roughly 41% since December, trading recently at $21.25.

While the battle against Intel and AMD will unfold in the years ahead, Nvidia will face a much more competitive ATI in the near term.

ATI's graphics chips have been a nonfactor in recent years, perhaps owing to the distractions of the company's merger with AMD. That, however, is expected to change when ATI releases its own new family of graphics processors, the first of which will ship later this month.