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Nvidia Up After Intel's Squeeze Play

U.S. regulators point to Intel's anticompetitive practices in the budding Netbook segment.

NEW YORK (TheStreet) -- In an attempt to control the Netbook graphics processors market, Intel (INTC) - Get Report may have stepped out of bounds against rival Nvidia (NVDA) - Get Report.

In addition to charging that

Intel used threats and bribes to retain its market dominance

against

AMD

(AMD) - Get Report

in computer processors, the Federal Trade Commission is also zeroing in on Intel's effort to block graphics semiconductor specialist Nvidia from the booming Netbook market.

The FTC says that Intel bundled its Atom processor with its own graphics chips to corner the mini-notebook market. Intel tried to penalize computer makers that opted to use Nvidia's Ion graphics chips by threatening to charge more for its processing chips, Barclays analyst Tim Luke said in a research note Wednesday.

Eager to become the industry standard in this hot ultraportable market, Intel may have made "misleading promises" about the readiness of its graphics chip, according to Barclay's interpretation of the FTC case. Intel may have also used pricing to stifle innovation and limit consumer choice, which is the thrust of the FTC lawsuit.

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In a statement Wednesday, Intel said the regulators were "misguided."

Nvidia shares surged 8% Wednesday to $16.91 as investors sensed that a potential settlement could help boost the company's prospects.

Last month, Intel paid AMD $1.25 billion to settle an antitrust case. Analysts say the money could be a business-changing event for AMD, which is expected to use the windfall to repay debt and possibly spin off its manufacturing business.

Intel closed down 2% Wednesday.

-- Reported by Scott Moritz in New York

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