Graphics processor designer Nvidia Corp unveiled plans for a new chip on Tuesday that would be available in the second half of 2011. The graphics processor, known as Kepler, will deliver faster performance and be followed two years later by another generation called Maxwell, said Nvidia chief executive Jen-Hsun Huang at an event in San Jose, California. “We expect to go to production later next year, the design is progressing very rapidly,” Huang said. “There are hundreds of engineers working on it.”

Nvidia, which specializes in high-performance graphics cards favored by gamers, faces pressure as Intel Corp early next year launches a microchip that combines a traditional core processor with a graphics processor. Investors are also concerned about the health of the microchip business after Intel warned in August that third-quarter revenue could fall short of its own estimates by more than $1 billion because of weak demand for PCs. To diversify, Nvidia is moving into the fast-growing mobile business, combining low-powered processors designed by ARM Holdings Plc with its own graphics processors under the Tegra brand name for telephones and tablets. “The Tegra business is probably a year behind my goals. However, the Tegra 2 uptake, as I hope you will see later in the year, is really quite phenomenal,” Huang said, referring to a chip unveiled at the start of the year.

Nvidia shares gained 5.42 percent on Tuesday to close at $11.29 on the Nasdaq. The Kepler processor will be three to four times faster than Nvidia's current Fermi chip generation, Huang said. Intel, which makes the microchip brains for 80 percent of the world's computers, would like to see its new chip, called Sandy Bridge, counted on to handle the mainstream graphics needs of computers built over the next few years. But Nvidia says consumers and PC manufacturers will continue to demand specialized graphics chips like Kepler, which will be based on 28 nanometers, and Maxwell. Rival Advanced Micro Devices also plans to release a microprocessor with integrated graphics. Intel's new chip is not expected to satisfy high-end users, like gamers willing to splash out hundreds of dollars separately for top-of-the-line graphics cards designed by Nvidia and AMD.

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