There have been rumours circulating for a couple of years about Nvidia releasing processors. I've touched on this before in the post - Nvidia inches closer to CPU business

AMD and ATI are now joined in holy matrimony. While Intel’s discrete Larrabee graphics solution is fast closing in. So Nvidia is facing the prospect that it will only have graphics cards and chipsets to offer, where its two main competitors will have the full kit and caboodle.

Both AMD and Intel are promising CPUs with integrated graphics for 2009, potentially cutting Nvidia out of a high-volume chunk of the market.

Nvidia's next generation graphics cards, the GeForce GTX 280 and 260, look likely to steal a march on ATI’s Radeon HD 4800 series. But that’s just at the high end. The true volume has historically been in integrated graphics, which is why Intel has the biggest percentage of revenue.

Where Nvidia has some pretty credible integrated graphics chipset options, graphics built into the CPU itself will make for an even cheaper proposition – particularly for business and notebook users. Just look at the popularity of Intel's GMA X3100, which appears in everything from Dell XPS laptops to the new MacBook Airs.

Unless Nvidia can offer an integrated CPU/GPU package in the future, it will end up only having competitive products in the discrete market.

Nvidia picks portables first

Nvidia’s first forays into the CPU business are not x86 desktop CPUs. According to slides leaked by The Inquirer from a recent editor’s day, Nvidia has two processor ranges approaching release, although one of them was actually already demonstrated at Mobile World Congress 2008, which took place in Barcelona back in February.

The Nvidia APX 2500, the one on show in Barcelona, is a full system on a chip based on ARM11, so combines CPU and GPU functions.

The APX 2500 is certainly flexible - it can allegedly encode and decode video at 720p and up to 14Mbits/sec. The ARM11 architecture also supports from one to four cores, and is aimed at everything from embedded car entertainment systems to PDAs and set-top boxes.

But Nvidia’s version was developed specifically for Windows Mobile, and supports Direct3D mobile and OpenGL ES 2.0. With GeForce-level graphics features, the APX 2500 is effectively a smartphone chip capable of HD video and 3D-accelerated gaming.

In contrast, the Tegra CSX 600 and 650 appear to be aimed squarely at Intel’s new Atom processor. This means that they are intended for use in portable devices in the larger UMPC, subnotebook and netbook categories.

Running at up 800MHz, the CSX will be capable of encoding and decoding video at 1080p, has support for hard disks and consumes less than 3W. But there's a problem. It won’t be able to run x86 code, such as Windows.

The x86 factor

At the moment, Nvidia can’t develop its own x86 processors anyway – it doesn’t have a license. There is an embedded 386SX in Nvidia’s product range called the M6117C, which integrates a ULi M1217B chipset. But if Nvidia wants to compete directly with Intel and AMD’s mainstream desktop CPU ranges it will need to obtain a full x86 license.

One analyst even suggested Nvidia might buy AMD to get an x86 license. But AMD’s deal with Intel means its own x86 license wouldn’t transfer, making this a rather pointless exercise.

More credible is the suggestion that Nvidia is interested in a deal with VIA, which already produces its own credible x86 clone thanks to the purchase of Centaur Technology from IDT in 1999.

A multi-core VIA Isaiah with Nvidia graphics integrated on die could be a pretty potent proposition, and a potential competitor for what AMD and Intel have planned in 2009. At the moment, though, VIA’s price is allegedly too high to make it happen.