Nvidia om Monday announced that it has agreed to acquire San Jose, CA-based PortalPlayer, a supplier of semiconductors, firmware, and software for personal media players (PMPs) and secondary display-enabled computers.

PortalPlayer, which was founded in 1999, is recognized for its system-on-chip (SoC) technology which powers some of the world's most recognizable portable digital music players.

Under terms of the agreement, NVIDIA will pay $13.50 in cash for each share of PortalPlayer common stock, which represents a total purchase price of approximately $357 million, or approximately $161 million net of cash on PortalPlayer's balance sheet as of September 30, 2006.

The acquisition will help Nvidia expand its line of computer chips used in handheld devices such as portable digital media players and phones capable of playing music and videos.

"Modern mobile devices are miniaturized yet powerful multimedia computers. At the core of their architectures are complex Application Processors integrating microprocessors, system logic, networking, and multimedia processors," said Jen-Hsun Huang, president and CEO of NVIDIA. "With this acquisition, we are combining the two essential technologies of next-generation PMPs, PDAs, portable game players, and phones: PortalPlayer's innovative Application Processor technology and NVIDIA's industry-leading GPU technology. With the products created through this combination, we intend to drive the next digital revolution, where the mobile device becomes our most personal computer."

Today, NVIDIA's handheld technology, which combines high-quality graphics, TV, and video with low power and a small footprint, is at the foundation of many portable media devices, including phones from Motorola, Samsung, Kyocera, HTC, and Sony Ericsson.