It is not the first time Nvidia is rumored to enter the x86-based microprocessor market. This time an analyst claims that the Nvidia may be closer to the development of CPUs due to preserve both GPU and chipset revenue.

"We believe Nvidia could enter the x86 CPU business," said analyst Doug Freedman of Broadpoint AmTech in an inquiry from EE Times. "Nvidia could become a supplier of x86 CPUs by necessity to preserve both GPU and chipset revenue."

Mr. Freedman obviously refers to the difficulties Nvidia is facing to put its chipsets to the market, provided that the company is involved in a spat with Intel over rights to develop chipsets for future Intel processors as well as the "incompatibility" of the company with AMD, because that owns ATI.

A very high percentage of Nvidia's revenue comes from chipsets, so getting out of the chipset business could put too much pressure on Nvidia's other products.

With both Intel and AMD to ready CPUs with graphics capabilities inside, Nvidia may see the entrance into the x86 CPU market as the only was to remain competitive.

Freedman also reasons that Nvidia has been recently hiring former Transmeta staff. Transmeta tried to enter the microprocessor market some time ago with no luck.

"We believe internally developed x86 solutions are more likely than external acquisitions (i.e. Via Technologies),'' he said in a new report, referring to rumors that Nvidia would acquire Taiwan's Via.

"We believe that Nvidia has hired former Transmeta staff extensively, and that instruction code "morphing" requirements have declined as more x86 instructions have come off of patent coverage," he added.

Nvidia has denied any plans to develop its own microprocessor until now. However, the company is somehow involved in areas close to CPU technologies. For example, it has entered Silicon-on-Insulator process technology consortium and had also hired earlier this year William Dally, who had been working on microprocessor business.