Aug. 4 (Bloomberg) -- Intel Corp., the world's largest semiconductor maker, plans to challenge Nvidia Corp. and Advanced Micro Devices Inc. in the market for graphics chips used to run video games.

A new Intel chip called Larrabee, due as early as next year, will be easier for developers to write games for because it's comprised of general-purpose processors built into one piece of silicon, Doug Carmean, the product's chief designer, said at a briefing in San Francisco.

Intel is designing the chip for graphics cards, the circuit boards that help computers enhance visuals on games and other programs. While Intel already includes graphics features in chips that support its best-selling processors, most add-on cards use chips from Nvidia and AMD. All three companies are promoting the use of graphics semiconductors in new markets, such as medical imaging and financial modeling.

``We don't know whether it's going to be a super-duper part or a super-duper dog at this point,'' said Jon Peddie, an analyst at Tiburon, California-based Jon Peddie Associates. ``If it delivers on the promise that they are claiming for it, then it's going to have a significant impact on the market.''

Success in the high-end graphics market could add as much as $4 billion to Intel's sales in 2010, Peddie estimates. The new product would have to perform as well as those from Nvidia and AMD, he said.

2010 Impact

``This is 2008 and Intel is talking about a product that's 2010,'' Peddie said. ``Do you think that Nvidia and AMD are just going to sit around and say, `Let's wait until Larrabee comes out?''

Intel will give out more details of the new design today at an industry conference. The chip will have more cores, or processors, than Intel's current products, which have up to four. Additional cores increase a chip's ability to perform multiple tasks simultaneously. The first product built on the design will go on sale in either 2009 or 2010, Intel said.

Intel, based in Santa Clara, California, fell 17 cents to $22.52 at 4 p.m. in Nasdaq Stock Market trading. The shares have dropped 16 percent this year.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

Last Updated: August 4, 2008 16:10 EDT