June 16 (Bloomberg) -- Nvidia Corp., the second-biggest maker of computer-graphics chips, will began selling a design that it says offers a 50 percent improvement in processing performance over previous models.

Graphics cards based on the GeForce GTX chips will go on sale tomorrow for as much as $649, the Santa Clara, California- based company said today in a statement.

Nvidia competes with Advanced Micro Devices Inc. to produce chips that run the latest computer games and process high- definition video. Improving the performance of the processors allows programmers to create more realistic games by showing more detail and making characters and backgrounds move faster.

Advanced Micro will introduce two graphics processors with faster performance in the next month, said Matt Skinner, a product manager at the Santa Clara-based company. The chips use less power than Nvidia's offering, which means two of them can be placed on the same computer card. That will provide better performance for less money, he said.

Intel Corp. is the biggest seller of graphics chips, mainly because the company includes graphics capabilities in its other products. Intel, also the world's largest semiconductor maker, doesn't make chips for higher-performance graphics cards.

Intel had 43 percent of the graphics-chip market in the first quarter, followed by 33 percent for Nvidia and 19 percent for AMD, based on units sold, according to Jon Peddie Research in Tiburon, California. Overall sales totaled $2.4 billion.

Nvidia fell 29 cents to $21.02 at 4 p.m. New York time in Nasdaq Stock Market trading. AMD rose 19 cents, or 2.5 percent, to $7.71 in New York Stock Exchange composite trading.

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

Last Updated: June 16, 2008 16:10 EDT