Intel Corp., the world’s No. 1 maker of x86 central processing units (CPUs), and Nvidia Corp., the world’s largest supplier of graphics processing units (GPUs), reportedly plan to broaden their collaborative efforts. Even though no details are available, a cooperation of the two companies poses a threat to Advanced Micro Devices, who has to compete against both.

According to a news-story at DigiTimes web-site, Nvidia plans to release some of its GPU technology to Intel in exchange for cooperation with the chip giant. It is claimed that Nvidia has had discussions with Intel and has already reached several agreements for cooperation.

Intel and Nvidia signed a multi-year cross-licensing agreement back in late 2004, several months before the latter released its first nForce 4 Intel Edition chipsets. As a result of the agreement, Nvidia received rights to develop and sell core-logic sets compatible with CPUs from Intel, but it is unclear, which technologies of Nvidia are now in possession of Intel.

It is rumoured that Intel plans to enter the market of standalone graphics processors in 2009 or 2010. Moreover, Intel already confirmed that its Nehalem processors will have built-in graphics core, something, which may be considered as a threat for Nvidia and ATI, graphics product group of AMD.

Even though Intel is still the world’s largest supplier of graphics adapters with its chipsets that feature graphics cores, the company has been reallocating its manufacturing capacities to products with higher profit margins and away from low-end offerings. As a result, in Q1 2007 Nvidia became the largest supplier of desktop graphics adapters. Integrating graphics cores into CPUs will allow Intel to continue capturing market share of graphics adapters without substantially increasing amount of chips to be made.

Given that in the past Intel bundled graphics cards from ATI and Nvidia with some of its mainboards and the fact that Intel is unlikely to bundle graphics cards from its arch-rival Advanced Micro Devices, close collaboration of Intel and Nvidia may also include promotion of Nvidia GeForce graphics cards, something, which is very dangerous for ATI/AMD.