NVIDIA Corp., a developer of graphics and core-logic processors, announced that it had signed an agreement under terms of which it would buy the struggling chipset designer ULi Electronics from Taiwan. As a result of acquisition, engineers and products developed by ULi will be in possession of NVIDIA Corp.

Under the terms of the agreement, NVIDIA will pay approximately $52 million for ULi Electronics’ shares. The acquisition, which is expected to be completed in the first quarter of the company’s fiscal year 2007 (calendar year 2006), remains subject to the satisfaction of regulatory requirements and other customary closing conditions.

Alex Kuo, president and chief executive officer, ULi, will join NVIDIA as a senior executive responsible for MCP sales, marketing, and support functions in Asia.

“Alex and his team have built a company admired for creating innovative products in the core logic arena.  The acquisition provides an opportunity for NVIDIA to leverage a very talented engineering team in order to expand our MCP initiatives while building closer relationships with customers in Asia,” said Jen-Hsun Huang, president and chief executive officer, NVIDIA.

ULi has been controlling less than 1% of the whole core-logic market, whereas NVIDIA’s market share has climbed from 5% to 8% in the past quarters according to Mercury Research. But while not so popular and technologically advanced chipsets from ULi are hardly interesting for NVIDIA, the Taiwan-based chip developer has a broad multimedia product portfolio that may interest the graphics giant and may be integrated into the future nForce products.

Additionally, ULi Electronics supplies partners of ATI Technologies with I/O controllers. It is unclear for how long NVIDIA will keep supplying the arch-rival’s mainboard partners with appropriate products. NVIDIA said it intended to supply ULi customers with current products for the foreseeable future.

The acquisition represents NVIDIA’s ongoing investment in its platform solution strategy, which leverages the acclaimed NVIDIA nForce media and communications processors (MCPs) along with other products, according to NVIDIA.

Additionally, the acquisition is expected to strengthen the company’s sales, marketing, and customer engineering presence in Taiwan and China.