Is NVIDIA Exiting The Chipset Business? UPDATED

Whoah there. That would be news. Santa Clara-based NVIDIA, makers of graphics processors that are near and dear to the heart of computer gamers everywhere, has been making quite a bit of news lately -- most of it bad. On the plus side, they were rumored to be working on a deal with Apple to supply a custom platform using Intel processors. But as we told you here earlier, they've also been stung by a $200 million charge to replace laptop chips that were damaged by packaging material. Now Digitimes is reporting that NVIDIA is planning to stop making chipsets altogether, and concentrate solely on their GPU business.

The loss of its chipset business is expected to have a significant impact on Nvidia's GPU business in the short-term. Reception to the nForce 200 chip (BR04) which will enable SLI technology on Intel X58 motherboards has been lukewarm at best, with many makers saying they will not bother adding the chip on their boards. This means Nvidia needs to find a way of licensing and enabling multi-GPU support on motherboards using Intel and/or AMD chipsets fast. Otherwise it will have to cede the top-end of the graphics card market to AMD, which now has the benefit of Crossfire.

Digitimes has a "shoot first, ask questions later" approach to reporting such news, but they are often right about industry scuttlebutt. They talk to all sorts of upstream and downstream suppliers and found out things that are closely held in-house, but are made obvious to other businesses when orders don't show up unexpectedly, for instance.

If we pile rumor on top of rumor, Apple stiffed Intel by flirting with NVIDIA to produce chipsets for Macs, then NVIDIA decides it's quitting the chipset business, and now someone at Intel is sitting by the phone with a smirk on their face waiting for it ring. "Hello, Steve, is that you?"

Update:  We have gotten a response directly from NVIDIA denying that they were exiting the chipset business.  NVIDIA's response is posted below...

1. The story on Digitimes is completely groundless. We have no intention of getting out of the chipset business.

2. In fact, our MCP business is as strong as it ever has been for both AMD and Intel platforms:
a. Mercury Research has reported that the NVIDIA market share of AMD platforms in Q2 08 was 60%. We have been steady in this range for over two years.
b. SLI is still the preferred multi-GPU platform thanks to its stellar scaling, game compatibility and driver stability.
c. nForce 790i SLI is the recommended choice by editors worldwide due to its compelling combination of memory performance, overclocking, and support for SLI.

3. We're looking forward to bring new and very exciting MCP products to the market for both AMD and Intel platforms.