Nvidia's Ageia Aquistion Pressures AMD

Ageia, best known for its PhysX software found in games for Sony's PlayStation 3, Microsoft's Xbox 360, Nintendo's Wii and gaming PCs - provides technology that speeds up complex physics calculations to make games feel more realistic.

Jen-Hsun Huang, president and chief executive at Nvidia, said that the combined firms could bring GeForce-accelerated PhysX software to hundreds of millions of gamers around the world.

"The computer industry is moving towards a heterogeneous computing model, combining a flexible CPU and a massively parallel processor like the GPU to perform computationally intensive applications like real-time computer graphics, " he said.

The move could put pressure on Advanced Micro Devices, which acquired Nvidia's graphics chip rival ATI Technologies.

Late last year Intel, the world's largest chip maker and direct competitor to AMD purchased Havok, a firm that also made physics technologies. Havok worked closely with AMD, however after Intel's acquisition, development ceased.

The situation could be problematic for AMD if Intel and Nvidia push the integration of more complicated physics into video games.

The acquisition remains subject to customary closing conditions.