Intel's Larrabee processor, which the company plans to demonstrate next year, will take the chipmaker into the high-graphics market, where it will compete against products from Nvidia and Advanced Micro Devices's ATI unit.

Paul Otellini, president and chief executive of Intel, said during his keynote address at the Intel Developer Forum this week that integrated graphics and CPU cores would be in Larrabee, codename for Intel's first tera-scale processor. Larrabee is set for release by 2010.

Larrabee is expected to compete against graphics processors from Nvidia and AMD's ATI. Intel, however, also is positioning the chip for scientific research, data mining, visualization, analytics, and other highly computing-intensive applications.

Intel has said that teraflop products based on the Larrabee platform will be based on a highly parallel architecture that's easily programmable and will scale to trillions of floating point operations (teraflops) per second.

During a question and answer session following the keynote, Otellini ducked a question on whether Larrabee would take Intel into the market of discrete graphics, which is the development of graphics processing units (GPUs). After listing other uses, Otellini said, "Graphics will also be an area for the chip."

In 2009, AMD plans to ship the first of its Fusion chips, which merge graphic and CPU cores. AMD plans to eventually release models for desktops and notebooks.

During the Q&A, Otellini also said that Intel expects its 45-nanometer scale technology to comprise 50% percent of the chips it ships by the middle of next year. Intel plans to introduce its first 45-nm processors, codenamed Penryn, on Nov. 12. Intel expects the chips to give it a performance advantage over rival AMD, which is scheduled to ship its first 45-nm chips until 2009.