Chip giants Intel and AMD will need to be careful in the next 12 months as demand for PCs and notebooks slows in favour of smartphones and tablets.

It’s still early days but with demand for alternatives to the Windows PC being sold in increasing numbers, the days of expecting an Intel or AMD chip inside a computer device are beginning to vanish.

The tablet boom created by the Apple iPad and this year to be continued by a raft of new Android 2.3 and 3.0-reaady tablet devices will see chip rivals such as Qualcomm, Texas Instruments and Nvidia take a bigger chunk of the CPU pie.

Nvidia is better known for its PC graphics chips but the latest news coming out of Taiwan suggests that it may well start seeing significant revenue from its general-purpose CPU work.

Taiwanese news site has reported today that Nvidia has snagged an order to supply an estimated 1.5million Tegra 2 processors to Korean tech giant Samsung. The report was based on suppliers elsewhere in the component stream for the company’s new 10.1-inch Galaxy Tab due in the next couple of months.

However, the report continues with news that a number of major brands are lining up to grab their share of Nvidia’s dual-core ARM-based CPU with built-in 1080p video decoding. They include Dell, Motorola, Toshiba, MSI, Acer and Asus, which has reportedly placed an order for 500,000 to be delivered during the first half of 2011.

While AMD’s new Fusion processors, the C-50 and E-350, are being used in some new netbooks, Intel is only gaining a small chunk of the tablet market through vendors selling Windows tablets. However, the current Windows 7 operating system isn’t well suited to tablet use in its existing format, allowing Apple, Google and HP to grow the tablet market through their respective iOS, Android and WebOS operating systems.

WebOS tablets were only announced a few days ago, although, already the buzz about WebOS is strong. Apple’s iOS is a proven performer and Android is gaining wins everywhere.

In fact, the growth in 1080p (1920×1080-pixel) capable tablet devices featuring Android 2.3/3.0 operating system and the Tegra 2 processor should be enough to worry the likes of Intel and AMD, particularly given recent news that smartphones and tablets will outsell PCs in Australia in 2011.

Certainly, Intel needs to fire back and do it quickly if its to slow down the ever-growing shift towards Tegra 2.

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