Olds said this kind of leapfrog move in the graphics chip arena puts pressure on both Intel and AMD. "Assuming that Nvidia has truly raised the bar in notebook graphics, then Intel and AMD will need to take their game up a notch," he added. "This isn't news to them, they're both working on new chips that will address what Nvidia is providing, such as higher graphics performance and low power requirements. It's just that Nvidia seems to have gotten there sooner."

In August, AMD threw down its own gauntlet in front of Nvidia, that runs two graphics chips. The ATI Radeon HD 4870 X2 uses two units of a smaller chip rather than one big chip.

AMD spokesman Matt Skinner said at the time that AMD's new GPU provides 30% to 50% more performance and uses less energy than Nvidia's GTX280 graphics card.

The graphics chip market has been getting increasingly contentious.

Just weeks before AMD unveiled its dual-chip graphics card, rival Intel released of its upcoming , which will power its first stand-alone graphics card. Larrabee marks a major strategic shift for Intel, which has traditionally relied on graphics technology from companies like Nvidia and ATI.