Nvidia Corp., the manufacturer of chips for computer graphics cards, is functioning on a microprocessor for tablet devices that would immediately contest with Intel Corp. products, two people familiar with the matter said.

For the fiscal second quarter months ended Aug. 1, Nvidia's loss was $141 million, or 25 cents per share. In the same period last year, the company lost $105.3 million, or 19 cents per share.

Nvidia took a charge of $193.9 million for faulty packaging for laptops chip shipped before July 2008. That includes the cost of remediation and settling a class action lawsuit.

Jim McGregor, an analyst at Scottsdale, Arizona-based In-Stat said that, “They are between a rock and a hard place,” he said. “Nvidia doesn’t have that much time. Their business model is under pressure.”

Nvidia took an inventory writedown because of weak demand for consumer graphics chips. High prices for memory chips, which are paired with Nvidia's chips in graphics cards and economic weakness in China and Europe, led to a shift to cheaper graphics chips and PCs without separate graphics cards.

Nvidia took a charge of $193.9 million for faulty packaging for laptops chip shipped before July 2008. That includes the cost of remediation and settling a class action lawsuit.

Nvidia, based in Santa Clara, California, has concentrated on the market for graphics processing chips, becoming popular with computer gamers. Those customers add cards to their PCs to enable them to play the latest games.

Nvidia went 8 cents to $8.96 at 4 p. m. at New York time in Nasdaq Stock Market trading. The stock has lost 52 percent this year. Shares of Intel, also based in Santa Clara, and increased 3 cents to $19.45.