One of Apple's two graphics chips suppliers, NVidia, has been hard hit by the continued softness in worldwide PC sales, according to a profit warning it issued yesterday.

The company said the weak market for its chips used in PCs will force it to write off a “significant” amount of unsold inventory.

Company executives confirmed that its low-end chips (as used in AMD PCs), and Xbox chip sales have been particularly weak. Microsoft changed some security aspects of Xbox, making earlier NVidia chips obsolete, leaving NVidia with unsold inventory.

The company also makes chips for Apple's new LCD iMac, for which Apple reported weaker-than-expected sales earlier this month.

The company expects to report revenue of approximately $410 million to $430 million in its second quarter; analysts had expected revenues of about $568 million. NVidia will report its earnings August 15.