NVidia is demonstrating the next generation of graphics processors at the Games Developers Conference in San Jose, California.

The company took the wraps off its GeForce FX 5600 Ultra and the FX 5200 Ultra. This follows ATI's Wednesday launch of its newest Radeon graphics chips. It also follows NVidia's own recent launch of its long-delayed, high-end graphics chip, the GeForce FX 5800 Ultra.

NVidia's latest chips use the CineFX architecture, that supports DirectX 9 and high-level shading languages that the company says provides "easier, more-realistic lighting and shading effects".

"We're trying to make the PC more like a console, a truly liberating experience for developers to write for," says Bill Rehbock, NVidia's director of developer relations.

The budget GeForce FX 5200 Ultra comes with 128MB of memory and will ship on boards selling for about $99. The 5200 Ultra still uses the 0.15-micron process, and replaces NVidia's current GeForce 4MX. The mid-range GeForce FX 5600 Ultra will appear on boards selling for around $199. Based on the new 0.13-micron process the 5600 Ultra will be available in both 128MB and 256MB incarnations.

The power of the FX 5200 in particular is stunning compared to that of previous budget chips, Rehbock says.

"Here at GDC, I've never seen game developers so excited," he says. "Imagine being able to run Doom III on a $99 card."

ATI beat NVidia to the high-end punch with its Radeon 9700 Pro, and that success has filtered down to its mainstream chips.

Jon Peddie, president of Jon Peddie Research, a graphics and multimedia research firm, says NVidia remains the dominant player in the graphics-board market.

"Right now, ATI is going to get more favourable press attention, but NVidia is a great company and it has great products coming," he said.

The rivalry between the two companies is strong enough to drive them both ahead swiftly. "We'll see some dramatic things out of NVidia," he adds. "Its road map is pretty damn powerful. And ATI's is also damn powerful. We'll see a lot of damn powerful stuff coming out," he says.

Peddie observed: "The bad news is that ATI and NVidia are moving so far ahead of the other companies, that we're going to see the rest of them squabbling over the 15 per cent of the market that's left," he says.

NVidia plans to release the new cards in April. The company does not manufacture its own cards, so the GPUs are unlikely to reach Macs unless Apple builds them into its designs.

However, Apple partners with both NVidia and ATI for graphics processors. The company uses NVidia chips in eMacs, iMacs, and PowerBooks. It also offers NVidia chips as standard or optional units in its Power Macs.