Intel shares fell more than two percent on the news.

Nvidia said that it has designed a central processing unit, or CPU, based on technology from ARM, a company it's trying to acquire from Japan's SoftBank Group.

Already the Swiss National Supercomputing Centre and US Department of Energy's Los Alamos National Laboratory will be the first to use the chips in their computers,

Expanding into this product category opens up more revenue opportunities for Nvidia and could bring a pile of pain to Intel.

Founder and Chief Executive Officer Jensen Huang has made Nvidia the most valuable U.S. chipmaker by delivering on his promise to give graphics chips a major role in the explosion in cloud computing. Data centre revenue contributes about 40 percent of the company's sales, up from less than seven percent just five years ago.

At the moment Intel l has more than 90 per cent of the market in server processors, which can sell for more than $10,000 each.

Nvidia’s CPU, named Grace after the late pioneering computer scientist Grace Hopper is designed to work closely with Nvidia graphics chips to better handle new computing problems that will come with a trillion parameters.

Systems working with the new chip will be 10 times faster than those currently using a combination of Nvidia graphics chips and Intel CPUs. The new product will be available at the beginning of 2023, Nvidia said.