The two have been battling it out in court since February over the terms of a 2004 chipset licensing agreement, which Intel claims doesn't extend to processors with an integrated memory controller -- like the Core family -- while Nvidia is firing back with accusations of breach of contract.
Nvidia will continue to market Ion for low-cost netbooks and nettops, but with Intel's upcoming Pine Trail platform moving a basic graphics core onto the CPU die, things are not looking good for them in this space either. The company will reportedly counter with a discrete Ion GPU that will remove the MCP features to lower costs, and play the 'GPU-accelerated Flash' card, but we'll have to wait and see how that works out.
Furthermore they are ceasing development of chipsets for AMD processors, noting a lack of demand for such products; not to mention they also plan to release microprocessors with integrated graphics cores. All in all, Nvidia stands to lose quite a penny here, considering the company's chipset business accounted for 31% of its $776.5 million revenue in the second quarter of fiscal 2010, which ended in July 2009.