Intel has increased speculation that it is looking to enter the graphics processor market with its upcoming Larrabee chip.

The vendor unveiled Larrabee earlier this year at Intel Developer Forum in Beijing. The highly parallel processor is based on the Intel Architecture scheduled to ship by 2008.

Larrabee has been vaguely positioned as a chip for scientific modelling applications such as super computing, financial services, physics and health applications, and graphics. It will deliver over one trillion floating point operations per second.

Intel chief executive Paul Otellini did not provide many new details in his opening keynote at the current Intel Developer Forum in San Francisco, other than a promise to "develop this product in 2008".

But the executive did spend a remarkably large amount of time on its graphics capabilities.

Jim McGregor, a director for semiconductors and enabling technologies at analyst firm In-Stat, argued that Intel is hinting at a discrete graphics chip that would compete with Nvidia and ATI, a division of Intel's main rival AMD.

Intel currently offers graphics capabilities as part of the chipset, but does not design standalone graphics cards. But the company could be forced into the market by AMD's ATI acquisition last year.

"To every move that AMD has made, Intel is making a very competitive countermove," noted McGregor.

Intel also said that it would increase development efforts for integrated graphics processors, which lag one or two generations behind Intel's processors.

But Otellini said that the firm is speeding up development to allow the graphics processor to bring the technology up to par with its processor technology. Matching processing technologies are required for the GPU to be integrated into the CPU.