The XO laptop has spurred interest in cut-down laptops or netbooks
Nvidia has joined a growing band of hardware makers producing low-power, portable laptops.
Better known for graphics cards, Nvidia has shown off two Tegra processors designed for tiny laptops or netbooks.
It said devices fitted with the chips would be able to browse the web, show high-definition video and be able to handle graphically-heavy games.
The move pits Nvidia against chip giant Intel which is releasing a similar line of chips for such small devices.
Nvidia said it would release more details of the Tegra 600 and 650 processors at the Computex show in Taiwan which runs from 3-7 June.
The chip maker said the processors were aimed at light, portable gadgets that are fitted with a screen up to 12in (30cm) across, a keyboard, high-speed wireless connection and a port for a game controller.
Nvidia has dubbed such devices Mobile Internet Devices or "Mids". Others, such as Dell and Intel have started calling them "netbooks".
"The systems now look more like dehydrated notebook computers," Mike Rayfield, general manager of Nvidia's mobile business, told Reuters.
On-board the Tegra processors are an Arm 11 chip, graphics unit, media handler, system memory and peripheral controllers.
Mr Rayfield expected Taiwanese computer firms to unveil prototype netbooks using the Tegra chips at Computex. When such devices go on sale they should retail for about $200-$250 (£101-£127), he said.
Nvidia's announcement pits it against Intel, which has launched the Atom chip specifically for low-cost, portable notebooks. Gadgets using the Atom processor are also expected at Computex.
In late May Dell showed off the first of a family of netbooks machines and HP has announced a trimmed-down notebook powered by a chip from Via.
Leading the pack to create netbooks are Asus with its Eee PC and the One Laptop Per Child project which is taking such gadgets to children in developing nations.