Nvidia Corp Chief Executive Jen-Hsun Huang said the downturn in chip demand appears to have bottomed out and is now growing nicely.

Huang said the graphics chip maker expects to ride strong sales when Microsoft Corp releases its next-generation operating system, Windows 7. The new operating system is expected to hit the market later this year.

Demand appears to be growing again -- obviously from a lower base, but we're seeing demand growing nicely, Huang told the Reuters Global Technology Summit in New York on Monday via videoconference. We're actually seeing that there are spot shortages in the channel for several of our products.

Shares of Nvidia rose 6 percent to $9.27 on the Nasdaq on Monday.

Huang also called Intel Corp's chip pricing strategies unfair, but said his company will not seek antitrust action against the world's largest chip maker for now.

Last week, the European Commission fined Intel 1.06 billion euros ($1.44 billion) and ordered it to change its business practices for competing illegally against Advanced Micro Devices Inc.

Nvidia makes graphics chips that run alongside Intel's microprocessors, used in about 80 percent of personal computers. The two companies have sued each other over an assertion by Intel that a licensing agreement between them does not cover Intel's next-generation products.

Huang on Monday also took issue with Intel's practice of bundling chips together. He said Intel sells its Atom microprocessor by itself for $45, but it will sell Atom for $25 if it is purchased in combination with other Intel chips that compete with Nvidia products.

That seems pretty unfair, he said. We ought to be able to compete and serve that market.

For now, Huang said Nvidia has no plans to complain to regulators about Intel's sales practices.

I hope it doesn't come down to that, he said, adding: We have to do whatever we have to do when the time comes. We really hope this company (Intel) will compete on a fair basis.

Intel brushed off Huang's comments.

We compete fairly. We do not force bundles on any computer makers and customers can purchase Atom individually or as part of the bundle, said Bill Calder, a spokesman for Intel. If you want to purchase the chip set, obviously there is better pricing.

DIFFERENT TAKES ON DEMAND

Chipmakers such as Nvidia, Intel and AMD, which owns Nvidia's chief rival ATI, have been hurt this year by the steep drop in PC sales brought on by the global economic slowdown.

Nvidia, saying Windows 7 will support the nascent use of graphics processors for the main tasks of computing, hopes that PC makers will realize that users increasingly want and need graphics-intensive, multimedia applications.

More broadly, Huang said industry inventory levels were near historical lows after cutbacks in production over past quarters.

Huang said netbooks -- which are decreasing in size while gobbling up market share -- were an ideal fit for Nvidia's chips because consumers used the mini-computers primarily for graphics-heavy applications.

($1=.7376 euro)

(For summit blog: http://blogs.reuters.com/summits/)

(Editing by Edwin Chan, Tiffany Wu, Tim Dobbyn)

Electronics Intel