Graphics chip maker Nvidia Corp. (NASDAQ:NVDA) showcased the high performance of its Tegra 3 mobile processor at the 2012 Consumer Electronics Show (CES) and revealed a new Tegra 3 feature called DirectTouch, enabling the processor to directly receive the touch-screen input without the need for a touch controller.

NVIDIA showed a live demo, suggesting performance efficiency increased by three times, in terms of sampling rate, by DirectTouch versus a standalone touch controller.

While we are unsure of the overall touch performance of DirectTouch, we believe that any trends towards directly using the processor to sample touch input will likely be a negative for touch controller suppliers like Atmel (NASDAQ:ATML) and Cypress Semiconductor (NASDAQ:CY), Wedbush Securities analyst Betsy Van Hees wrote in a note to clients.

Nvidia also unveiled a demo of the presenters, wirelessly playing a multi-person First-Person Shooter (FPS) game and demonstrating the computing power potential of the Tegra 3 quadcore mobile processor.

Van Hees, who has an outperform rating on Nvidia shares, recommended investors to build positions in Nvidia as the analyst believes the company's shift to a leading solutions provider to the expanding mobile market still remains in the early innings.

We think as macro headwinds clear that NVIDIA will benefit from (1) Tegra 3 ramp, (2) increasing silicon footprint from Icera, (3) stable GPU attach rates and market share, and (4) healthy balance sheet bolstered by strong generation of CFFO, Hees said.

Consumer Electronics Show Consumer Electronics Show Consumer Electronics Show