Nintendo â??has abandoned the Nvidia 3DS dealâ??

In a move that would suggest a significant missed opportunity for graphics chipmaker Nvidia, it is being reported today that Nintendo has now backed away from a widely-speculated deal that would have seen Nvidia tech used in the next DS handheld.

Early in January, a handful of purported inside sources insisted that the graphics chip giant had won a highly lucrative contract that will see it provide technology for the next Nintendo handheld, the 3DS.

Now a separate number of inside sources are suggesting that Nintendo has backed away from the deal.

Technology website Digital Foundry claims to have heard from “mobile industry insiders” who say that Nintendo has turned to a Japanese partner for the 3D acceleration hardware within the 3DS.

The website’s report reads:

“According to our two independent, unconnected sources, the Nintendo 3DS – almost certain to be revealed at E3 – features a design totally divorced from the NVIDIA Tegra SoC (system on chip) initially thought to have been powering the DS successor.”

Tegra is an ARM-based processor with integrated Geforce graphics, and has been developed by Nvidia for use in smartphones and other mobile devices such as Microsoft’s Zune HD.

Widespread rumours of a Nintendo deal had accelerated from claims made by Nvidia CEO Jen-Hsun Huang last year.

In June, Huang left analysts dumbfounded by declaring that Tegra will account for as much as 50 per cent of Nvidia’s revenues in the next few years. A surprise deal with Nintendo would have gone some way in facilitating this aim. The current DS has sold over 110 million units.

The speculated deal fallout would mark a funeral day at the office for Nvidia.

The source of the rumours, Digital Foundry, has a reputation for reporting rumours that turn out to be accurate. More will be revealed during and after E3, with Nintendo preparing to unveil its new device for the first time.

A separate source has told games site IGN that Nvidia is out of the picture.