Nvidia has responded to a court filing made by Intel on Monday, in which the chipmaker alleges that the four year chipset licensing deal does not extend to future generation CPUs with integrated memory controllers, such as Core i7 series CPUs.

Nvidia thinks the license still applies, even to upcoming CPUs, and contends that Intel is trying to squeeze it out of the chipset business because the focus is slowly shifting to GPUs over CPUs.

"We are confident that our license, as negotiated, applies," said Jen-Hsun Huang, president and CEO of Nvidia. "This is clearly an attempt to stifle innovation to protect a decaying CPU business."

In its press release, Nvidia cites that since it entered the Intel chipset market, it has offered numerous innovations, such as SLI, Hybrid power, CUDA, and, more recently, Ion. It emphasizes its Ion chipset offers a ten fold increase in graphics performance compared to Intel's 950 IGP used on the Atom platform.

Nvidia believes Intel's latest move is an attempt to control the PC market, which is slowly embracing Nvidia platforms. The company also claims it has been trying to resolve the dispute with Intel for over a year.