It is a known fact that Intel will launch their first ever dedicated GPU codenamed Larrabee this year. And on the other hand, rumors are that NVIDIA is heavily recruiting x86 engineers for making its own x86 processor. So, why suddenly both the companies are gunning for each other’s core market? The reason might lie in Intel’s decision to develop a dedicated graphics card.
NVIDIA is the number one dedicated graphics card maker in the world, but it has to depend on Intel as they have more than 85 percent CPU market share.  We have already seen how Intel captured mobile graphics market by bundling its CPU and integrated graphics chipset. And, it is very likely that Intel follows the same approach and start bundling the dedicated Larrabee GPU with their processors for discounted prices, which will totally destroy NVIDIA’s business.
This leaves NVIDIA with only one option to develop its own CPU, which is not only difficult but costly also. Going against Intel in CPU business is almost impossible, even without considering all the licensing problems NVIDIA will face by designing an x86 processor. It is very likely the NIVIDA is just trying to intimidate Intel by hiring x86 engineers. NVIDIA’s future will depend a lot one how good the Larrabee GPU is, if it's better than NVIDIA’s lineup the company is doomed. However, if NVIDIA’s GPUs are better, Intel will have to continue supporting them.