Why Intel cancelled its Larrabee product? It really buys nVidia?

As it’ known at the beginning of this week, Intel was reported in news with surprising intention to delay its expected new graphics microprocessor chip code-named Larrabee. So, why would Intel cancel such a high profile product?

On the one side, this decision might be a part of a tacit agreement with rival Advanced Micro Devices, itself with a graphics chip initiative. Thus, the companies has recently signed a 5-year long bitter anti-trust battle that would ultimately cost Intel $1 billion

On the other side, it can appear to be a result of the ongoing Federal Trade Commission investigation into Intel's marketplace behavior as it relates to competitor nVidia , the industry leader when it comes to graphics microprocessor innovation.

nVidia shares revealed a rapid surge on Intel's decision to cancel Larrabee. But they also jumped in part because of renewed speculation that the company would buy nVidia. 

According to an Intel source, company’s CEO Paul Otellini appreciated the nVidia speculation, and that execs had a good laugh about it, determining a deal like that would not have passed muster under the Bush Administration, let alone under a new and emboldened Obama regime when it comes to anti-trust.