UPDATE 2-Nvidia to buy PortalPlayer in mobile push

Nvidia Corp. [...] said on Monday it will buy audio chip maker PortalPlayer Inc. [...] for about $357 million as the graphics chip maker sets its sights on the fast-growing market for mobile devices.

Nvidia said it will pay $13.50 for each PortalPlayer share, a 1 percent premium to the company's closing price of $13.36 on Friday. The deal has a value of about $161 million net of cash on PortalPlayer's balance sheet.

PortalPlayer shares fell 0.6 percent to $13.28 while Nvidia's stock rose 1.8 percent to $33.18 in Nasdaq trading around midday.

The acquisition will expand Nvidia's line of chips used in hand-held devices such as digital media players and cell phones capable of playing music and video, an area where it lags its chief rival, ATI, now a part of Advanced Micro Devices Inc.