Is NVIDIA creating x86 processors that will take on Intel?

Ars today questions the recent rumors that NVIDIA might be entering the x86 processor market and taking Intel on directly.  The evidence claims come from industry rumors and the fact that NVIDIA is hiring up a lot of x86 talent including employees from Transmeta.

NVIDIA recently announced that it would be giving up its chipset work on Core and Nehalem series processors – which Apple use in their products – due to the ongoing litigation with Intel.

Bad NVIDIA chipsets had plagued Apple’s MacBooks and other industry products requiring Apple to provide unprecedented 3-year warranty replacement on bad motherboards.

Apple has a strong relationship with NVIDIA, using their chipsets in most of their current Macintosh products.  NVIDIA making x86 processors might lure Apple into changing processor providers, though unlikely.  Ars speculates that any NVIDIA x86 processors would likely be low to mid-range, at least initially.