By Noel Randewich

SAN FRANCISCO, Nov 7 (Reuters) - Nvidia Corp gave a revenue forecast for the current quarter that was shy of Wall Street's expectations as the graphics chipmaker faces tough competition in tablets and a slow personal computer market.

With the personal computer industry losing steam, Nvidia has expanded its graphics chips into tablets and is working on smartphone chips, but it is meeting stiff competition from Qualcomm Inc and other rivals, and some analysts said the chipmaker should exit those markets.

In the third quarter, sales from Nvidia's Tegra mobile chips fell 54 percent and sales from its PC graphics chips, which accounts for the majority of the company's total revenue, declined 2 percent.

Nvidia expects its mobile chip business, called Tegra, to remain flat this year as it focuses on integrating Long Term Evolution (LTE) features on upcoming components, making them compatible with high-end carrier networks and more attractive to smartphone makers.

Nvidia's lighter-than-expected revenue forecast follows other chipmakers that have failed to impress analysts.

Several semiconductor companies, including Texas Instruments Inc, Intel Corp and Qualcomm, have given current-quarter revenue forecasts in recent weeks that disappointed Wall Street, raising concerns that manufacturers of industrial and consumer devices might have overestimated the macroeconomy.

Nvidia's most recent Tegra 4 processors are being used in Microsoft's Surface 2 tablet and a smartphone made by Xiaomi in China but Wall Street is concerned it is making too little progress for the money it spends to develop the chips.

"Look at the tablet space - Apple and Samsung are captive and there's no chance Nvidia is going to have a long-standing business there," said Evercore analyst Patrick Wang.

Many of the tablets in the fast-growing Chinese market are made with inexpensive components supplied by Mediatek and other local chipmakers.

Some analysts, including Wang and Needham's Rajvindra Gill, said Nvidia should shed its mobile chip business and stick to more profitable areas such as gaming PCs, automotive and enterprise computing.

"What they should do is try to spin out Tegra or sell the business related to phones and tablets," said Gill. "Become a much higher margin company and continue to return capital to shareholders."

Nvidia's PC graphics chips are widely used in high-end laptop and desktop computers favored by gamers. Sales of those computers have been healthier than sales of less expensive laptops, which consumers are switching away from in favor of tablets.