The iPad 2 will sport powerful, new graphics hardware, along with a higher-resolution display, according to a report.

That graphics chip would be Imaginations' SGX543, according to Apple Insider.

If this rumor is on the money, it is, indeed, a potent graphics technology. Imagination describes the POWERVR SGX543MP as allowing "up to 16 cores...in a high-performance, multiprocessor graphics solution without performance or silicon area compromises." This graphics tech would be used in conjunction with a dual-core ARM processor, as CNET previously reported.

And Apple's next-gen iPhone 5 would also feature this chip design--the so-called Apple A5 processor.

"This makes sense," said Linley Gwennap, principal analyst at the Linley Group, a chip consulting firm. "The A5 processor must have at least dual Cortex-A9 CPUs (central processing units) to be competitive with [Nvidia's] Tegra 2 and other current smartphone CPUs," Gwennap said in response to an e-mail query. The Cortex-A9 is a design being used by most major ARM chip suppliers, such as Texas Instruments, Samsung, and Nvidia.

Gwennap continued. "The single-core SGX543 does not have enough graphics performance to keep up with Tegra 2, but a dual-core SGX543 should be within the same range. Even a dual-core SGX543 would fall well behind the graphics performance of Marvell's new Armada 628, which should be in phones in 2H11," he said.

Not surprisingly, graphics chips--needed for handling high-resolution images, video, and games--are becoming a major focus for next-generation tablets and smartphones. Look no further than Motorola's Xoom tablet and upcoming Droid smartphones. Those devices use a version of the ARM processor from graphics-chip supplier Nvidia, which integrates 8 cores into its GeForce GPU (graphics processing unit), according to Nvidia's Tegra 2 spec page.

And RIM's PlayBook is expected to boast stellar graphics, based on Texas Instrument's OMAP 4 ARM chip, which uses Imagination's PowerVR SGX540.

The iPad 2 is also rumored to have a high-resolution display, though it's not clear if this would be similar to the Retina Display used on the iPhone 4, or another technology.