The battle over the red-hot graphics chip market just got more interesting.

Intel announced on Wednesday it hired the former head of AMD's graphics business and will start a new high-performance graphics group inside the company.

Raja Koduri was named Intel's chief architect and senior vice president of the newly formed Core and Visual Computing Group and general manager of a new initiative to drive edge computing solutions.

"In this position, Koduri will expand Intel's leading position in integrated graphics for the PC market with high-end discrete graphics solutions for a broad range of computing segments," the company said in a news release.

Shares of AMD fell 5 percent following the report. Nvidia and Intel stock fell 1.8 percent and 0.9 percent, respectively.