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    Graphic Chip Shipments Slump, but Nvidia Takes Market Share from Intel, AMD

    By
    Nicholas Kolakowski
    -
    January 29, 2009
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      With consumers and businesses cutting back on desktop and laptops purchases in an increasingly recessionary environment, the number of shipped graphics processing units dropped by 35 percent between the third and fourth quarters of 2008, from 111.26 million to 72.35 million, according to a new report.

      The Jan. 29 report from Jon Peddie Research also said the decline affected all vendors, including Advanced Micro Devices, Intel, Nvidia, Matrox, SiS and VIA/S3, although some faced steeper market-share erosion than others.

      The last time that overall fourth-quarter GPU shipments declined compared to the third quarter, it was the bursting of the tech bubble of 2000. In 2007, the segment experienced 10.62 percent growth from third quarter to fourth quarter. The decline in chip shipments reflects a similar fourth-quarter tumble in notebook and desktop shipments.

      Despite the overall declines, a few companies managed to squeeze out a few more points of market share, including Nvidia, which saw a 2.9 percent increase despite a sales drop from 30.93 million to 22.20 million units.

      Nvidia gained those points at the expense of Intel and AMD’s ATI graphics business, which saw drops of 1.6 and 1.3 percent, respectively.

      “Nvidia has had a very strong channel management team for several years, and been very quick to react to ODM [original design manufacturers] and OEM requests, typically making decisions and putting plans into action within 24 hours,” said Peddie said in an interview. “The short answer is: nimbleness, product spread, inventory to fill spot orders, and brand, brand, brand.”

      Other analysts seconded that reasoning.

      “Today, Nvidia dominates the discrete graphics product stack top to bottom, and in integrated graphics, its 9400M/Ion platform is disrupting the mobile world with wins at Apple and Dell and in upcoming netbooks,” Hans Mosesmann, an analyst at Raymond James, wrote in a Jan. 28 research note.

      “We believe Nvidia’s upcoming 40-nanometer-based GPUs are set for a timely May/June launch and that notebook OEMs have already started to design these products in -today’ and likely ahead of AMD’s own 40nm-based products,” Mosesmann added.

      Nvidia kept what the report describes as a “slight edge” (a 37.9 percent market share) in the desktop segment, while AMD raised its market share in the segment by 1.1 percent between the third and fourth quarters.

      Shipments of desktop units dropped 39.5 percent between the third and fourth quarter.

      Click here to see Panasonic Toughbook laptops with Intel’s vPro technology.

      While desktops are more likely to feature multiple graphics boards in a single computer, the number of units shipped still remains higher than notebook units, at 37.45 million versus 34.89 million for the fourth quarter. Notebook unit shipments for the quarter were down 29 percent.

      Nvidia has been looking to expand its offerings in the notebook and netbook markets as well.

      The report credits “the worldwide financial market meltdown, the U.S. housing market meltdown, layoffs and media reports” as contributing factors in the sales decimation.

      It also features a prediction from Peddie: “We’re forecasting a strong [third quarter] and [fourth quarter] for 2009 and bracing for what will probably be the worst [first quarter] and [second quarter] decline we’ve seen since the Internet bubble burst of 2000.”

      Nicholas Kolakowski
      Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.

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