Study: PC graphics shipments down, Intel increases market share

Tiburon (CA) - Despite an overall declining graphic chip market in the second quarter, Intel was able to expand its shipments with the help of its recently launched Grantsdale integrated graphic chipset (IGC) and increase the pressure on Nvidia, ATI and Via, according to a study released by Jon Peddie Research.

The firm estimates that approximately 54.3 million PC graphics devices shipped from eight suppliers in the second calendar quarter, a 5.2 percent decline from the previous quarter and a 12.8 percent increase over the same period the previous year. The desktop graphics segment saw a 6.6 percent decline in quarterly shipments but achieved 10.6% growth year-over-year. Within the desktop segment, discrete controller shipments declined 19.2 percent sequentially while integrated graphics shipments increased 5.5 percent on a quarterly basis. Growth in the desktop IGC market was led by Intel and VIA Technologies.

According to Peddie, the mobile segment keeps its growing momentum. Approximately 10.5 million mobile graphics processors shipped from six suppliers in the second quarter, up one percent from the previous quarter and up 23.1 percent year-over-year. Shipments of integrated graphics chipsets for notebooks slightly outpaced those of discrete (stand-alone) mobile graphics processors during the period, but discrete controllers displayed sequential growth of 2.7 percent while IGC shipments remained essentially flat as compared to the first quarter. Intel was the only supplier to see its shipments of IGCs for notebooks increase on either a sequential or annual basis in the second quarter.

"Quarterly shipment declines in the second quarter are to be expected in the graphics industry; however, year-over-year growth the second quarter was fairly robust in all segments except for the discrete desktop market, where shipments increased just 2.7 percent," said Lisa Epstein, a senior analyst at Jon Peddie Research. "The small window that opened in the first quarter for discrete desktop graphics swiftly closed in the second quarter as Intel started shipping its new Grantsdale ICG. When Intel ships a new IGC, ATI and Nvidia immediately lose ground," Epstein said.

Intel saw a 7.9 percent quarterly increase in graphics shipments in the second quarter, was the largest supplier of PC graphics devices worldwide, and claimed an increased share of the total graphics market. Nvidia was the second largest supplier in the second quarter but with reduced shipments and share of the total graphics market. ATI was the third largest supplier, also with reduced shipments and share.

Intel now holds a new record high of 37.7 percent (+ 4.7 points over the first quarter) of the total graphics market, followed by Nvidia with 23.2 percent (- 4.0) and ATI (- 0.8). Via follows with distance at 8.9 percent, SiS with 6.2 percent, Matrox with 0.46 percent, XGI with 0.26 percent and 3DLabs with 0.04 percent. Noteworthy is a significant drop at XGI, whose sales shrunk by 50 percent in the second quarter, according to Peddie.

Intel's march to the top of the market becomes obvious, if current shares are compared to figures published in 2003 and 2002. The company held a share of 31.7 percent in the fourth quarter of 2003, and 28 percent in the fourth quarter of 2002. In 2002, Nvidia still held a commanding market share of 32 percent with ATI as a distant third at 19 percent.