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Mercury Research, a well-known market tracking agency, released the research concerning the state of graphics solutions market in the third quarter of the year.

For the second consecutive quarter the trends show ATI Technologies is gaining momentum with its leadership position in performance and mobile segments, while Intel Corporation continues to occupy the market of the cost-effective integrated solutions. NVIDIA Corporation, who develops GPUs for various market segments, experiences some declines in its overall share, but is still the largest desktop graphics chip company in the industry.

Desktop Graphics Direction – Intel

The graphics adapters market itself proved to be quite healthy in the third quarter of 2003 and demonstrated both sequential and annual growth. Particularly, the market saw a 13.75% increase in terms of graphics units sold, including standalone, integrated, mobile, professional, etc.

The biggest supplier of graphics products in the third quarter of the year was Intel with 35% of the whole market. NVIDIA Corporation and ATI Technologies boast with nearly equal shares of the graphics market – 25% and 22% respectively. This demonstrates the indisputable success of ATI Technologies and Intel within the last 12 month.

Other providers of graphics products, such as VIA Technologies, Silicon Integrated Systems and Matrox Graphics stayed flat with the previous quarters with 9%, 8% and 1% parts of the market in that order. All three saw slight volume increases, while the sales of competing Silicon Motion decreased dramatically during the quarter.

Standalone GPUs Trend: NVIDIA Leads, ATI Catches Up

NVIDIA Corporation continued to loose the ground in the total standalone graphics processors market – includes desktop and mobile GPUs and VPUs – in the third quarter of the year by declining 1% to 53% sequentially. Markham, Ontario-based ATI Technologies, on the other hand, gained solid 3% and reached 40% milestone. Shares of companies like SiS and Matrox Graphics were 3% per each with SiS leading in terms of unit sales.

In general, ATI is very strong in mobile and high-performance markets these days. This may ignite future design wins as well as market share increases eventually.

Desktop Standalone Graphics Chips – ATI Gaining Momentum, NVIDIA Fighting Strong

Santa Clara, California-based NVIDIA managed to maintain its Number One position in the desktop standalone graphics chip business, but also saw a sequential decline of 2% in terms of share, down to 62%. The rivaling ATI Technologies boosted its share by 4% to 32% during the Q3 2003. SiS and Matrox stayed flat with 3% each.

Desktop Integrated Graphics – SiS Collapses, Intel Skyrockets

Intel Corporation proves to be the most successful provider of integrated graphics solutions with its Intel Extreme Graphics and Intel Extreme Graphics 2 cores that are built in the company’s i845 and i865-series of products. During the third quarter 2003 the company gained an extra 3%, while SiS lost another 2%.

It means that the world’s largest chip-maker has managed to increase its share from 57% to 67% within the first three quarters of the year, while SiS has lost 5 points and now occupies 13% of the desktop chipsets with integrated graphics market. NVIDIA and VIA stayed flat with 17% and 3% respectively compared to Q2 2003.

New Breed DirectX 9.0 Chips on Track

Since NVIDIA has never had value DirectX 8.1 parts, its share in that market is very low, while ATI enjoys sales of its RADEON 9200-series products with about 80% of the market.

On the other hand, the Markham, Ontario-based graphics chip designer still does not have a widely-available DirectX 9.0 cost-effective part, as a result, NVIDIA leads the DirectX 9.0 value segment with 72% of the market, up 2% from the previous quarter, while ATI has only 27%, even a bit lower than earlier.

NVIDIA also tripled its sales of Performance Direct X 9.0 GPUs and grabbed 32% of the market. ATI was flat in terms of units, as a consequence, its share felt to 68%. In overall, it means that ATI Technologies still sells loads more high-performance DirectX 9.0 parts than the rival.

It worth to point out that the third quarter was the first quarter for NVIDIA’s high-performance GeForce FX 5900 revenue shipments. Given that the company did not manage to outperform ATI’s powerful RADEON-series in terms of sales, we may conclude that enthusiasts still prefer ATI’s VPUs to NVIDIA products. Therefore, we may anticipate strengthening of ATI’s positions in mainstream and value segments as well eventually.

ATI and Intel Compete in Mobile

There are some changes in the mobile segment, where ATI have always leaded. Due to Centrino sales going upwards during the last few months, Intel’s share in the market of integrated chipsets for portable computers rose to 45% from 23% early this year, while ATI only gained 5% within the same period and now has 39% share. VIA Technologies continued to loose the ground in mobile integrated segment – a 26% decline from 37% in Q1 to 11% in Q3 speaks for itself. In contrast, SiS/XGI successfully received 5% share as a result of Trident acquisition in the Q3.

In the mobile standalone segment ATI maintained its leadership position with 71% share, up 9% from the Q1 and 3% sequentially. NVIDIA also added two points in sequence, but did not manage to achieve 28% level of the first quarter 2003 with the Q3’s 21%. SiS/XGI, Silicon Motion and VIA had 6%, 1% and 1% shares of the mobile standalone market in Q3 2003 correspondingly.

Due to increase competition in the mobile segment, ATI Technologies overall market share in portable graphics markets is 56%, down 3% sequentially; Intel’s is 21%, up 5% sequentially and NVIDIA's share is up 1 point with 12%. SiS, VIA and Silicon Motion occupy 6%, 5% and 1% in that order.

You can order the whole report from Mercury Research over here.


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