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Research and consulting firm Jon Peddie Research said a study parts of which it released Tuesday shipments of graphics components, both standalone and integrated, tumbled rather significantly from the previous quarter in Q1 2005. Both top suppliers of discrete graphics processing units saw their shipments and market shares down, whereas Intel Corp., the main supplier of integrated graphics chipsets, managed increase its market share.

Intel on Top Amid Market Decline

Jon Peddie Research estimates that about 60.2 million PC graphics devices were sold by eight suppliers globally in Q1 2005, a 6.2% decline from the previous quarter and a 4.9% increase over the same period the previous year. According to research firm IDC total shipments of personal computers rose 10.9% year-on-year in the first quarter to 46.1 million, roughly 1% above forecast.

Intel Corp. managed to maintain its leading position in the graphics market due to strong sales of chipsets with built-in graphics cores. The company posted 0.6% sequential increase in graphics shipments in Q1 2005 and now commands 43.1% of the market. ATI Technologies sustained its No. 2 position in the first quarter with an 11.3% sequential decline in shipments and reduced to 26.1% share of the total graphics market. NVIDIA Corp. remained on the third spot with a 9.7% sequential decline in shipments and reduced to 17.9% market share. All other graphics products vendors also faced declines in shipments and shrunk market shares.

Integrated Chipsets for Notebooks Grow 71.2% Annually

The desktop graphics segment saw a 7.9% decline in quarterly shipments with discrete desktop shipments falling 8.2% sequentially. Shipments of desktop chipsets with integrated graphics core dropped 7.8% on a quarterly basis.

At the same time 14.6 million mobile graphics processors shipped from six suppliers in the first quarter of 2005, down a mere 0.2% from the previous quarter and up 40.8% year-over-year. Mobile graphics held a record 24.4% share of the total graphics market during the period.

Shipments of integrated graphics chipsets for notebooks outpaced those of discrete mobile graphics processors in Q1 2005, showing sequential growth of 12.6% and annual growth of 71.2%. Discrete mobile controller shipments fell 15.8% sequentially but grew 9.1% year-over-year.

ATI Leads Desktop Segment

ATI Technologies of Markham, Canada, maintained its lead in the discrete desktop segment during Q1 2005 by a margin similar to that of the fourth quarter. ATI’s discrete desktop shipments declined 9.0% sequentially and its share in the segment fell slightly from 51.9% in Q4 2004 to 51.4% in Q1 2005. NVIDIA’s standalone desktop shipments declined 8.0% sequentially and its segment share was essentially flat, growing from 46.7% to 46.8% during the same period.

Intel’s Alviso Drops ATI from the Mobile Top

Intel surpassed ATI as the largest PC graphics supplier to the mobile market in the first quarter which catalyzed its market share to grow from 39.5% to 50.8% sequentially. ATI’s market share fell from 42.9% in Q4 2004 to 35.5% in Q1 2005. It is unclear whether NVIDIA’s share in the mobile market was also down quarter-over-quarter, but it is a highly likely scenario.

ATI’s loss of share was a result of increased shipments from Intel of integrated chipsets for notebooks. During the quarter, Intel launched its mobile i915-series core-logic products featuring integrated graphics based on the GMA900 engine and subsequently saw its mobile chipset shipments increase 28.4% sequentially and 148.3% year-over-year during the period.

“The mobile segment did not slow during the period, with strong shipments that, relative to the desktop segment, led to record share of the total graphics market. This dynamic was driven exclusively by shipments from Intel of its new GMA900-based 915 IGC for mobile PCI Express platforms. Intel’s steep ramp of this new Pentium M chipset contributed to phenomenal growth in the mobile IGC segment during the quarter,” said Lisa Epstein, a senior analyst at Jon Peddie Research.

Trends Favour Intel

The general trend towards Intel’s graphics cores which are built-in into the company’s chipsets has been an evident thing for a number of quarters already. However, the first quarter of 2005 was especially noticeable because Intel could leave ATI behind in both desktop and lucrative mobile market.

So far it is unclear how well ATI Technologies performed in the high-end of the standalone desktop market against NVIDIA Corp. who was, according to analysts from Mercury Research, ahead of ATI in terms of market share with graphics processors that consist of more than 100 million of transistors.

The Q1 2005 edition of Jon Peddie’s Market Watch will be available in May 2005 in both electronic and hard copy editions. A condensed version of Market Watch, entitled First Look, is available now.


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