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Inline with expectations, the market of graphics adapters dropped noticeably in Q1 2008. Even though ATI, graphics product group of Advanced Micro Devices, posted one of the lowest market share results in over six years, it still managed to steal a tiny piece of the market from its rivals, however, the biggest winner in Q1 2008 was Via Technologies and its S3 Graphics business unit.

Shipments Down Sequentially, May Drop Further

“The first quarter of 2008 was seasonally down, and showed potential softness in the market and for the coming quarters. No segment had any growth, even the gravity defying notebooks. This is the first time notebook shipments have slipped in several years,” said Dr. Jon Peddie, president of Jon Peddie Research in Tiburon California.

Traditionally, the first quarter has flat to negative growth for the computer industry as retailers and OEMs sell what is left from the holiday season and do not tend to order new products. This year is not an exception, but the total available market (TAM) of graphics adapters (both standalone and integrated for desktops, notebooks, etc.) stayed on high level with shipments at 94.88 million units, down 5.59% quarter-on-quarter (which is a slightly higher drop than usually), but up impressive 20.4% year-over-year, recently released figures from JPR show.

The analysts from Jon Peddie Research believe that with the complex economic pressures building in the U.S., the market of graphics adapters may drop significantly in Q2 2008.

“Although there is modest overall demand, and little shift in market share between GPU vendors quarter-to-quarter (which suggests there is no channel stuffing or double ordering), we remain cautious about the second quarter’s results,” Mr. Peddie added.

No Substantial Market Share Change Among Suppliers

The biggest winner in Q1 2008 was Via Technologies, who managed to increase its shipments by 54.8% sequentially and gain market share. Market leader in terms of unit share Intel Corp. demonstrated 7.3% decline in shipments, Nvidia’s sales were down 8.2%, ATI/AMD supplied 4% less graphics adapters in Q1 2008 compared to Q4 2007 and SiS’ shipments dropped 19.7% quarter-over-quarter.

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In general, there are no substantial changes in market shares among different suppliers: in Q1 2008 Intel held its first place position claiming 42.7%, Nvidia came second with 32.7%, while ATI/AMD moved to 18.6%, which is slightly more than previous quarter’s 18.30%, the lowest market share ATI demonstrated in the last six years.

The desktop graphics adapters saw market saw decline of 6% this quarter to 62.3 million units. On the desktop Intel took back its first place position with a 38% share against Nvidia’s 36%, while ATI/AMD remained at 19%. At this time JPR did not disclose any results for desktop standalone graphics cards.

The market of graphics adapters for mobile computers declined 5% quarter-to-quarter to 32.6 million units, which is 34% of the market. In the notebook market Intel held its dominant position, but slipped nearly one point to 53% while Nvidia gained about a point to 27%, whereas ATI/ATI continued saw a substantial decline in sales and now commands 17% of the market.

Q2 2008: Interesting, but Foggy

Mr. Peddie further noted that in the second quarter of 2008 will be an interesting quarter for the market. Neither ATI/AMD, nor Intel, nor Nvidia plan to introduce any important new products at least until June, which means that there will be little influence on market shares from potential novelties. As a result, three biggest players will have to sell current lineups of products and there will be no shifts in terms of market leadership between ATI/AMD and Nvidia.

At present graphics boards based on Nvidia GeForce graphics processors tend to be faster than those powered by ATI Radeon graphics chips, however, they tend to be noticeably more expensive too. One of the outcomes of overall market softness may be shift towards less expensive components; still, since the market of discrete graphics cards for gaming and multimedia activities may not be really flexible, Nvidia may keep its positions or initiate price war against its smaller rival to keep shipments of discrete graphics cards on high level.


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