The market of graphics adapters in the third quarter of 2010 was slightly down compared to the second quarter of the year, according to Jon Peddie Research market tracking firm. Among leading suppliers of graphics adapters - both discrete and integrated - ATI, graphics business unit of Advanced Micro Devices - lost the most, whereas both Intel Corp, and Nvidia Corp. managed to boost their shipments.

Overall graphics chip shipments were an unseasonably 1% down from Q2 2010 due to the 8.4% drop in notebook sales despite an 8.4% growth in desktop sales reflecting the increasing impact of the notebook market. The possible cause for the decline in notebook sales could be shift from netbooks to Apple iPad slate as well as overall weakness of retail market in well-developed countries.

Embedded graphics processors (EPGs - Clarksdale/Arrandale and Pineview) from Intel showed strong growth, up 50% from Q2 2010, while total integrated graphics processors' (IGPs) shipments from all vendors slowed to a modest 1.4% growth quarter to quarter, which means that discrete graphics chips market dropped more than one quarter in terms of unit shipments.

Overall, market shifts occurred for all vendors even though the quarter-to-quarter total shipments were basically flat.

AMD attributed its slip in market share to weakened demand and OEMs letting their GPU inventory run down to avoid being stuck with leftover processors. Due to real and perceived shortages in supply, some customers shifted their purchases to rival Nvidia. Besides, there may have been some de-emphasis on GPUs after a significant weakening of the Euro that occured in early Q3, with laptop makers settling for cheaper, integrated graphics instead. AMD graphics unit shipments decreased 11% sequentially but increased 11% year-over-year.

Considering the fact that Nvidia managed to release award-winning GeForce GTX 460 family of graphics cards in volume last quarter and 40% of those boards are, according to some data, factory-overclocked and therefore more appealing to consumers, it is not surprising that the firm's market share increased. What may not be exactly good about the company's performance is that it still has a lot of cheap low-end products in the mix, something that affects its profit margin.

Tags: ATI, AMD, Nvidia, Intel, , Matrox, SiS, Via Technologies, S3 Graphics, Geforce, Radeon, Chrome