Mercury Research this week issued its quarterly report regarding the state of graphics market for the first quarter of calendar 2003. According to their research, NVIDIA Corporation is still the number one, its overall market share continues to grow, Intel’s share is solid, while ATI Technologies gained one point. Seasonal decline of overall graphics market from the fourth to the first quarter was 5%.

The overall graphics market, including desktop standalone, desktop integrated, portable standalone and portable integrated graphics devices was down 5% from the previous quarter to approximately 53 million of units, according to Mercury Research. NVIDIA’s overall share in these four segments is 31%, up 1% from the Q4 2002. Intel’s share is still 29%, while ATI managed to get 1 additional point and its share now is 19%.

NVIDIA’s share in the standalone graphics products market was 64% during the first calendar quarter of 2003, down 1% from the Q4 2002. ATI Technologies has gained 2% from the last quarter of the year 2002 and now its share in the mentioned segment is 28%. ATI’s growth was primarily driven by success of the RADEON 9000/9500/9700-series. There were no indications about the rest 8% of the market, shared by SiS, 3Dlabs and Matrox Graphics with majority of unit shipments belonging to the Hsinchu, Taiwan-based SiS, who is one of the biggest graphics suppliers in China.

In the portable standalone market segment NVIDIA’s share climbed 6% to 31%, while ATI Technologies’ share achieved 60%, up 4% from the fourth quarter of 2002.

Unfortunately, Globeandmail.com web-site, who published the report on Tuesday, did not report any figures concerning such segments as workstation graphics, core-logic with integrated graphics cores, Apple computers and mobile computers overall graphics.

I believe NVIDIA’s market share in workstation market may grew in the first quarter a bit thanks to Quadro 1000 and Quadro 2000 graphics cards rolled out earlier this year. Since Athlon XP sales improved during the quarter, the Santa Clara, California-based developer probably also increased its share in the chipset market.

Joe Osha from Merryl Lynch Securities was very surprised with ATI’s very moderate growth during the quarter despite of technology leadership, while UBS Warburg even downgraded ATI to Neutral from Buy yesterday.