Leading graphics and multimedia markets research firm Jon Peddie Research said that the market of desktop add-in graphics cards declined in the third quarter, the boards that offer both high performance and functionality are still relatively popular.

Jon Peddie Research estimates that approximately 21.8 million PC graphics boards shipped from major suppliers in Q3 2006, a 10.6% increase in units from the prior quarter and a 7.7% increase over the same period the previous year.

The desktop add-in card graphics segment market value however continued its decline to $4.97 billion, the third consecutive quarterly decline in market value after hitting a high of $5.88 in Q1 2006, and a decrease of 12.2% from Q3 2005.

Despite of the fact that suppliers like ATI Technologies (now AMD) and Nvidia Corp. managed to maintain market shares of discrete graphics processing units (GPUs) against integrated graphics processors (IGPs), the fierce competition between the two forced both to lower their prices rapidly, which caused tumble of average selling price (ASP) and diminishing the total market value.

“The ASP for all segments of AIBs were down with the ironic exception of the value segment, where ASPs went up in Q3 2006. The market value of the individual segments also declined with the exception of the workstation segment which gained in value,” the analyst firm said in a statement.

Nvidia-based boards gained in unit market share to 59% of the AIB market, and to 56% of market value. Aside from the two leaders, ATI/AMD and Nvidia, other GPU suppliers accounted for just $29.4 million or 0.6%.

“Although the market value has been declining, we expect to see the fourth quarter show a rise due to the holidays, new products from Nvidia’s partners, and the increased gains in dual AIB systems,” the market firm noted.

Jon Peddie Research forecasts that the total market value for add-in graphics cards will be $21 billion in 2006.