In spite of expectations, the market of graphics adapters did not drop significantly in the second quarter of the year, according to figures recently released by Jon Peddie Research market tracking firm. Continuing its rapid expansion on the market of graphics, Intel Corp. grabbed the highest share in more than four years.

Market Drops Slightly, Strong Quarters Ahead

“The second quarter of 2008 was just slightly seasonally down, and showed remarkable strength in the market and for the coming quarters. Desktops declined for the third consecutive quarter, but notebooks enjoyed offsetting gains,” said said Dr. Jon Peddie, president of Jon Peddie Research in Tiburon, California.

Second quarters are not particularly good for graphics adapters, in the last seven years – with the exception of 2005 and 2007 – the market declined further from seasonally weak first quarter by 2.5% - 10.75%, according to data by JPR. Therefore, the sequential drop from Q1 2008 to Q2 2008 of just 0.49% is a surprise that gives a lot of hope to the whole market of graphics cores.

Furthermore, the slight decline of the total available market of graphics adapters and personal computers means that despite of the economy slowdown in the U.S. and some other well-developed countries, the developing markets are offsetting any declines, as a result, the worldwide market remains stable.

“Smallest drop in Q2 shipments in eight years - where's the market slowdown?” asks Jon Peddie.

Intel Captures Highest Graphics Adapters Market Share in Years

Total shipments for the quarter were 94.4 million units, down a mere 0.49% from last quarter. Compared to the same quarter last year shipments were up a heartening 16%.

In the overall graphics market (desktops and notebooks), Intel held its first place position claiming 47.3% against Nvidia’s 31.4%, while ATI, graphics product group of Advanced Micro Devices, moved to 18.1%, which is the lowest market of ATI/AMD in the recent years.

Please click to enlarge

As can be seen from the table, Intel’s expands its presence on the market at the expense of all other players, including ATI and Nvidia. The expansion is primarily conditioned by increased shipments of low-cost personal computers with integrated graphics, therefore, Intel’s exact plans for the market of graphics cores remain generally unclear.

Since S3 Graphics, a wholly owned subsidiary of Via Technologies, is no longer present in chipsets for AMD or Intel processors (due to the fact that Via is on the final stage of its withdrawal from chipset business), its market share dropped dramatically both annually and sequentially. Meanwhile, Silicon Integrated Systems Corp. managed to increase its shipments and share quarter-over-quarter.

Desktops on Decline, Notebooks on the Rise

The desktop market of graphics adapters saw decline of 5% this quarter to 59.2 million units from 62.3 million a quarter ago.  On the desktop Intel held its first place position with a 41.5% share against Nvidia’s 36%, while ATI slipped to 18.3% due to unknown reasons.

Notebook graphics chips (both discrete and integrated) increased 8.1% quarter-to-quarter to 35.3 million units, to claim 37.4% of the market. In the notebook market Intel increased its dominant position to 57.1% while Nvidia declined to 23.6% and ATI/AMD grew to 17.9%, a good news for the company.

Q3 2008: Potentially Strong Quarter?

With the complex economic pressures building worldwide it is difficult to forecast Q3 2008, but barring a major recession it looks like it could be record quarter, according to Jon Peddie Research.

During the Q3 2008 the latest graphics processors from both ATI and Nvidia are going to ramp up on the market, therefore, market share changes are very likely.

“Although there was modest overall demand last quarter, and  little shift in market share between GPU vendors quarter-to-quarter, we expect to see AMD make impressive gains in Q3,” said Jon Peddie.