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Monday, November 16, 2009
Graphics Add-in Board Market Rebounds in Q3 09

While a market rebound for graphics add-in boards (AIBs) didn't occur in sync with the broader graphics hardware markets, it did eventually materialize in the third quarter, reports Jon Peddie Research.

The market (along with most others) had suffered a major drop in Q4?08. Volume flattened in the first quarter as drained-down inventories regained some lost weight, and Q2 09 mercifully showed demand stabilizing and more evidence the market had bottomed.

What was in store for the third quarter? The firm had been expecting a bounce in the second half, with the first signs to be manifested in Q3?09. And to the relief of many, that?s how the story unfolded. The quarter saw 20.3 million graphics cards shipped, up 21.0% sequentially, a particularly robust number considering the two major vendors were on the tail end of product cycles. Even in the context of a year-over-year measure, the quarter's 7.2% decline was significantly more moderate than the firm had seen in the previous quarters.

The market's rebound turned out a bit belated, as the broader market for graphics hardware had already seen its bounce. In Q2?09, overall shipments for graphics - including integrated graphics processors (IGPs) - rose at a substantial clip, up 31% sequentially and an even more impressive 4% year-over-year. Yet AIB shipments in the same quarter were generally flat from Q1.

The reason? The firm attributed the dynamic to more hesitant buyers with tighter wallets in Q2. As frugal buyers cautiously made their way back to the marketplace, they tended to opt more for lower-performance - but essentially free - IGPs over add-in boards. But thanks to improved consumer confidence, more AIBs left retail shelves (and PC assembly lines) in the third-quarter. Not surprisingly, the battle lines for Nvidia vs. AMD relatively quiet in the third quarter

A quiet before a coming storm, the third quarter proved to be a virtual stalemate in the Nvidia vs. AMD war, with the latter managing just a one point gain in unit share. By contrast, Q4 09 promises to be anything but quiet. AMD's got a brand new set of graphics cards ready for the holiday (and Windows 7) season. Its launch of the Evergreen (Radeon HD 5000 series) generation has equipped the company with strong offerings for the Enthusiast and Performance segments, ready to entice somewhat-more-optimistic consumers.

Nvidia, however, will have to get by this holiday season with previous-generation products, as it hustles to get products based on its ambitious Fermi generation ready for (what appears to be) the first quarter of 2010. The one potential snag for AMD is the broadly reported, less-than-stellar ramp of 40 nm product coming out of TSMC. Nvidia's relying on 40 nm as well, but should TSMC's struggle with yield be limited to the fourth quarter, and not Q1 10, then it will be AMD that will primarily suffer, not Nvidia.

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