GPU business faces tablet pressures but high end does well

The graphics market continues to be split into two camps: the low-end, which is being beaten up by tablet sales, and the high-end, which continues to do well and defy the slow sales of PCs.

Overall, shipments were up 3.2% quarter-to-quarter and down 4.5% compared to the same quarter last year, according to Jon Peddie Research, which follows the graphics market. AMD enjoyed a nice spike in sales, up 11.1% from the first quarter, while Nvidia suffered an 8.3% drop and Intel grew 4.1%.

The devil is in the details. Peddie said that AMD got one last little bump from BitCoin farming, and the bloom is off that rose as detailed in a previous blog. Nvidia took a bit of a hit to tablets and low-end PCs with embedded graphics but continues to do well on the high-end and in the professional market, which is where the profit is anyway.

You really have to break it down you see how the different markets really make a big difference. AMD's desktop heterogeneous GPUs and CPUs shipments increased 16.7% while notebooks increased 10.3%. Discrete desktop shipments fell 10.7 percent while notebooks discrete shipments increased 30.6 percent (increased 11 percent overall).

NVIDIA saw a 21 percent decrease from last quarter for desktop discrete shipments while notebook discrete shipments had increased 6.9 percent (decreased 8.3 percent overall). Its best performance was among gamers, which have always been its bread and butter.

Overall, it's not a great time for AMD and Nvidia. Total discrete GPU shipments decreased 3.6% from last quarter and were down 13.3% from last year. Q2 is typically a slow period for the hardware business, but that year-over-year drop was pretty steep, especially given the PC market increased 1.3% sequentially and decreased just 1.7% year-over-year.

And in a bad sign, Intel appears to be eating the share of both AMD and Nvidia. Peddie counts Intel because its Ivy Bridge and Haswell generations of chips have passable GPU processors on the CPU die, which makes them good enough for business use and even light gaming. This has eaten away at the low-end business for the GPU guys.

Intel has gone from 61.7% share in Q2 2013 to 67.3% one year later. Nvidia's share dropped slightly, from 16.2% in 2013 to 14.7% in 2014, and AMD also fell a little, from 21.9% to 17.9%. Clearly for a lot of vendors and customers, Intel's HD Graphics are good enough.

Part of the slump for the dedicated GPU guys might be new products. Nvidia is slowly bringing its Maxwell architecture to market, while AMD is rumored to be announcing a new GPU architecture any day now. More on that in another blog.

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