Nvidia saw a steep loss in market share even as graphics chip sales soared 21 percent in the third quarter.
The strong overall market was consistent with Intel’s announcement that the PC market saw a strong resurgence in the third quarter, according to market researcher Jon Peddie Research. Peddie said that the strong sales boost — the largest quarter-to-quarter increase in nine years — suggested that the holiday season will be strong for PC sales.
In the third quarter, Advanced Micro Devices, which owns the ATI graphics chip business, saw the strongest gain, with sales rising 30 percent from the second quarter. AMD’s market share rose from 18.4 percent in the second quarter to 19.8 percent. Intel saw its sales rise 25.2 percent from the second to the third quarter, and its market share rose to 52.7 percent from 51.1 percent in the second quarter.
Nvidia, however, saw its market share decline from 29.2 percent in the second quarter to 24.9 percent in the third quarter. Nvidia has seen delays in the launch of its newest graphics chip, code-named Fermi, while AMD managed to launch its newest generation of chips in late September.
There is one explanation for this current mismatch in sales. Nvidia is focusing on adding non-graphics computing functions to its graphics chips, based on its CUDA programming language. That is helping to spread the usage of graphics chips in functions such as data center servers, scientific computing, and video processing. Those features, which add to the hardware complexity of Nvidia’s chips, make the designs more complex and harder to manufacture.
AMD isn’t making the same heavy investment in hardware-based non-computing functions. So its chips are easier to design and easier to manufacture. Both companies use Taiwan Semiconductor Manufacturing Co. But AMD was able to launch earlier given the relative simplicity of its chips. Nvidia is thus taking a calculated bet, losing market share now in the hopes of gaining it in the long term.
Peddie said that Intel shipped more than 63 million graphics chips, which are actually integrated into its chip sets. About 119.45 million graphics chips were shipped in the third quarter, up from 111 million oin the third quarter of 2008. Notebook graphics shipments led the market with 56 million units shipped, up 36 percent over the second quarter. Since the sales channel is full, Peddie predicts slower growth in the fourth quarter, as the products in inventory will have to be sold off before more shipments resume.