Graphics chip market shows green shoots after PC slump

In my opinion, graphics chips are without doubt one of the most powerful, exciting, and essential components in tech today: not only does every computer require one (or more), but the technology is entering into major new markets like supercomputers, remote workstations, and simulators almost on a daily basis.

New technologies and compute programs are taking advantage of the ability of GPU power to scale. On top of that, PC gaming momentum continues to build. It would be no exaggeration to say that GPUs are becoming the 800-pound gorilla in the room.

In our latest Market Watch report, available now, the big drop in graphics shipments in Q1 has been partially offset by a small rise this quarter. Shipments were up 3.2 per cent quarter-to-quarter, and down 4.5 per cent compared to the same quarter last year.

Here are some of the highlights of the report:

  • AMD’s overall unit shipments increased 11 per cent quarter-to-quarter, Intel’s total shipments increased 4 per cent from last quarter, and Nvidia’s decreased 8.3 per cent.
  • The attach rate of GPUs (includes integrated and discrete GPUs) to PCs, for the quarter was 139 per cent (up 3.2 per cent) and 32 per cent of PCs had discrete GPUs, (down 3.6 per cent) which mean 68 per cent of the PCs are using the embedded graphics in the CPU.
  • The overall PC market increased 1.3 per cent quarter-to-quarter, and decreased 1.7 per cent year-to-year.
  • Desktop graphics add-in boards (AIBs) that use discrete GPUs declined 17.5 per cent.
  • Q2 is, on average, usually mixed, up slightly some years, down others. There was an abnormal spike in 2009 after the massive market decline which warps the 10-year average to 7.1 per cent and makes the 3.2 per cent this year appear to be below average. If the anomalous 2009 spike is ignored, the 9-year average is just 0.5 per cent, which would make the 3.2 per cent increase for Q2 2014 a significant increase.

GPUs are traditionally a leading indicator of the market, since a GPU goes into every system before it is shipped, and most of the PC vendors are guiding cautiously up to flat for Q3’14.

The Gaming PC segment, where higher-end GPUs are used, was a bright spot in the market in Q1. Nvidia and AMD high-end GPUs sales were strong, lifting the ASPs for the discrete GPU market.

Q2 2014 saw the first decline in tablet sales, and one of the few increases in PC sales. The CAGR for total PC graphics from 2014 to 2017 is basically flat. We expect the total shipments of graphics chips in 2017 to be 418 million units. In 2013, 438.3 million GPUs were shipped and the forecast for 2014 is 414.2 million.