PC Graphics Shipments Increase 11% in Third Quarter 2002; Growth Limited to Chipsets with Integrated Graphics

Jon Peddie’s Market Watch reports chipset suppliers gain share in Q3’02 while discrete suppliers experience shipment declines

TIBURON, CA, January 15, 2003—Jon Peddie Research (JPR), a leading research and consulting firm for graphics and multimedia, today announced the availability of the Q3'02 edition of Jon Peddie's Market Watch, the firm's quarterly graphics survey. Market Watch takes an in-depth look at activity in the PC graphics market and contains unit shipment and segment market share data, trend analysis, and two-year forecasts. The report also covers product news, design wins, financial results, and share price performance for leading graphics suppliers.

Jon Peddie Research estimates that PC graphics shipments in Q3'02 increased by approximately 10% as compared to the previous quarter. However, growth was limited to shipments of chipsets with integrated graphics (IGCs) for desktop platforms and was largely at the expense of discrete graphics, total shipments of which declined by more than 4% from the previous quarter.

The trend to integrated desktop graphics in Q3'02 was led by Intel, which launched and began to ship its 845G integrated graphics chipset in Q2'02. Augmented by offerings from SiS and VIA, overall shipments of IGCs quickly ramped to reach 44% of desktop graphics shipments in Q3'02, as compared to 21% in the first quarter.

"The overall growth in graphics shipments during Q3'02 belies the fact that shipments of discrete desktop and mobile graphics controllers and of integrated graphics chipsets for notebooks declined as compared to the previous quarter," said Lisa Epstein, a senior analyst at Jon Peddie Research. "Although suppliers such as Intel, SiS, and VIA saw revenue growth in Q3'02 from sales of IGCs for desktop PCs, the ongoing weakness in demand for PCs has encouraged aggressive pricing and most suppliers experienced reduced ASPs, margins, and profits in Q3'02 as a result," Epstein concluded.

ATI, SiS, and VIA reported narrower gross margin in Q3'02 as compared to Q2'02 and ATI, Nvidia, SiS, and Trident all reported a loss in Q3'02.

In Q3'02, the relative market share of graphics suppliers shifted significantly with Intel surpassing ATI in overall unit shipments to become the second largest graphics supplier worldwide. Nvidia remained the largest graphics supplier but with a reduced share of the total graphics market. The relative share of the total market for major suppliers over the past two quarters is shown in the following charts.