The PC graphics industry is resilient: chip shipments decline but new product introductions increase

Jon Peddie Research publishes Q2'02 Market Watch: graphic chip report for the second calendar quarter of 2002

Posted: 10.10.02

TIBURON, CA—October 10, 2002 —Leading research firm for multimedia and graphics, Jon Peddie Research, today announced the results of their Quarterly Report on the Graphics semiconductor market. The study has found the graphics industry to be relatively hardy in comparison to the computer industry as a whole.

The second quarter of the year is traditionally a slow period in the graphics industry. Although shipments of graphics devices declined only slightly in Q2'02 compared to the previous quarter, the period was disappointing to many companies in terms of revenues, profits, gross margin, and share price performance. The outlook for Q3’02 continues to be mixed as several suppliers, including ATI, point to ongoing softness in the PC market as an inhibitor to increased shipments of graphics in both the desktop and mobile segments.

Despite the current climate, seven major graphics suppliers will be ramping new desktop GPU products in 2H’02, an unusual event in the relatively consolidated graphics industry. ATI and Nvidia will lead the pack with DirectX 9 compliant parts. SiS is making a play for the mainstream with its AGP 8X Xabre and Creative aims to do the same with 3Dlabs’ new VPU architecture. Matrox, after a long development cycle, is poised to impact the Performance segment with its triple output Parhelia and Trident is back on the desktop with its diminutive XP4. VIA will continue to maintain a quiet presence in the discrete desktop segment with the SavageXP from S3.

Jon Peddie Research estimates that 39.75 million graphics devices shipped for all segments of the personal computer industry in the second quarter of 2002. This represents a 2.5% decrease from 40.79 million units shipped in Q1’02 and an 11.5% increase from 35.60 million units shipped in the same period the previous year.

Of the graphics devices shipped in Q2’02, 32.13 million or 81% were desktop controllers and 7.62 million or 19% were mobile display controllers. Seven suppliers accounted for over 99% of all graphics shipments during the quarter. The relative share of the total market for these suppliers over the past two quarters is shown in the following charts.

Total graphics market share in Q1’02 and Q2’02

As the previous charts show, major chipset suppliers Intel, SiS, and VIA all grew their market share shares in Q2’02 while major discrete controller suppliers Matrox, Nvidia, and Trident saw market shares decline. ATI maintained it’s position in the market with strong shipments of discrete mobile controllers.

Intel’s activity greatly affected the ratio of discrete vs. integrated controllers shipped in Q2’02. The ramp of the 845G chipset created a shift away from discrete desktop controllers and towards desktop IGCs during the period. Within the IGC segment, desktop shipments increased 52% in Q2’02 over the previous quarter. Discrete desktop controller shipments declined 18% in Q2’02 from the previous quarter.

On the notebook side, mobile display controllers accounted for 19% of total graphics shipments in Q2’02, unchanged from Q1’02 and up from 17% in the same period the previous year. Discrete controller share within the mobile segment was up significantly – from 57% in Q1’02 to 68% in Q2’02. Most major suppliers now participate in the mobile segment, recognizing its potential for growth.

Market Watch and GMI

Jon Peddie Research, a leading graphics and multimedia research and consulting firm, has just released Market Watch Q2’02. The detailed report takes an in-depth look at activity in the PC-based graphics market for the second calendar quarter of 2002 and contains shipment data, analysis, and forecasts for all industry segments through 2003.

Jon Peddie's Market Watch provides graphics unit shipments by quarter, shipment forecasts by quarter, supplier market share, performance and price segmentation for graphics devices, as well as product news, design wins, financial results, market share, and share price performance for leading suppliers.

Graphics Market Index through August, 2002

In the face of an ongoing slowdown in the PC market, many companies in the technology sector announced poor financial results in Q2’02. This has helped to depress the share price of virtually all graphics suppliers’ publicly traded stock.

Market Watch Table of Contents in Brief

Desktop Graphics Controller Shipments and Comparisons
Desktop Graphics Controller Forecast
Mobile Display Controller Shipments and Comparisons
Mobile Display Controller Forecast
Product and Financial Information for Leading Graphics Suppliers