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Two sides of the same coin: Jon Peddie Research reports ups and downs in the market for graphics AIB

Posted: 08.29.08
TIBURON, CA – August 29, 2008 — Graphics industry observers and participants may have been a bit more anxious than usual to learn how the second quarter of 2008 fared. With economic conditions worrisome, and with new product releases from both Nvidia and AMD occurring near the quarter's close, would the quarter hint at future strength or encroaching weakness? After completing analysis of Q2'08 results for the graphics add-in board (AIB) market, Jon Peddie Research reports a little of both.

Market results for semiconductor-driven industries often tell a similar and intuitive story: units go up over time as ASPs come down. Which all makes the analysis of Q2'08 in the AIB market interesting. ASPs were up — and dramatically so — to around $182, representing around a 25% sequential increase, while unit volume dropped. All told, the industry shipped 19.8 million add-in cards in Q2'08, a decline of around 19% sequentially. From a revenue standpoint, the healthy rebound in ASPs fortunately offset the loss in units, leaving revenue at $3.6 billion, roughly flat from Q1'08.

While the quarter's behavior wasn't exactly typical, it didn't particularly surprise either, especially when taking into account recent industry events and the cyclical nature of the business. Rather than assess Q2'08's price levels as uncharacteristically strong, JPR instead credits unusually low ASPs in Q4'07 and Q1'08 for making Q2'08's results look good. The market in preceding quarters had seen significant price cuts for older products, in anticipation of the summer releases of major new generations of graphics technology from both Nvidia and AMD, the GeForce GTX 200 and ATI Radeon HD 4800 series (respectively).