Graphics chip shipments driven by netbooks, Windows 7

Graphics chip shipments could go up by 27.9 percent this year

Shipments of graphics chips worldwide went up in 2009 and could rise again this year as the PC industry emerges from the recession and consumers open up wallets, Jon Peddie Research said in a study on Tuesday.

Graphics chip shipments totaled 425.4 million units in 2009, a growth of 14 percent compared to the previous year, according to the study. Shipments could rise by 27.9 percent to 544 million units this year.

Consumers held off from purchasing technology products including graphics chips during the recession, but are now feeling good about buying, said Jon Peddie, president of Jon Peddie Research. The adoption of low-cost netbooks with integrated graphics cards and PCs with the Windows 7 OS contributed to the growth for graphics cards, Peddie said.

"We had a very deep recession; it cut sales off for a long time and now the market is just recovering," Peddie said. Increased spending by consumers could continue to help graphics chip shipments grow through the year, he said.

Intel in particular registered strong growth during 2009, finishing as the top graphics vendor during the fourth quarter. Intel held a market share of 55.2 percent in the fourth quarter, which grew from the 47.7 market share it held during the previous year's fourth quarter. Intel's graphics chip shipments grew by 114.7 percent year over year.

Nvidia, on the other hand, conceded market share to Intel during the fourth quarter. Nvidia was in second place, with a 24.3 percent market share, compared to a 25.3 percent market share it held in the previous year's fourth quarter. Advanced Micro Devices was third, holding a 19.9 percent market share, a slight gain from the 19.3 percent market share it held at the end of 2008.

Intel's graphics chip shipments went up, with increased sales of Atom chips for netbooks and strong growth in the desktop segment. AMD gained share in the integrated laptop graphics segment, but lost ground in the discrete graphics card segment due to supply issues. Nvidia's share went up in discrete graphics cards for desktops, but it lost share in the chipset graphics segment.

The fourth quarter also marked the first time a chip maker integrated a graphics processor inside the CPU. Intel in December released the Pine Trail platform for netbooks, which embeds a graphics processor inside the CPU. Until now, graphics chips resided outside the CPU on chipsets, but more chip makers are putting graphics chips inside CPUs.

Intel started shipping laptop and desktop chips that combine a graphics chip and CPU in a chip package. AMD will soon start sampling Fusion, a CPU that integrates a graphics chip.

However, integrating graphics chips inside CPUs won't affect discrete graphics cards, which are needed for high-performance computing and graphics, Peddie said. Integrated graphics has improved over years, but still can't provide the performance punch of discrete cards.

Many graphics card vendors offer GPUs with hundreds of processing cores that provide teraflops of performance to quickly process applications like video decoding. For example, AMD's ATI graphics boards hosts 1,600 processing cores and Nvidia's upcoming Fermi graphics boards will host 512 processing cores. The boards have billions of transistors built into them, and companies offer toolkits for software developers to write programs for execution on the graphics cards.

Building thousands of cores and billions of transistors can't be done on the smaller integrated graphics chips, Peddie said.

The discrete graphics cards also boost the performance of Microsoft's Windows 7 OS, which supports DirectX 11. DirectX 11 includes a set of APIs (application programming interfaces) for realistic images and sound when playing games or watching movies. The tools help free up CPUs by off-loading multimedia tasks to graphics processors, which could boost overall system performance.

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