The graphics chip market is changing

Nvidia has faltered in recent times, with the company's sales not on par with its competitors. Because of this, they have lost their second place in the market of GPU sales. All the while, its major competitor, AMD (Advanced Micro Devices), has its ATI graphics card on the rise. With AMD's 'radical' shifts in sales and market share being recorded by a company that tracks all sales of GPUs, Mercury. Currently, after the recent financial quarter, AMD has surpassed Nvidia as the second best seller of graphic solutions as a whole, behind only Intel.

"AMD surpassed Nvidia this quarter in overall shipments...[and] is now the leading supplier of standalone GPU and of notebook standalone GPUs, and the second largest supplier of graphics solutions overall," the Mercury Research report says.

The reason behind the change in position for AMD is by and large due to the ATI Radeon HD 5000 series, which is used in both laptops and desktops. This is because the total number of mobile GPUs is now surpassing the number of desktop graphics cards. AMD saw "a huge burst" in sales from the shipments in the second quarter because of the ATI Radeon HD 5000 series, says the report by Mercury.

The mobile graphics market is changing a lot, and is now moving to a more streamlined single unit approach. With the GPUs becoming a part of the CPU, with Intel's new Core i3 and i5 processing units being fully implemented examples of these. The chips take the functionality of the GPUs and combine them with the single CPU.

"Talks with (PC makers) indicated that many are working on dual-graphics systems," according to Mercury. This system enables more power options, so that when it is running with a low performance, it would switch to the less power consuming Intel or AMD integrated graphics unit, but when more performance is needed, the unit uses the standalone graphics card. An example of this is the HP Pavilion dv7t, which can offer the switchable ATI Mobility Radeon HD 5650.

This whole process benefits AMD substantially as the company has paired with Intel and its i3 processors, which have gained popularity "explosively". "This has lifted AMD's mobile GPU shipments substantially in the quarter." ATI graphics cards are also being paired more with AMD processors, according to Mercury. A trend, in turn, connected to a movement toward "dual graphics" laptops.

Nvidia, however, is not standing down, with the recent refresh of the MacBook and MacBook pros; Nvidia is combining with Intel to utilize the switchable graphics cards. Nvidia's downfall is by no means permanent, said Dean McCarron, the principle analyst at Mercury; "There are a couple of things going on with Nvidia that are independent of the whole AMD (market) share transfer," he said recently via a phone interview. "On the integrated front, Nvidia does not have an Intel (chipset) bus license for the new processors. So, their Intel products are dropping off."

"And in the desktop standalone space, Nvidia has a DX-11 high-end part, but most of the market share gets determined by low-end and mid-range parts and AMD introduced their low-end and mid-range (DirectX 11) back in Q1," he said. "Nvidia's low-end and mid-range parts aren't out yet. They're coming out this quarter."

This may indicate the industry is once again having that "ping pong" effect, this quarter it was AMD that was in front, but next it may be Nvidia. Next year may determine the top space, as the true impact of the dual units comes into play. Both company's will more than likely fall behind Intel as the company doesn't seem to be moving anywhere. Only one thing is for certain, the graphics chip is going through a huge transition, and is seemingly heading in the right direction.

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