To quote the iconic 1960s drummer Buddy Miles, the graphics chip market is "going through them changes."
As Nvidia falters, Advanced Micro Devices' ATI graphics unit is on the rise, spurred by "radical" shifts in the market, according to Mercury Research, which tracks the market for GPUs or graphics processing units.
"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. Intel is the longstanding No. 1 supplier because it includes the graphics function in its chipsets, which accompany its processors, and more recently is building the function into the central processing unit or CPU.
There are, of course, good reasons why AMD knocked Nvidia out of the No. 2 spot. AMD is gaining in laptop share just as the total mobile graphics market surpasses the total desktop graphics market for the first time, according to Mercury. In particular, AMD's ATI Radeon HD 5000 series (used in both laptops and desktops) saw a "a huge burst" in shipments in the second quarter, Mercury said.
And the composition of the mobile GPU market is changing. "The mobile integrated graphics CPU market...has surpassed both the mobile standalone graphics market and the mobile integrated chip set market for the first time." Translation: the CPU now subsumes the function of the GPU, due to Intel's newest mobile silicon based on the Core i3 and i5 processors. These chips take the GPU function--which had been separate--and combine it with the CPU.
How does AMD fit into this change? Its graphics chips have been "closely paired" with Intel's Core i3 processors, which have "grown explosively," Mercury said. "This has lifted AMD's mobile GPU shipments substantially in the quarter." ATI graphics is also being paired more with AMD processors, according to Mercury. A trend, in turn, connected to a movement toward "dual graphics" laptops. Here, a discrete GPU is paired with Intel's new Core i3 or i5 CPUs or an AMD processor.
"Talks with (PC makers) indicated that many are working on dual-graphics systems," according to Mercury. How does the type of pairing work? When the laptop is on battery power, for example, it defaults to power-efficient Intel (or AMD) integrated graphics. When more performance is needed, the system switches to discrete graphics. HP's Pavilion dv7t, for example, offers a switchable graphics option, based on the ATI Mobility Radeon HD 5650 graphics chip.
Tides could turn
Though AMD is faring well in this market, Nvidia is by no means absent. Apple's recent refresh of its MacBook and MacBook Pros include switchable graphics, which toggles between the Intel and Nvidia graphics.
And Nvidia's downturn may be temporary, according to Dean McCarron, principal 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 in 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," he said. McCarron is referring to the legal skirmishing with Intel that prohibits Nvidia from making chipsets for Intel's Core i series of processors.
"And in the desktop standalone space, Nvidia has a DX-11 (DirectX 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." DirectX 11 is a graphics technology used in Windows 7 to speed up certain multimedia and game-centric operations.
"The other thing that's going on right now that hasn't gotten enough attention is that the attach rate of mobile standalone graphics in notebooks has been skyrocketing," McCarron said. "The net of it is, that market is growing even though we've got CPU integrated graphics happening. And that's an opportunity for Nvidia," McCarron added.
And a word to the wise: PC makers are notoriously fickle about graphics chips, as demonstrated over the years, with occasional wild swings in market share between AMD and Nvidia from quarter to quarter or year to year. This time around it's AMD that hit the market sweet spot, but the next quarter or next year could see Nvidia back on top.
"This sort of ping-pong in market share has taken place several times in the past," McCarron said.