Archive for February 28th, 2010

AMD, Nvidia Lose Share As Intel Leads The Graphics Market | Sramana Mitra on Strategy

AMD, Nvidia Lose Share As Intel Leads The Graphics Market | Sramana Mitra on Strategy.

According to a recent Jon Peddie Research report, Intel (NASDAQ:INTC) increased its graphics chip market share to 55.2% driven by strong Atom sales while Nvidia’s (NASDAQ:NVDA) share declined to 24.3% and AMD’s (NYSE:AMD) share declined slightly to 19.9%. Let’s take a closer look.

The quarterly research report included the first shipments of a new category, the CPU-integrated graphics – CIG and predicts that there would be a rapid decline in shipments of traditional integrated graphics processors (IGPs). AMD gained share in the notebook IGP segment, but lost share in both the desktop and notebook GPU segments due to constraints in 40nm supply. NVIDIA gained some share in desktop discretes, while slipping in desktop and notebook IGP. This downward trend will likely continue as Nvidia’s focus shifts to tablets and cell phones with its new Tegra chip.

In the higher-end advanced graphics card market where Nvidia dominates, Intel had earlier planned to compete with an advanced graphic card, Larrabee. However, Intel recently scrapped its plans for a commercial launch and said that it would instead use it as a software development platform for graphic and high-performance computing.

Nvidia last week reported fiscal year 2010 revenue of $3.3 billion, down about 3% and net loss of $68 million. As the market rebounded, fourth quarter revenue grew 9% q-o-q and doubled from last year and it swung to a profit of $131.1 million from a loss of $147.7 million last year. It ended the quarter with $1.73 billion in cash.

Gross margin in the quarter improved to 44.7% with strong demand but it was unable to meet the demand due to supply constraints and probably missed out on revenue of $100 million. Last quarter coverage is available here and recent coverage of Intel is available here.

Nvidia’s GPU revenue was up 22% q-o-q and within that, revenue from desktop GPU was up 19% and notebook GPU up 27% while Quadro graphics revenue was up 25%.

For the first quarter, Nvidia expects revenue to be flat from the fourth quarter as it expects to face constraints for at least half the year. Gross margin is expected to be 44 to 45%.

Nvidia has a lot of new products in the pipeline apart from the new Tegra chip. It also introduced Optimus switchable graphics technology, which provides the performance of discrete graphics while still delivering great battery life. Asus announced its laptop using this new technology. Acer last week announced its netbook based on ION. Nvidia expects these two technologies to supplement its Media Communications Processor (MCP) business that it is transitioning out of.

AMD on the other hand reported a 40% q-o-q increase in its fourth quarter graphics revenue of $427 million. Total revenue in the fourth quarter was up 42% to $1.646 billion and net income was $1.18 billion including $1.25 billion settlement paid by Intel.  For the full year, revenue declined 7% to $5.4 billion and it swung to a profit of $304 million from a loss of $3.1 billion.

Gross margin in the quarter improved to 45% and it ended the quarter with $1.8 billion in cash. AMD which also competes with Intel in the computing chips business reported Computing Solutions revenue of $1.214 billion, up 14% q-o-q with notebook processor sales up 19% q-o-q.

AMD expects revenue to be down seasonally for the first quarter. It is currently trading around $8 with market cap of $5.5 billion and 52-week high at $9.95 on December 24. Nvidia is trading around $16 with 52-week high at $18.78 on December 30 and market cap of $9 billion.

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