AMD-Nvidia showdown looms as demand for graphics recovers

Demand for add-in graphics cards showed signs of recovery during the third quarter, setting the stage for an upcoming showdown between rivals Advanced Micro Devices and Nvidia.

Third-quarter shipments of add-in graphics cards fell 7.2% compared to the same period last year, according to analyst company Jon Peddie Research (JPR). That decline was less than in previous quarters and represents a 21% sequential increase over the second quarter, hinting at a recovery in demand, JPR reported.

Demand for add-in graphics cards, which are generally used in high-end desktops meant for gaming, has been slower to recover than the overall graphics market, which saw demand grow firmer during the second quarter of this year, JPR said.

While add-in graphics cards are at the top end of the market, the majority of graphics chips are PC chipsets that include graphics capabilities — a segment that Intel dominates. These chipsets are found in nearly all mainstream PCs and are less expensive than high-end graphics chips.

The add-in graphics card market is dominated by AMD and Nvidia. Both companies have maintained their respective share of the market through the recent downturn in demand, but that will likely change during the year-end holiday shopping season, with the release of more advanced graphics chips from AMD, the research company said.

“Nvidia will have to get by this holiday season with previous-generation products, as it hustles to get products based on its ambitious Fermi generation ready for (what appears to be) the first quarter of 2010,” JPR said.