Doh! Graphics market downer

The second quarter of the year is typically the slowest quarter for the PC industry. Thus, it comes as no surprise that overall shipments of graphics chips and integrated graphics chipsets (IGCs) have declined. Jon Peddie Research estimates that 39.75 million graphics devices shipped for all segments of the personal computer industry in the second quarter of 2002. This represents a 2.5% decrease from 40.79 million units shipped in Q1'02 and an 11.5% increase from 35.60 million units shipped in the same period the previous year

While the industry did not experience a radical decline in unit shipments in Q2'02, the period was disappointing to many companies in terms of revenues, profits, gross margin, and share price performance.

"Although overall graphics shipments declined predictably in Q2'02, individual segment performance was quite disparate," said Lisa Epstein, Senior Analyst, Jon Peddie Research. "As expected, shipments of desktop IGCs increased at the expense of discrete desktop solutions and somewhat surprisingly, shipments of discrete mobile controllers increased at the expense of mobile IGC units. The rapid adoption of the Pentium 4-M processor, for which Intel does not supply an IGC, helped drive the shift to discrete mobile controllers during the period."

The outlook for Q3'02 continues to be mixed as several suppliers, including ATI, point to ongoing softness in the PC market as an inhibitor to increased shipments of graphics in both the desktop and mobile segments. Despite the current climate, seven major graphics suppliers will be ramping new desktop GPU products in 2H'02, an unusual event even in the relatively consolidated graphics industry.

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