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Graphics card shipments plunged 42.7 percent in Q4 2008

Posted on Monday, March 16 2009 @ 16:35:19 CET by

Jon Peddie Research (JPR) reports shipments of add-in-board graphics cards dropped to 15.20 million in the final quarter of 2008, down 42.7 percent compared to the fourth quarter of 2007. Revenue was down by 43.8 percent, to $2.5 billion.

The strong decline of discrete GPU shipments while PC sales were down only 10 percent suggests a higher marketshare for integrated graphics processors (IGPs), but according to JPR this was not the case. JPR explains OEMs and the channel relied on existing inventories, rather than buying new GPUs.
One bright spot: AIBs fending off IGPs in a downturn
Considering that the majority of graphics cards ship to customers in systems from PC and workstation OEMs, the AIB market’s ugly drop raised an interesting question: why were AIBs down 43%, when PCs and workstations were down more in the neighborhood of 10%? Was it more evidence of the inroads made by chipset-integrated graphics processors (IGPs), stealing away potential AIB customers? Not so, reports JPR.

While the big picture still indicates the IGP taking a bigger share over time — today in chipsets, and tomorrow in the CPU — it didn’t take a bigger share of desktop graphics market in Q4’08. On the contrary at 40.6%, the IGP’s share was remarkably consistent with what it commanded in Q4’07 (40.2%).

Tapping inventories exaggerate losses
Rather than blaming further IGP encroachment for the exaggerated quarterly decline in AIB shipments, Jon Peddie Research points instead to the reliance of OEMs and the channel on existing inventories. In any industry where deep inventories can act as a buffer between supply and demand, the extent of the impact during a downturn is likely to be more pronounced.

Deeper inventories are a safety valve, making it a lot easier for buyers to stop buying — at least for the short term — while allowing them some time to sort out the situation and determine how to properly adjust orders to meet the new, lower run-rate. Drain down inventory for a bit to keep orders filled near term, and build it back up later when the coast is clear. Such appears to be the case for graphics AIBs in Q4’08, taking what might have been just a poor quarter and turning it downright ugly.



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