The graphics industry is relatively hardy in comparison to the computer industry as a whole, according to a study conducted by Jon Peddie Research, a multimedia and graphics research firm based in Tiberon, Calif.

The second quarter of the year is traditionally a slow period in the graphics

industry. Although shipments of graphics devices declined only slightly in Q2’02 compared to the previous quarter, the period was disappointing to many companies in terms of revenues, profits, gross margin, and share price performance. 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 in the relatively consolidated graphics industry. ATI and Nvidia will lead the pack with DirectX 9 compliant parts. SiS is making a play for the mainstream with its AGP 8X Xabre and Creative aims to do the same with 3Dlabs’ new VPU architecture. Matrox, after a long development cycle, is poised to impact the Performance segment with its triple output Parhelia and Trident is back on the desktop with its diminutive XP4. VIA will continue to maintain a quiet presence in the discrete desktop segment with the SavageXP from S3.

The study 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 per cent decrease from 40.79 million units shipped in Q1’02 and an 11.5 per cent increase from 35.60 million units shipped in the same period the previous year.

Of the graphics devices shipped in Q2’02, 32.13 million or 81 per cent were desktop controllers and 7.62 million or 19 per cent were mobile display controllers. Seven suppliers accounted for over 99 per cent of all graphics shipments during the quarter. The relative share of the total market for these suppliers over the past two quarters is shown in the following charts.

Major chipset suppliers Intel, SiS, and VIA all grew their market share shares in Q2’02, while major discrete controller suppliers Matrox, Nvidia, and Trident saw market shares decline. ATI maintained its position in the market with strong shipments of discrete mobile controllers.

Intel’s activity greatly affected the ratio of discrete vs. integrated controllers shipped in Q2’02. The ramp of the 845G chipset created a shift away from discrete desktop controllers and towards desktop IGCs during the period. Within the IGC segment, desktop shipments increased 52 per cent in Q2’02 over the previous quarter. Discrete desktop controller shipments declined 18 per cent in Q2’02 from the previous quarter.

On the notebook side, mobile display controllers accounted for 19 per cent of total graphics shipments in Q2’02, unchanged from Q1’02 and up from 17 per cent in the same period the previous year. Discrete controller share within the mobile segment was up significantly — from 57 per cent in Q1’02 to 68 per cent in Q2’02. Most major suppliers now participate in the mobile segment, recognizing its potential for growth.

Lisa Epstein is an analyst at Jon Peddie Research, which has a quarterly report on the PC graphics market called Market Watch. For visit www.jonpeddie.com.

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