Nvidia shipments were down 6.2% in 2010 and AMD saw growth of 12.6% while all other card makers fell 44%, as less-expensive technologies took the place of graphics cards in lower-end PCs, John Peddie Research reported.
Shipments of add-in graphics cards, typically used in PCs to boost performance in video and image rendering, fell last year as the market shifted to the use of alternative technologies in lower-end systems.
Many graphics card makers are feeling the pinch as overall unit shipments fell a "disappointing" 3.3% last year to 72.8 million units from 75.3 million units in 2009, John Peddie Research said. Nvidia saw shipments fall 6.2% year to year, while Advanced Micro Devices' experienced growth of 12.6%. Overall shipments from all other add-in card makers fell 44%.
The industry decline in shipments reflects major changes in the overall market, the research firm said. The use of graphic cards is gradually moving up to higher-end systems, as PC makers cut costs in lower-end systems by taking advantage of graphics processors that are embedded in motherboards. Such processors have been improving in performance over the years and are now capable of handling high-definition video playback and light video and image editing.
Another factor reducing the need for separate graphics cards is that more chipmakers are selling products that combine a CPU and a graphics processor on the same die. The latest processors from AMD and Intel use this architecture, which has boost graphics performance in mainstream PCs.
"Even as embedded graphics technology becomes better and more prevalent, there will always be a need for better graphics," Peddie analyst Kathleen Maher said in an interview Wednesday. "It can't go away, because we all want more."
Also lowering shipments of graphic cards is the growing popularity of tablets, which has led to fewer sales of laptops overall. Gartner this month lowered its projected growth rate for worldwide PC shipments this year by more than 5 percentage points to 10.5% year over year, because of tablets cannibalizing PC sales.
The drop in shipments of graphics cards did not cause a decline in industry revenue. The overall market last year hit $17.2 billion, up 0.8% from 2009, Peddie said. The increase is due to the use of more expensive graphics cards in gaming PCs and professional workstations. The average spend on a graphics card last year was $300.
The graphics card market is not expected to continue shrinking, particularly in terms of revenue, Peddie said. That's because the technology is being used for more purposes in higher end systems. Once used only for rendering graphics, manufacturers are selling GPUs for use in high-performance computing within scientific research, financial services, and other industries. These GPUs are being used to handle tasks once belonging to CPUs, particularly heavy-duty number crunching.
"There's going to be more and more applications that can take advantage of it [the graphics card] in the mainstream," Maher said.
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