Press Release

EDITOR’S NOTE: Excerpts from JPR Add-in-Board report are available on request.

Graphics AIB Market Anything But Spared in Q4'08, Reports Jon Peddie Research

TIBURON, California March 16 2009 Jon Peddie Research--The market for graphics add-in boards (AIBs) proved anything but impervious to the downward pull of fourth quarter's economic collapse, according to a new report from market analysts at Jon Peddie Research (JPR). Markets in every corner of the economy - and every corner of the globe - contracted, and the AIB market was no exception. But that's really an understatement, as the AIB market took a substantially bigger beating than the closely related markets for PCs and workstations, as OEMs and the channel curtailed new orders and ran down inventories.

If there were many holiday buyers out shopping for a game card among the several new high-performance price-competitive offerings from market leaders Nvidia and AMD, well the results didn't show it. The grim numbers for the quarter read as follows: 15.2 million units shipped, representing a 42.7% decline (year-over-year), accounting for $2.5 billion in revenue, reflecting a similar 43.8% decline in revenue.

Desktop AIB market results

Q2'07

Q3'07

Q4'07

Q1’08

Q2’08

Q3’08

Q4’08

Units

21.20 25.84 26.51 24.40 19.78 21.92 15.20

Growth - year-to-year

7.6% 19.1% 25.9% 18.1% -6.7% -15.2% -42.7%

Table 1 AIB market value history, by quarter

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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