Report: Q3 PC Graphics Shipments Reflect Impact Of Tablets

Declining notebook sales, possibly stemming from the cannibalizing effects of Apple's iPad, are having a negative impact on graphics chip shipments, according to a new report.

In a report issued Monday, analyst firm Jon Peddie Research said a total of 116 million graphics products units shipped in Q3, a 10 percent increase year-over-year. However, graphics chip shipments were down 0.9% sequentially due to an 8.4 percent drop in notebook sales, according to the report.

"It's the first time we've seen a decline from the second quarter to the third quarter," said Jon Peddie, president of Jon Peddie Research, in a statement.

AMD's share of the graphics chips market in Q3 was 22.3 percent, down from 25 percent in Q2. Nvidia's market share was 21.2 percent, up from 20.7 percent in Q2 and Intel's market share was 55.6 percent, up from 53.4 percent.

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Nvidia follows a different fiscal calendar, which ends on October 31. For now, the company's growth in revenue from graphics processors has declined by 16.1 percent compared to Q3 last year.

Next: The Q4 Stakes

A more telling indicator of the state of competition between chipmakers could come in Q4. AMD released its Radeon HD 6800 series last week and is expected to follow with the HD 6900 series later this year. Meanwhile, Nvidia cut prices for its GeForce GTX 470 and 460 cards, while preparing its GTX 580 card for release. The GTX 580 will likely compete with AMD's 6900 GPUs, codenamed Cayman, for the high-end of the graphics market.

Jon Peddie Research predicted graphics chip shipments of about 473.1 million units for 2010, an increase of 14 percent from last year.

Jon Peddie Research says the iPad may be responsible for the drop in notebook sales, but Intel has a different view.

"No one knows how much cannibalization there is in tablets," said Intel President and CEO Paul Otellini during the company's Q3 earning call, "but the numbers are relatively small."

Intel is preparing Atom chips specifically for tablets, codenamed Oak Trail, and plans to release them in June 2011.