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JPR: Graphics, PC Shipments Both On the Rise According to Jon Peddie Research (JPR), 2011 is shap- ing up to be an anomalous year for the industry, as busi- nesses take their own path to recovery. To this end, JPR found that estimated graphics chip shipments and suppliers' market share for the second quarter of 2011 did not behave according to past years with regard to seasonality, and was higher on a year-to-year comparison for the quarter. Typically, the second quarter of the year is a slower business quarter in the graphics industry (and in the PC industry as a whole). This year, Q2 did not conform to the normal seasonal cycle. Instead, sales were up significantly compared to previous years. The growth in Q2 comes as a welcome change, if not a bit worrying—Is it inventory build- ing for back-to-school and the holiday season, or channel stuffing? JPR's forecast for the coming years has been modified since the last report, and is less aggressive for both desk- tops and notebooks, as tablets have changed the nature of the PC market. The findings include desktops, notebooks (and netbooks), and PC-based commercial (POS) and indus- trial/scientific and embedded; it does not include handhelds (such as mobile phones), x86 servers, or ARM-based tablets (for instance, iPad and Android-based tablets), smartbooks, or servers. The Quarter in General In Q2, Intel celebrated its sixth quarter of embedded proces- sor graphics CPU (EPG, a multi-chip design that combined a graphics processor and CPU in the same package) ship- ments, and enjoyed a 21 percent average growth in desktops and notebooks. AMD and Nvidia lost in overall market share, while Intel grew compared to last quarter. Year to year this quarter, Intel had tremendous market-share growth (14.7 percent), AMD had a loss of 14.2 percent, and Nvidia slipped 18.4 percent in the overall market partially due to the company withdrawing from the integrated segments. The second-quarter change in total shipments from last quarter increased 6.3 percent, significantly above the 10-year average of 3.5 percent, and raising concerns about an inven- tory buildup. Netbooks contributed to notebook growth a bit, however, and iPads and Android tablets have probably canni- balized some netbook sales. More than 84 million PCs shipped worldwide in the quarter, 4 NEWS: GRAPHICS August/September 2011 an increase of 2.4 percent compared to the first quarter (based on an average of reports from Dataquest, IDC, and HSI), caus- ing speculation that the 6.3 percent upswing in graphics could be an inventory buildup and have a negative impact on the next two quarters. AMD's HPU quarter-to-quarter growth has been extraordi- nary at an average of 80 percent for desktops and notebooks, and Intel's EPG growth was significant at an average of 41 percent. This is a clear showing of the industry's affirmation of the value of CPUs with embedded graphics and is in line with our forecasts, claims JPR. The major, and logical, impact is on older IGPs, and some on low-end add-in boards (AIBS). Graphics chips (GPUs) and chips with graphics (IGPs, HPUs, and EPGs) are a leading indicator for the PC market. At least one, and often two, GPUs are present in every PC shipped. It can take the form of a discrete chip, a GPU integrat- ed in the chipset, or one embedded in the CPU. The average GPU per PC has grown from 115 percent in 2001 to almost 160 percent. Since the crash of 2009, combined with the introduction and influence of ARM-based tablets, the PC market has devi- ated from historical trends. Until the segment for tablets is clearly defined, the fluctuations in the market data are likely to continue. The disruptions probably won't settle down for a while as tablets find their place in the market and agreement can be reached on whether to include them in the PC market analysis. Market shares shifted for the big three, and put pressure on the smaller three, and they showed a decrease in shipments. Intel continues to be the overall market share leader in the quarter, elevated by Core i5 EPG CPUs, Sandy Bridge, and Pineview Atom sales for netbooks. AMD gained market share quarter to quarter, and Nvidia lost share. Nvidia is exiting the integrated graphics segments and shifting focus to discrete GPUs. The company showed significant discrete market share gain (30 percent quarter to quarter) due to, they say, strong connect with new Intel Sandy Bridge notebooks. Ironically Nvidia enjoyed some serendipitous sales of IGPs in the period. AMD share dropped 7.3 points. In summary, the market has increased year to year. Ship- ments increased to 140 million units, up 22 million units from this quarter last year. The full results are found in the Q2 2011 edition of Jon Peddie Research's "Market Watch," available in electronic and hard-copy editions for $995.

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