Graphics Chip Shipments Surge on Optimism Over PC Demand

Shipments of graphics chips surged during the second quarter, bucking seasonal trends as hardware makers gear up for an expected uptick in PC sales.

On a quarterly basis, sales of graphics chips jumped 31.3 percent, to 98.3 million units sold, analyst firm Jon Peddie Research said Monday, noting that graphics chip sales usually decline during the first two quarters of the year ahead of a mid-year slowdown in PC sales. Normally, graphics chip sales don't start to pick up until the third quarter as hardware makers gear up for the year-end selling season.

"This year preparation seems to have gotten off to an early start," the research firm said in a statement.

Advanced Micro Devices and Nvidia both saw strong gains in second-quarter shipments of graphics chips, but Nvidia saw its overall share of the market slip while AMD's grew larger. AMD's market share increased to 18.4 percent from 17.1 percent, while Nvidia's share dropped to 29.2 percent from 31.1 percent during the period, Jon Peddie Research said.

Intel, which sells chipsets that include integrated graphics cores rather than stand alone graphic chips, saw its share of the overall market grow to 50.3 percent from 49.7 percent.

"It's clear the channel is gearing up for what it thinks is going to be a robust back-to-school season," the statement said, pointing to the upcoming release of Windows 7 and the Snow Leopard version of Apple's MacOS X as factors that will help drive PC demand higher.

Windows 7 is due in October, while Snow Leopard will ship in September.

The surge in shipments of graphics chips is yet another sign that PC sales may regain their footing after being knocked flat when the global economy slowed last year. IDC, which released preliminary numbers for second-quarter PC shipments last week, said it expects computer sales to continue growing during the second half of this year.

"New product launches in the second half of the year combined with seasonal growth and greater economic confidence resulting from factors such as government stimulus, a more liquid housing market, relatively stable stock market and interest rates, and progress in the auto and financial industries, should support the expected return to growth by year-end," IDC said in a statement.

Even as IDC expects PC shipments to rise higher, they believe a recovery will be uneven. Much of the demand for PCs in recent months has come from consumers, with most companies still refraining from buying new computers or replacing old ones.