Integrated graphics market feeling pressure from lower PC sales

NEW YORK, USA: 2010 was a difficult year for many chipmakers. While the smartphone and tablet trends have given certain key industry players many new sources of revenue, we are seeing somewhat of a double edged sword as the tablet craze is having negative effects on PC sales.

As a result, semiconductor companies whose niches are focused on PC's are already seeing their ratings slashed by analysts and are beginning to report less-than impressive earnings. Additionally, the market for graphics processors is hurting due to a slowdown in laptop sales.

The Bedford Report examines the outlook for companies in the semiconductor industry and provides research reports on NVIDIA and Intel.

According to the analyst firm Jon Peddie Research, graphics product shipments were down 1 percent sequentially in the third quarter. Intel remains the clear-cut market share leader in graphics products with 55.6 percent market share according to Jon Peddie Research.

Intel is hoping to steal more market share from graphics chip rivals Nvidia and AMD early next year when it launches a chip called "Sandy Bridge" that combines a traditional core processor with a graphics processor. Rumors are that Sandy Bridge will find its way into the lower-end range of the next generation of MacBooks.

Nvidia's chief executive Jen-Hsun Huang recently unveiled the company's new graphics processor, known as Kepler, which Huang says is three to four times faster than Nvidia's current Fermi chip generation. Last month, Nvidia reported third-quarter fiscal 2011 earnings per share of 15 cents on revenues of $843.9 million. For the fiscal fourth quarter, the company expects revenues to increase approximately 3 percent to 5 percent sequentially.