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Nvidia continues to be a leading player in the graphic chip space


Mar. 5 2015, Updated 1:06 p.m. ET

GPUs are integral to computing space

Graphics processing units (or GPUs) are an integral part of the computing environment. Many devices contain GPUs, including personal computers (or PCs), servers, video game consoles, TVs, tablets, and smartphones.

The presentation above shows the market shares for Advanced Micro Devices (AMD), Nvidia (NVDA), and Intel (INTC)—three leading players in the graphics processor and graphics add-in board market.

You can consider investing in the VanEck Vectors Semiconductor ETF (SMH) and the PowerShares QQQ Trust (QQQ) to gain exposure to Nvidia. The company makes up about 1.94% of SMH and 0.22% of QQQ.

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Increased preference for high-performance graphic chips has led to demand decline in add-in boards

According to Jon Peddie Research (or JPR), in the add-in board space, Nvidia’s market share increased to 76% in 4Q14 as compared to 64.9% in 4Q13. In 4Q14, total add-in board shipments declined by 17.5%. The reason behind this decline is that more and more PCs are using higher-performance graphics chips. This has lessened the advantages of add-in board graphics.

JPR also reported that the attach rate of add-in boards to desktop PCs has fallen drastically from 63% in 1Q08 to 36% in 4Q14.

The add-in boards market represents the high end of the graphics industry. High-end graphics use discrete chips and private, high-speed memory in comparison to the integrated GPUs in central processing units, which share slower system memory.

Nvidia and Intel are the leading players in the graphic chip space

In 4Q14, Intel improved its position in the GPU market as its market share rose to 71.4% from 66.8% in 4Q13. Nvidia, which generates a majority of its revenues from its GPU business, slipped marginally in the market in 4Q14. Its market share declined to 15% from 15.7% in 4Q13.


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