Industry Update - Q2-2005: Chipset wars, AMD's growing market share and more...

Chipsets

With ATI, Intel, NVIDIA, ULi, SiS and VIA all competing for market share, the chipset business is particularly interesting right now. 

The AMD Chipset Battle: NVIDIA vs. VIA

The battle for AMD platform market share continues to be between NVIDIA and VIA.  VIA was largely responsible for the success of the very first AMD Athlon, as they were the only mainstream chipset provider for quite some time.  However, since then NVIDIA has stepped up to be a very serious competitor.  All of the manufacturers we have talked to have said that in the past year, NVIDIA has grown extremely quickly to take control over virtually all of the high end K8 chipset business. 

Despite NVIDIA's incredible growth, VIA is still found on quite a few AMD motherboards for three reasons in particular: 1) Socket-A, 2) Socket-754 and 3) K8 Integrated Graphics solutions. 

The K7 market continues to be dominated by VIA, but as a dying market, it isn't one that we normally focus on.  The Socket-754 and K8 Integrated Graphics solutions are also dominated by VIA however.  The Socket-754 market is very price sensitive right now, which is where VIA wins over NVIDIA.  Ironically enough, NVIDIA, the graphics manufacturer, does not have a K8 chipset shipping with integrated graphics and thus, gives up a large portion of K8 market share to VIA.

NVIDIA has been working on an integrated graphics solution for both the Intel and AMD markets: the C51 and C60 (AMD and Intel platforms respectively).  Motherboard manufacturers have received these new chipsets with relatively mixed response.  Both the C51 and C60 implement a much larger graphics core than the integrated S3 graphics that VIA offers in their chipsets. 

The problem is that NVIDIA's cheapest integrated solution is still more expensive than VIA's offerings, which are currently priced at the $13 - $14 price point.  The OEM markets will gladly pay the added premium to be able to use the NVIDIA name in their marketing, but the rest of the markets are simply looking for the cheapest overall solution, and NVIDIA's approach won't provide that.  So, it appears that although NVIDIA will be eating a bit of VIA's lunch, they will still leave a big hunk of it for VIA. 

If you're wondering why NVIDIA doesn't simply stick a small DX7 graphics core in their chipsets to compete with VIA, it comes down to profit margins.  NVIDIA needs to keep their profit margins high, and by going after the ultra low end integrated graphics market, they cannot maintain high enough profit margins to justify spending so much time and resources producing cheap enough chipsets to compete with VIA.  It would surely bring hard times to VIA, but with NVIDIA dominating the high end market, there's simply no economic reason to go after VIA's share of the AMD business. 

Motherboard manufacturers that we've talked to all expect the high end AMD market to be dominated by NVIDIA and ATI based solutions, while the integrated graphics offerings will be dominated by VIA.  Ironic, isn't it?