Desktop GPU shipments jumped by a third – no thanks to AI PCs

Prices stabilized, so buyers opened their wallets

Shipments of consumer-grade GPUs are growing strongly, according to graphics-focused analyst firm Jon Peddie Research, but probably not due to the emergence of generative AI or the so-called AI PC.

The firm's latest report found GPU shipments grew 32 percent year over year in the fourth quarter of 2023 to 9.5 million units, and 6.8 percent quarter to quarter.

JPR analyst Jon Peddie told The Register AI is not driving the growth.

"We've been shipping PCs with GPUs that have been capable of AI inference work for the last, at least ten years, maybe more. So, it's not a novel thing," he said.

He contends that, for now, the AI PC is more of a marketing tool to sell systems with neural processing units (NPUs), for which applications still need to be optimized to divide up the workload between the various accelerators. This lines up with a previous report from Gartner, which showed that the arrival of software infused with AI is lagging AI PC hardware.

"It's all hype right now," Peddie opined, adding that while some folks may run out and buy a new system or GPU to experiment with local AI, he doesn't expect the AI PCs to drive an upswing in graphics card sales.

The real driver for GPU sales, Peddie suggested, is improved availability driving down prices, making new cards more attractive to consumers.

During the COVID-19 pandemic and ensuing crypto boom, retailers were able to charge well above manufacturers' suggested prices – and those were already hefty for products like Nvidia's $1,599 RTX 4090 and the $1,199 RTX 4080. On shopfronts like eBay such kit often sold for far more.

"The clear growth during the last three quarters, along with the stabilization in overall graphics add-in board prices, signals a return to seasonality for the market," JPR analyst C Robert Dow noted in a statement.

Prices for consumer-and-prosumer-grade GPUs have recently fallen. For example, many of Nvidia's Super-series GPUs launched in January enjoyed a sizable price cut compared to their non-super siblings. AMD and Intel, meanwhile, have introduced new budget-oriented cards for those that don't care about high frame rate 4K gaming.

Peddie said those moves can be attributed to chipmakers trying to clear inventory of older cards, ahead of product launches scheduled for later in 2024.

Digging into Peddie's view of Q4 shipments, Nvidia maintained its stranglehold as the dominant player in the desktop graphics arena, claiming 80 percent of market share.

However, the tides may be changing – the JPR report found that it was AMD, not Nvidia, that saw the greatest growth during the holiday quarter.

Of the 9.5 million GPUs sold in Q4, shipments of AMD GPUs by add-in board (AIB) partners increased 17 percent quarter-on-quarter and 117 percent compared to the prior year, contributing to a seven percent share gain.

By comparison, Nvidia grew at a slower pace with shipments up 4.7 percent quarter-on-quarter and just 22.3 percent from last year. As a result, Nvidia's market share contracted by two percent.

Peddie described that shift as a mere "wiggle," and suggested availability of product will see Nvidia and AMD continue to trade market share. AMD's decision to prioritize mid-range, high-volume products – instead of parts for high-end enthusiast parts – has helped to boost its shipments, he explained.

"AMD's current range of products are just touching Nvidia in terms of performance at the high end; mid-range AMD products are solid and are really good value," Peddie told The Register. "AMD has made a decision that they are not going to go after the high-end quite as much as they used to and you can understand that, it's a much, much smaller volume."

This leaves Intel – a relatively newcomer to the consumer graphics market with its Arc-series of cards. According to the JPR report, Intel's efforts to upset the desktop GPU have delivered just one percent market share as of Q4 2023 – down from two percent in 2022’s final quarter.

One reason for that dip could be that Intel's Alchemist GPUs – which made their way onto the market with mixed reception in 2022 – are due for a refresh and buyers may have decided to wait for new kit.

That hardware, codenamed Battlemage, is expected to ship later this year. However, by the time they launch, Intel may have to contend with next-gen cards from Nvidia and AMD, both of which are expected to refresh their consumer graphics lineups this year.

Looking ahead to the first quarter of 2024, analysts expect the market to remain stable, thanks in part to GPUs launched by Nvidia and AMD at CES. ®

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