Updated: Llano and Sandy Bridge take their toll on Nvidia
Nvidia has reportedly been "forced" to exit its integrated graphics chipsets business following the success of Intel's Sandy Bridge and AMD's Llano APU.
According to analysts at Trefis, revenues from Nvidia's integrated graphics division weighed in at around $872 million before falling below $400 million for 2011.
However, warns Trefis, the successors of Llano and Sandy Bridge may also take its toll on Nvidia's (mainstream) discrete graphics business, as APUs from the two industry heavyweights could ultimately encroach on both the notebook and desktop segments.
"In the case of desktops, the number of discrete desktop GPUs sold as a proportion of desktops shipments has come down from an estimated 62% in 2007 to about 47% in 2011," a Trefis rep wrote in an article published on Forbes.
"We forecast stable levels in the future but if APUs threaten this business, this figure could continue to go down. Let's assume a pessimistic scenario for Nvidia where this figure drops to 35% by the end of our forecast period. This implies that only 35% of the desktop users will be using discrete GPUs in 2018."
The analyst also noted that a "similar conservative scenario" indicates Intel and AMD APUs are more than capable of forcing discrete notebook GPUs sales to continue hovering around current levels of 33% - rather than increasing as ultimately projected.
"The above two scenarios imply a significantly reduced market growth with discrete GPU shipments growing by a mere 10% over the course of 7 years.
"This could lead to close to 10% downside to our price estimate for Nvidia. Our price estimate for Nvidia stands at $21.19, implying a premium of about 40% to the market price," the analyst added.
Update: Nvidia rep Ken Brown contacted TG Daily with the following statement:
"Nvidia announced that it would exit the chipset business in 2009. Llano and SNB had nothing to do with what decision... In addition, the shipment numbers for discrete GPUs has been steadily climbing the last few years. Mercury Research projects discrete GPU numbers to continue to grow in the years ahead."