GPU vendors look at 10-20% sequential drops in 2Q14

Most graphics card vendors are expected to see shipments slip 10-20% sequentially in the second quarter of 2014 due to high inventory levels in retail channels, weak demand in China, as well as off-peak season effects, according to industry sources. Monthly shipments are unlikely to bounce up until July, the sources noted, reports digitimes.

However, the leading vendors such as Nvidia and AMD managed to maintain their shipments and profitability in the first quarter despite slack demand from the PC supply chain, indicated the sources.

Nvidia's earnings for the first quarter of 2014 were higher than expected thanks to orders for high-end graphics cards, revealed the sources.

AMD has seen sales of its Radeon R7 and R9 family products improve gradually in the past six months and is likely to swing back to profitability in the second half of 2014, buoyed by a rising shipment ratio of mid-range to high-end products, said the sources.

But a number of vendors including Elitegroup Computer Systems (ECS), XFX and Hightech Information System (HIS) have seen their shipments decline amid the dwindling discrete graphics card market, said the sources, adding that some have to decide to stay or withdraw from the market in the second half of 2014.

Asustek Computer and Gigabyte Technology, which shipped five and 3.8 million graphics cards, respectively, in 2013, are likely to maintain their shipment momentum in 2014, the sources commented.

Affected by seasonality, Gigabyte's graphics card shipments are expected to slide to 700,000 units in the second quarter of 2014, down from one million units shipped in the previous quarter, the source estimated.