GPU Demand Defies Pre-Pandemic Seasonality

Article By : George Leopold

The only thing slowing graphics chip shipments is a supply chain hangover.

From semiconductors to the equipment and substrates used to make them, on up the electronics food chain to PCs, nearly every industry segment is in the midst of a pandemic-driven boom. The only headwinds are a supply chain hangover that prevents manufacturers from meeting what analysts say is unprecedented demand for digital products.

The latest example comes from the graphic chips sector, where shipments continued to soar during the second quarter. Jon Peddie Research reported this week that PC GPU shipments increased 3.4 percent sequentially from the previous quarter, jumping 37 percent on an annual basis.

Nvidia remains far and away the market leader, adding incrementally to its market share during the second quarter as also-rans AMD and Intel Corp. each last ground.

(Click on image to enlarge.)

Demand for graphics processors is projected to rise at a compound annual rate of 3.5 percent through 2025, reaching an installed base of more than 3.3 billion units by the middle of this decade. Fundamental shifts in work, school and entertainment wrought by the pandemic have torpedoed most quarterly market forecasts for GPU and CPU demand by consumers and enterprises.

For example, Peddie said GPU demand traditionally declines during the second quarter. This year, 2Q graphics chip shipments jumped 3.4 percent over the previous quarter.

“Covid has distorted every forecasting model in the universe—even Moore’s Law has been disrupted,” added the GPU market analyst. “Predictions based on short-term conditions have created conflicting and distorted estimates from some quarters that will be proven wrong and embarrassing.”

Source: Jon Peddie Research (Click on image to enlarge.)

Graphics chips are among the industry’s leading indicators since GPUs are installed by vendors into nearly every system before shipping PCs. Peddie further noted that guidance from most chipmakers continues to trend upward during the next quarter by an average of 3 percent. Some of that guidance is based on normal seasonality, but “there is still a coronavirus impact factor and a hangover in the supply chain.”

Indeed, suppliers reported shortages ranging from chip substrates to capacitors as consumer electronics manufacturers vied with automotive and other sectors to keep production lines open during the ongoing IC shortage.

Peddie warned the traditional third-quarter inventory build-out for the holiday season will be constrained until the semiconductor supply chain catches up with surging demand.

The supply-demand imbalance isn’t likely to go away anytime soon. Hence, last-minute holiday shoppers may have to consider something analog. Like, say, a book.

This article was originally published on EE Times.

George Leopold has written about science and technology from Washington, D.C., since 1986. Besides EE Times, Leopold’s work has appeared in The New York Times, New Scientist, and other publications. He resides in Reston, Va.

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