Graphics card sales have been declining in recent quarters, affecting both Advanced Micro Devices (NASDAQ: AMD) and NVIDIA (NASDAQ: NVDA).
According to Jon Peddie Research, there was a decline in GPU sales during the third quarter of 2018 (the latest quarter for which data is available).
NVIDIA Itsmarket share increased in the third quarter of 2018, capturing 74.3% of the market and leaving AMD with the remaining 25.7%, according to Jon Peddie Research.
This doesn't bode well for AMD, considering that in the second quarter of last year, it held over 36% of the GPU market. Investors thought NVIDIA might stop dominating the graphics card space this year, but that's not the case. However, AMD has taken some steps to overtake NVIDIA.
AMD made a big splash in the GPU space by releasing the world's first 7nm gaming card in January. The Radeon VII graphics card is 29% more powerful in terms of gaming performance than its previous flagship card. Most importantly, the new GPU doesn't consume any more power to achieve this performance.
At this point, this GPU isn't a direct competitor to NVIDIA's current top card, the RTX 2080 Ti. However, it does compete with the RTX 2080. Digital Trends suggests that AMD's offering can easily beat the RTX 2080 in some tests, but also prove to be just as good as NVIDIA's top card. In fact, the Radeon VII has outperformed the RTX 2080 Ti after running games like Battlefield V and Civilization VI.
This is really impressive considering that AMD's graphics card costs $699, while the RTX 2080 Ti costs $1,199. The most direct competitor, the RTX 2080, costs $799, so AMD is playing smart by offering a more powerful card at a lower price.
Of course, AMD's card has some drawbacks. For example, it consumes about 20% more power than the RTX 2080. In addition, NVIDIA's offering includes new technologies, such as ray tracing. But AMD's card offers more speed at a lower price, thanks to new specifications and an advanced manufacturing process. Moreover, ray tracing is not a hindrance for most gamers, as there are not many games that support this technology yet.
On the other hand, NVIDIA is having a hard time changing the high prices of its cards. Management recently admitted that gamers are probably expecting cards at lower prices, and AMD could likely take advantage of this situation with the release of the Radeon VII.
AMD's big plan
AMD CTO Mark Papermaster has said that the company will refresh its lineup of cards in 2019 using 7nm architecture. This means we can expect the company to release 7nm GPUs at a variety of price points, giving gamers access to powerful cards built on an advanced manufacturing process while still being affordable.
NVIDIA is expected to release its own 7nm GPUs sometime next year. Sales of NVIDIA's latest graphics cards - such as the RTX 2070 and RTX 2080 - have been disappointing, reducing the company's revenue.
AMD is doing better than NVIDIA, as its revenue has been growing recently. With this data, it wouldn't be surprising if AMD maintains this advantage and increases its market share, as its powerful and affordable graphics cards can attract more gamers.
