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Wednesday, November 11, 2021

Nvidia is still the graphics king, but AMD, Intel, and Apple are making moves

Nvidia (NVDA) unveiled a sweeping array of new technologies at its GTC conference this week, ranging from an AI-powered chauffeur that can park your car to a tool to predict the paths of wildfires. All of this from a company that started out selling graphics cards for gamers.

But Nvidia still makes the majority of its money from the sale of those cards. Its gaming unit accounted for 47% of total revenue in the second quarter, while the data center business accounted for 36%.

And while Nvidia dominates with roughly 83% of market share compared to AMD's (AMD) 17%, it has serious competition angling to take its crown.

First, there's Apple (AAPL), which has quickly built out its own laptop chips with graphics capabilities that it says can tangle with Nvidia’s best offerings. And waiting in the wings is Intel (INTC), which is set to launch its own line of graphics chips that could prove especially troublesome for Nvidia.

That's because unlike Apple's chips, Intel's graphics processors will find their way into Windows laptops and desktops. Windows PCs are the go-to computers for gamers around the world, and if Intel pushes out chips that can rival Nvidia's capabilities, it could threaten the gaming titan in the long term.

Intel, Apple, and AMD are looking to take own Nvidia

Nvidia is a beast in the gaming market and AI business, but it’s quickly gaining new rivals. While the company’s RTX cards are some of the most powerful around, they aren’t the only option for consumers and businesses.

While AMD doesn’t have Nvidia’s market share, it’s got the kind of capabilities that gamers are looking for at similar prices. Intel, meanwhile, is preparing to roll out the first real competitors to mainstream Nvidia and AMD graphics in the form of its Arc Alchemist chips for laptops and desktop cards.

“Intel has already got all the support for gaming in its GPUs, because Intel is actually the biggest GPU vendor in the market with its integrated GPUs,” explained Gartner analyst Alan Priestley.

But those chips, he says, don’t offer the kind of graphics capabilities of discrete graphics chips that have their own memory. They’re more in line with playing Solitaire rather than, say, “Call of Duty.” But Intel’s new chips, based on its Xe-HPG microarchitecture, appear to have all of the features necessary to take on Nvidia.

Intel says its chips will support technologies like DirectX Ray Tracing, variable rate shading, and mesh shading — basically all things that make games look and run well. It's taking a direct swipe at Nvidia’s most important business.

“The challenge for Intel is going to be whether it can gain share, because it's either got to gain share from Nvidia or AMD or grow the market,” Priestley said.

Intel isn’t Nvidia’s only new competitor. Apple has become a surprising dark horse in the graphics game with its M1 Pro and M1 Max chips. Powering the company’s MacBook Pro 14-inch and MacBook Pro 16-inch, the chips make Apple’s laptops, according to the company’s own numbers, every bit as capable in terms of graphics performance as those running Nvidia chips.

According to Apple’s testing, the M1 Max-powered MacBook Pro 16-inch with 64GB of RAM beats out Razer’s Blade 15 Advanced running an Intel Core i9, 32GB of RAM, and an Nvidia RTX 3080 in both performance and power efficiency. Both systems are roughly the same price.

There are some caveats there, of course. Namely that Apple doesn’t play much in the gaming space. Sure, there are games available through the App Store, but if you’re looking for AAA titles from the world’s biggest developers, you’ll find them on PC.

It’s not just gaming where Nvidia is facing stiffer competition, though. AMD on Monday rolled out its new MI200 GPU for high performance computing and AI acceleration, with its sights set on taking on Nvidia in the data center space. Not to be left out, Intel is expected to bring out its own Ponte Vecchio GPU in 2022 for AI applications.

Nvidia is still as formidable as they come

Despite staring down strong contenders, Nvidia is still a powerhouse — in large part because of its software.

“They make their products very sticky by creating software infrastructure that makes it hard for customers to shift, particularly in the data center,” explained Matt Bryson, SVP of Equity Research at Wedbush Securities. “So I really think that that is the differentiation that they've created both in gaming and in the data center space. And that it's just really hard for competitors to replicate that.”

Nvidia also benefits by selling full-on supercomputers for AI applications, which can go for hundreds of thousands of dollars.

What’s more, Nvidia benefits from largely working only with GPUs. Unlike AMD, it doesn’t sell both CPUs and GPUs, and unlike Intel, it isn’t reentering the discrete GPU market. The company is set to launch its own CPU code named Grace to ensure it can provide its customers with its own CPU — but so far it’s been able to focus all of its efforts on GPUs.

“Nvidia has had that part of the market to itself. It has the resources to invest into the markets, both gaming and the data center, which has helped it build its business,” Priestley said. “It has one product GPUs, basically.”

Still, Nvidia’s rivals aren’t sitting idly by. And while the company is the market leader for now, there’s no guarantee it will stay that way forever. It needs to continue to innovate at a rapid clip if it wants to hold on to its position at the top.

By Daniel Howley, tech editor at Yahoo Finance.

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