Jon Peddie Research's quarterly Market Watch report is out and as expected the discrete GPU market took a bit hit in the fourth quarter of 2018. This is primarily due to excess inventory because of overestimated demand during the cryptocurrency mining boom and the ensuing crash which made most mining ventures unprofitable.

JPR: Intel (integrated) GPUs comes out on top with the lowest shipment decline at 0.67%, NVIDIA and AMD at 7.6% and 6.8% respectively

According to the report, the repercussions of the excess inventory will continue to be felt through Q1 and Q2 2019. Not surprisingly, the winner in this discrete GPU recession is Intel's integrated solutions whose shipments barely declined (at a mere 0.67%). To read the full report, you will have to go and buy it of course, but an extract of the results has been given below courtesy of the firm.

As far as the GPU shipments go, AMD's overall unit shipments fell by 6.81% this quarter, while as NVIDIA fell by 7.62%. Intel GPUs (or iGPUs more precisely) fell by a mere 0.67% in comparison and that is because their demand wasn't affected by cryptocurrency mining to begin with. The attach rate of GPUs was 135% - down almost 6% from the prior quarter.

27.78% of the systems shipped contained a discrete GPU, which is 3.83% less than the prior quarter. Overall the PC market actually increased by 1.61% on a quarter over quarter basis (I am assuming this is thanks primarily to the strong CPU side of things). Desktop AIBs, on the other hand, took a big hit as discrete GPUs decreased 10.75% from last quarter.

Here is the overview of the report:

-Overall GPU shipments decreased -2.65% from last quarter, AMD shipments decreased -6.8% Nvidia decreased -7.6% and Intel's shipments, decreased -0.7%. -AMD's market share from last quarter decreased -0.6%, Intel's increased 1.4%, and Nvidia's market share decreased -0.82%. -Year-to-year total GPU shipments decreased -3.3%, desktop graphics decreased -20%, notebooks increased 8%. -Although overall GPU shipments declined PC sales saw an uptick of 1.61% which is a positive sign for the market overall. “The channel’s demand for add-in boards (AIBs) in early 2018 was out of sync with what was happening in the market,” said Dr. Jon Peddie, president and founder of Jon Peddie Research. “As a result, the channel was burdened with too much inventory. That has impacted sales of discrete GPUs in Q4, and will likely be evident in Q1, and Q2’19 as well.” The fourth quarter is typically flat to up from the previous quarter in the seasonal cycles of the past. For Q4'18 it decreased -2.7% from last quarter and was below the ten-year average of an 11.59% increase.​

The entirety of this fall cannot be blamed wholly and solely on cryptocurrency mining decline, however. The reason for this is that both AMD and NVIDIA dropped the ball as far as their respective approaches go. NVIDIA launched its Turing GPUs and was hoping to get around the excess inventory problem by pushing GPUs with a higher MSRP but this is something that did not gain immediate traction and their bottom lines consequently suffered. AMD, on the other hand, has not been competitive at all in this space and their Vega GPU still suffers from supply issues.

Both NVIDIA and AMD look like they have good things planned for the next couple of quarters however, so turn around is very much a possibility. NVIDIA is slowly rolling out its new non-Tensor and non-AI lineup the GTX 16XX series while AMD has promised to deliver the Vega 20 powered Radeon VII to the market (although it is facing some early supply issues right now). So this is in our opinion, a temporary lull in the usually heated GPU wars, and a comeback is there for the taking for both parties.