At Computex 2014, Intel's (NASDAQ:INTC) Kirk Skaugen talked about how Intel is teaming up with Samsung (NASDAQOTH:SSNLF) to try to drive the prices of 4K monitors (that is, displays with 3840x2160 pixel resolution or better) down to as low as $399, and to drive all-in-one PCs with 4K displays built into them to $999. This trend should benefit graphics card vendors NVIDIA (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) as the ubiquity of higher-resolution displays drives increased demand for graphics performance.

Discrete cards are just faster
Every so often, you'll get people who says that PC gaming is "dead" because game consoles are adequate for getting the most out of games, even though game consoles offer neither the performance nor the flexibility of a reasonable gaming PC. You'll also get folks who will claim that integrated graphics will eventually become "good enough" for high-end gaming, and as a result will render discrete graphics cards obsolete.

While it is technically true that the very low end of the discrete graphics market was made more or less obsolete by integrated solutions, the high-margin, high-value discrete market is quite safe from integrated solutions. Discrete graphics processors have much larger thermal and transistor budgets (NVIDIA's highest-end GK110 chip has 7.1 billion transistors -- Intel's biggest processor with integrated graphics likely has just south of 2 billion), allowing them to pack much more performance than what is feasible on an integrated solution.

Why the need for more performance?
We've of course established that discrete solutions can offer much better performance, but the more important thing to illustrate is just why that performance is necessary. To show that, let's go to AnandTech's recent review of NVIDIA's GeForce GTX 780 Ti to see exactly why 4K monitors will drive the need for much faster graphics cards.

Looking at a performance test of the popular 3-D shooter game known as Crysis 3 tells an interesting story. The test is run with the game at medium-quality settings, not even the fullest, and the resolution is set to 3840x2160 -- which is what a 4K monitor's resolution will be. In this, the $700 NVIDIA GeForce GTX 780 Ti can muster only 41 frames per second. While playable, this is not considered a fully "smooth" experience.

When AnandTech tested two of NVIDIA's 780 Ti cards running in tandem, the pair was able to pull in 54.3 frames per second on average. Two of AMD's R290X flagship cards were able to pull 56.4 frames per second on average. This means that it takes over $1,000 worth of discrete graphics horsepower to play the most demanding titles in 4K at medium-quality settings.

This is an opportunity for NVIDIA and AMD
As higher-resolution displays become more popular among desktop PC gamers (and at the $399 price point, adoption is surely to improve dramatically), there will be an increased need for graphics horsepower. This means that in the absence of new graphics cards, gamers may begin to buy multiple flagship cards at a higher rate. Of course, once AMD and NVIDIA launch new graphics cards (the current high-end lineups from both camps could use a shot in the arm), this could drive a pretty healthy refresh.

Foolish bottom line
As games continue to render more realistic scenes, and as display resolutions continue to improve, there will be an increasing need for more powerful discrete graphics cards, particularly for desktops. This is a win for both AMD and NVIDIA, and could ultimately lead to a richer mix of discrete graphics chips being sold going forward. Keep a close eye on this trend throughout 2015 and beyond, particularly if you own stock in either GPU vendor.

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Ashraf Eassa owns shares of Intel. The Motley Fool recommends Apple, Intel, and NVIDIA and owns shares of Apple and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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