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NVIDIA Takes On AMD With the GTX 1060

By Timothy Green - Jul 13, 2016 at 8:51AM

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AMD's plan to win back market share just hit a roadblock.

Image source: NVIDIA.

As NVIDIA (NVDA 4.28%) focuses on the high end of the graphics card market with the GTX 1080 and GTX 1070, Advanced Micro Devices (AMD 2.76%) was left with an opening. The first graphics card based on its Polaris graphics architecture, the RX 480, is a mainstream product priced at $199. AMD ceded the high end of the market for the time being in an effort to win back as much market share as possible.

During NVIDIA's last big graphics-card refresh, which began in late 2014 with the GTX 970 and GTX 980, a mainstream card didn't arrive from the company until four months after those high-end cards were released. With AMD gunning for mainstream market share, the story is different this time around. NVIDIA recently announced the GTX 1060, a mainstream $249 card aimed squarely at the RX 480. It will arrive on July 19, just a few weeks after AMD's first Polaris card became available, and a little more than a month after the GTX 1070 launched.

Trouble for AMD

AMD's RX 480 comes in two variants. A version with 4GB of memory is priced at $199, while an 8GB version sells for $239. The GTX 1060, which comes equipped with 6GB of memory, will be in direct competition with the pricier RX 480. NVIDIA still won't have any new graphics cards selling at $200, but it probably0 won't be too long until the company fills in that gap.

According to benchmarks from Tom's Hardware, the RX 480 provides gaming performance that falls a bit short of NVIDIA's last-gen GTX 980, which was a high-end card. That's impressive for a $239 graphics card. But it now looks like NVIDIA's GTX 1060 will be just as impressive, if not more so. NVIDIA is claiming that the GTX 1060 will be 15% faster and 75% more power efficient than the RX 480, which, if true would put AMD in a difficult position.

The large difference in power efficiency should be surprising. Both NVIDIA's Pascal cards and AMD's Polaris cards have moved to 14/16nm FinFET manufacturing, which brings with it efficiency improvements. But if NVIDIA's numbers are taken at face value, they suggest that AMD is still well behind in terms of efficiency. The RX 480 has had some issues with drawing too much power, which has since been fixed with a driver update, but the whole episode reflects poorly on AMD.

The good news for AMD is that it will still have the best $200 graphics card available, at least for the time being. A GTX 1050 and/or GTX 1050 Ti will be coming at some point from NVIDIA, but so far there's no word on the timing.

NVIDIA has a major advantage

AMD has been posting losses for a few years now, and one side-effect has been a shrinking R&D budget. During 2015, AMD spent just $946 million on R&D, down from $1.07 billion in 2014 and $1.45 billion in 2011. This R&D spending is spread across both CPUs and GPUs, meaning that the company's graphics business is only getting some fraction of those resources.

NVIDIA now outspends AMD when it comes to R&D, despite all of its products being built around its graphics technology. NVIDIA spent $1.33 billion on R&D in 2015, about 40% more than AMD. Some of this spending goes toward NVIDIA's growth businesses, like its self-driving-car platform, but it's safe to say that the company has more resources to devote to GPU development than AMD.

This mismatch in R&D spending seems to have created a situation where AMD is perpetually behind NVIDIA when it comes to efficiency. The RX 480 certainly represents a substantial improvement compared to AMD's previous generation of products, but the card uses nearly as much power as NVIDIA's high-end GTX 1080 under load. That raises some questions about how competitive AMD's eventual high-end products will be.

The GTX 1060 looks like it's going to take the wind out of AMD's sails. We'll have to wait until independent benchmarks become available, but based on what NVIDIA has said about the GTX 1060's performance, AMD's RX 480 is looking a lot less impressive.

Timothy Green has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Nvidia. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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Advanced Micro Devices, Inc. Stock Quote
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