Nvidia (NVDA -2.48%) owned the discrete graphics card market in 2021, and its efforts to boost supply didn't give rival Advanced Micro Devices (AMD -1.81%) even an inch in this lucrative space.
Jon Peddie Research points out that Nvidia was the only graphics card manufacturer that increased its shipments in the third quarter of 2021. Not surprisingly, Nvidia controlled 83% of the discrete GPU (graphics processing unit) market at the end of the third quarter, with AMD sitting on the rest. For comparison, Nvidia had an 82% share of the discrete GPU market under its control at the end of the fourth quarter of 2020.
It wouldn't be surprising to see Nvidia maintain its dominance of the graphics card market in 2022 as well. Let's look at the reasons why it could keep AMD at bay in this lucrative market.
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Nvidia is leaving no stone unturned to sustain its GPU dominance
Nvidia's announcements at CES 2022 -- an annual trade show held in Las Vegas where companies showcase the latest innovations and technologies in the consumer electronics space -- in the first week of January 2022 indicate that it is in no mood to yield any market share to AMD. Nvidia says that its RTX 30 series GPUs will be powering a whopping 160 laptop designs from several OEM (original equipment manufacturer) partners. The graphics specialist is bringing desktop-class performance to a mobile form factor with its RTX 3080 Ti laptop graphics card at an aggressive price.
Nvidia points out that the top-of-the-line laptops equipped with the RTX 3080 Ti card can outperform the desktop-centric Titan RTX. It is worth noting that the RTX 3080 Ti laptops will start at $2,499, which is identical to the price of the Titan RTX. However, consumers can only buy the Titan RTX GPU for that money, which means that they will have to invest more money into other components such as a monitor, memory, and processor, among others, which will increase costs.
The graphics specialist has also launched a mid-range laptop GPU, the RTX 3070 Ti. The RTX 3070 Ti-equipped laptops will start at $1,499, which makes them an enticing buy considering that the stand-alone RTX 3070 Ti GPU is being sold for over $1,700 due to the graphics card shortage. In all, Nvidia seems to be going after a broad range of price points. Its new laptops will be available for purchase beginning Feb. 1 and starting price of $799.
Nvidia is witnessing robust demand for its RTX-powered laptops. That's why its new laptop GPU lineup could help Nvidia sustain the impressive growth of its video gaming business, which is good news for investors as this segment moves the needle in a big way. The company's gaming revenue had increased 42% year over year in the third quarter of fiscal 2022 (period ended Oct. 31, 2021) and accounted for 45% of the top line. The segment's strong growth led to a 50% year-over-year increase in Nvidia's total quarterly revenue to $7.1 billion. What's more, Nvidia's guidance indicates that it is on track to finish fiscal 2022 with 60% revenue growth.
The updated laptop GPU lineup can play an important role in helping Nvidia replicate its growth in fiscal 2023 as well. Analysts expect the company's revenue to increase 19% in the new fiscal year, but it could do better as it seems to have increased its lead over AMD in the lucrative gaming laptop space.
AMD also updated its mobile GPU lineup at CES 2022, but it looks like the chipmaker's new chips only provide a small upgrade over their predecessors. For instance, AMD's top-of-the-line Radeon RX 6850M XT GPU promises a 7% performance jump over its predecessor. Nvidia, on the other hand, says that its RTX 3070 Ti-powered laptops are 70% faster than the previous-generation RTX 2070 Super.
Additionally, AMD didn't disclose the number of design wins its new laptop graphics cards have scored, as was the case with Nvidia. Though AMD did point out that several OEMs will be launching models powered by its graphics cards, it made specific mention of only Dell and ASUS in the press release. For comparison, Nvidia said that partners such as "Acer, ASUS, Dell, HP, Gigabyte, Lenovo, MSI and Razer are introducing new and updated GeForce laptops."
All this shows that Nvidia is going after the gaming laptop market aggressively in 2022, and that could help the graphics specialist maintain its terrific hold over this market given this segment's prospects.
Gaming laptop sales are expected to take off
Sales of gaming laptops have surged in the past couple of years on account of the novel coronavirus pandemic. Jon Peddie Research estimates that notebook shipments increased a whopping 49% in 2020 as people staying at home due to lockdown restrictions turned to laptops for work, entertainment, or study.
Gaming laptops were a key beneficiary of the increase in notebook sales because of their ability to keep consumers engaged in resource-hungry games, while also tackling other tasks related to work or education. Not surprisingly, gaming laptop shipments surged across the globe and drove the PC (personal computer) market's significant growth.
The laptop sales are expected to head higher in the coming years. According to a third-party estimate, the global gaming laptop market could hit nearly $18 billion in value by 2026, compared to $11 billion in 2020. With Nvidia controlling more than 80% of the gaming GPU market and taking the right steps to maintain its control over this space, it is in the driver's seat to corner a huge chunk of the additional growth on offer.
So Nvidia is doing the right thing by going all-out after the notebook GPU market with a new range of cards -- this will not just help maintain its dominance over AMD, but also allow the high-flying tech giant to keep up the terrific growth of its gaming segment, which remains one of its key growth drivers.
