The graphics card market is no longer a duopoly. Intel (INTC -9.20%) launched its first discrete family of graphics cards in late 2022. While the launch was bumpy, the company managed to offer a compelling value proposition for gamers in the budget portion of the market.
Nvidia (NVDA 6.18%) is still the market leader by far, and Advanced Micro Devices (AMD 2.37%) is in a distant second place. Intel has gained a small foothold, but only in the budget portion of the market. The company's issues with buggy software drivers, particularly soon after launch, have likely driven some gamers away.
Another shot in 2024
Intel's first generation of graphics cards made no attempt to compete with Nvidia and AMD at higher price points. The Arc A750 sells today for around $210, and the Arc A770 goes for around $320, although prices have dipped lower at times. These cards are competitive for the price, although performance can be inconsistent due to nagging driver issues.
Helping Intel in 2023 were lackluster mid-range graphics card launches from both Nvidia and AMD. Nvidia's RTX 4060 and RTX 4060 Ti came with limitations and high price tags. Tom's Hardware concluded that the priciest variant was "overpriced for what you get, much like most of the rest of Nvidia's current RTX 40-series lineup."
AMD's efforts weren't much better. The RX 7600 wasn't much of an upgrade over previous models, and the value proposition, compared to last-gen products, was weak, even after a last-minute price cut.
While Nvidia is expected to roll out a product refresh soon, genuinely new mid-range graphics cards from Nvidia and AMD likely won't be coming until 2025. The gap between Nvidia's RTX 3060 and RTX 4060 was more than two years, and the RTX 4060 has only been on the market since mid-2023. AMD may fill in some gaps in its lineup in 2024, but next-generation products are likely a ways off.
Intel's next-generation graphics cards, codenamed Battlemage, are expected to arrive sometime in 2024. With Battlemage, Intel is expected to move up into the enthusiast portions of the market that its first-generation products avoided. While Intel probably won't be going toe-to-toe with Nvidia's highest-end products, Battlemage should appeal to a broader swath of gamers.
Intel proved with its first-generation products that it can produce capable graphics hardware. With its second-generation products, it must prove that it's committed enough to the market to continually improve its software and eliminate the bugs and inconsistencies that have been holding it back.
A multibillion-dollar opportunity
Jon Peddie Research expects the market for discrete graphics cards to grow to $39 billion by 2026. That estimate was thrown out in late 2022 before the artificial intelligence (AI) bonanza caused demand for data center GPUs to explode. Considering just the market for graphics cards aimed at gaming, however, that's likely still a reasonable estimate.
In addition to winning a portion of the graphics card market, Intel's increased work on graphics can benefit it in other ways. The company's Meteor Lake CPUs, which launched in December for laptops, feature revamped integrated GPUs that deliver enormous performance gains. One set of benchmarks, for example, shows a 33% performance gain and a doubling of power efficiency over previous-generation models. Intel has long lagged AMD in terms of integrated graphics performance, but that gap now appears to be closing.
While Intel's initial graphics card launch didn't go smoothly, the software situation has greatly improved over the past year. Whenever the company manages to get Battlemage out the door, it will be in a good position to increase its market share and cement its status as a viable alternative to Nvidia and AMD.
