GPU demand growth slowed markedly in Q1 2022, signaling potential market saturation or normalization after cryptocurrency mining boom.
According to a new report by Jon Peddie Research, the GPU market is experiencing a slow but steady recovery from the supply and demand challenges that have affected the industry over the past two years. GPU shipments in the first quarter of 2022 saw a 6.2% decrease compared to Q4 of 2021, with a total of 96 million units shipped in Q1 across both integrated and discrete graphics from Intel, AMD, and Nvidia. When broken down by company, AMD saw the slightest decline of just 1.5%, while Nvidia saw a modest 3.2% increase. Intel's market decline showed the most significant drop at negative 8.7% when compared to the previous quarter. However, consumer graphics cards from add-in board partners (AIBs) have seen an increase in shipments by 1.4% from last year, suggesting that shipment reductions are mostly a result of OEM machines and especially laptops.
GPU market share has shifted significantly over the past year, with Nvidia and AMD gaining ground from Intel. In Q1 of 2021, Intel held a commanding 68% market share thanks to its massive volume of integrated graphics chips, with AMD in second place at 17% and Nvidia at just 15%. By Q1 of 2022, Intel lost 8% of its market share and now sits at 60%, while Nvidia jumped into second place with 21% market share and AMD improved slightly to 19%. This is particularly impressive for Nvidia considering all of its graphics shipments come exclusively from discrete GPUs.
In the discrete GPU market specifically, the landscape has been reshaped by Intel's entrance into the space. Q1 of 2021 saw Nvidia leading with 81% market share and AMD with 19%. That changed in Q4 of 2021 where Intel grabbed a respectable 5% discrete market share, with AMD dropping to 18% while Nvidia led at 78%. Q1 of 2022 showed minimal change, with AMD at 17%, Intel at 4%, and Nvidia remaining at 78%. Notably, Intel's discrete GPU shipments come entirely from its DG1 graphics solution, a relatively modest offering, with most of its market share likely coming from laptop OEMs opting for lower-priced Intel GPUs.
CPU shipments showed an even more dramatic contraction, with a 10.8% reduction quarter to quarter and a 26.2% reduction year over year—good news for CPU buyers expecting to find products at or below MSRP due to reduced demand. Overall, GPU demand has been steadily decreasing, which is welcome given last year's explosive demand that far exceeded supply. With mining profitability declining and Nvidia's Ada architecture and AMD's RDNA 3 launching soon, supply is expected to improve, potentially leading to GPUs selling at or below MSRP by the end of the year. However, demand for next-generation GPUs will likely eclipse supply again in the short term once those parts launch.
Looking further ahead, JPR expects the compound annual growth of GPUs to increase to 6.3% over the next five years. While 2021 was an exceptional year for CPU and GPU sales and the following year's decline is unsurprising by comparison, long-term market fundamentals remain strong, with sustained demand for discrete GPUs in both notebooks and desktops, plus increasing shipments for data center and deep learning applications.