Unexpected Twist: CPU Demand Soars As Gaming GPU Shipments Stall
The tech auditors at Jon Peddie Research have released the latest figures for both CPU and GPU shipments to start 2024 and they contain some surprises. Chief among them is the fact that PC processor shipments skyrocketed a "surprising 33% year-over-year" while discrete desktop graphics card shipments hit a pretty sizable skid.
Let's start with the CPUs. According to JPR, this marks only the second year-over-year increase in shipments in 25 years, which is an absolute eternity in the technology world. To put it into perspective, 25 years ago saw the launch of Intel's Pentium III, a 32-bit chip that was initially built on a 250-nanometer manufacturing process. The first Pentium III chips offered ran at 450MHz and 500MHz, with Intel charging $496 and $696, respectively, for 1,000-unit trays.
Another reason that the first-quarter surge in CPU shipments is notable is because we're just now starting to enter the era of AI PCs. Microsoft is trying to get the party started in earnest with its Copilot+ initiative, the first systems of which employ Qualcomm's Arm-based Snapdragon Elite X and Elite Plus hardware. Copilot+ PCs rocking x86 hardware from AMD and Intel will come later.
That said, AMD's Ryzen 8000/8040 and Intel's Core Ultra (Meteor Lake) processors feature dedicated hardware for AI processing (NPUs, or neural processing units), so it's possible that early AI adopters helped fuel the surprise spike in Q1 CPU shipments.
Shifting over to graphics, shipments of desktop add-in boards (AIBs that use discrete GPUs) dropped 14.8% from the previous quarter. Furthermore, discrete GPUs as a whole (which includes laptop GPUs) declined 12.4% from last quarter. This trend is not unusual as the first quarter is typically flat sequentially for GPUs, though the 10-year average is an 11% decline.
"Although the first quarter was down, it may be a signal the industry is returning to a normal seasonality," said Dr. Jon Peddie, president of Jon Peddie Research. "Microsoft, AMD, and Intel are promoting the AI PC, and Lenovo says their sales are up because of it. AMD and NVIDIA are forecasting an up Q2, so we may have a surprise, and traditional seasonality may be skewed again. However, AMD and NVIDIA’s forecast includes the data center. We expect NVIDIA, with its leading market share, to ship well over 2 million data center GPUs in 2024."
At this point, gamers may be holding off upgrading to see what the GeForce RTX 50 series brings to the table, including the GeForce RTX 5090 (though comparatively speaking, flagship GPUs get outsold by lower tier and more affordable models). Either way, JPR expects that the penetration rate of discrete GPUs in the PC will reach 22% over the next five years (meaning more than one of every five PCs will have a discrete GPU inside).
Source: Jon Peddie Research
Finally, JPR shared a market share breakdown of the GPU market as a whole, though it's less interesting as it takes into account integrated GPUs. As such, Intel dominates with a 66% share of the market, which is up slightly from 65% last quarter and down from 68% a year ago, while NVIDIA is a distant second at 18% and AMD in third at 16%. Obviously Intel isn't setting the world on fire with its discrete Arc graphics cards, but it does dominate CPU shipments.
The interesting thing to note there is that even when accounting for all GPUs (including all platforms and both integrated and discrete), shipments still dropped in the Q1 after three consecutive quarters of growth, according to the latest shipment figures, as outlined in the chart above.
Why does any of this matter? As JPR points out, GPU and CPU shipments reflect the PC market as a whole and are solid indicators of how it is performing (or under performing, in some cases).
