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ATI/Nvidia Price War Takes Its Toll, Intel Seen As Savior


Taipei (Taiwan) - Taiwanese companies are growing increasingly concerned over Nvidia’s and ATI’s market strategies. Both companies seemed to be more interested in making their partners stamp Nvidia and ATI stickers on their boxes and industry sources we talked to aren’t exactly happy with these two companies. It appears many are already hoping that Intel’s Larrabee will solve their problems.

Larrabee, in fact could become a major hit right out of the gate when it launches in the 2010 time frame, at least if the current market trend continues. TG Daily had a chance to chat with numerous graphics card companies, which combined account for more than 70% of ATI and Nvidia boards on the market, and the general view appears to be the same.

The CEO of one of the largest manufacturers told us that he happily would ditch AMD and Nvidia completely and go for Larrabee alone since he would be able to secure his company’s future with Intel’s design policy.

The apparent problem is a cutthroat price war between Nvidia and ATI pushing add-in-board (AIB) companies into a margin of 2% or less. Most of companies are even believed to lose money with every card you buy, since some ATI and Nvidia parts have a negative margin.

Why negative? Because both AMD and Nvidia push partners to keep the prices as low as possible, and in a lot of cases this means there is no money left for research and development. In the end, AIB vendors may be forced to buy boards from ATI and Nvidia. The result may be that a company is caught in a downward spiral. According to our sources in Taiwan, two current graphics card manufacturers may actually be on the verge of bankruptcy because of this policy.

Some manufacturers suggested that ATI and Nvidia should just reestablish their own brands (Built by ATI, 3dfx) and sell the boards directly to the consumer, but right now, it appears that there is not a lot of motivation for this change. The trend is believed to be clear: Smaller companies will fold and larger players will go somewhere else where money can be made.

If Larrabee is as good as Intel claims it is, that may be good news for graphics cards manufacturers and Intel, since our sources indicated that top tier vendors will happily jump on board. And even if it is not that great, Intel may still have an easy play.