Nvidia and AMD are deluged with orders for PC graphics cards

For the first time in nearly a decade, the sales of PC graphics add-in cards rose in the second quarter. Add-in cards are the discrete, high performance graphics solutions for PCs that are typically used by gamers, workstations, rendering farms, and enterprise segments that need high performance graphics capability. Based on data from Jon Peddie Research, add-in card sales rose by 30.9% sequentially and more 34.9% year over year.

More than $3.6 billion of add-in hardware was sold last quarter, representing an increase of about $850 million over Q1. With only graphics processor providers in this field, NVIDIA and AMD (and their associated board partners), that represents a significant increase in revenue and sell through.

Graphics cards and GPUs from AMD and NVIDIA have seen projected sales increases over the last few months due to the rise and dominance of the cryptocurrency market. Bitcoin and Ethereum miners use the hardware to earn, find, and verify transactions at an accelerated rate. Potential buyers in all market segments have been plagued by graphics card shortages and price hikes in recent months because of the demand for coin mining hardware. We finally have sales numbers to put in context why.

Unit sales of add-in cards of AMD and NVIDIA hardware were 520,000 units higher in Q2 than in Q1, according to JPR. Traditionally, we would expect the standard seasonal drop of 10-20,000 units. This indicates that upwards of 500,000 total units of high-end graphics were sold into the channel and sold for mining specific uses. Approximately one in three graphics cards sold at retail, to OEMs, or business was used for cryptocurrency mining.

Along with these sales numbers comes a market share shift. AMD Radeon graphics cards are better at the cryptocurrency mining workloads than NVIDIA’s GeForce family, and miners targeted the AMD parts first. AMD gained nearly two points of share (27.5% to 29.4%) while NVIDIA dropped from 72.5% to 70.6% quarter to quarter.

The growth in add-in card sales is even more impressive when compared to Q2 drop in unit sales of the desktop PC space of more than 30%.

Though the primary PC segment has declined dramatically, the discrete graphics space rose by 34.9%.

What remains to be seen is if this increase in GPU sales is sustainable for AMD and NVIDIA going forward and if it will lead to more market share shifts in AMD’s favor. We have already seen a leveling of the growth of Ethereum mining but price changes and performance shifts in the graphics landscape have the potential to redirect it at any point. The NVIDIA product line remains better placed for the gaming landscape and AMD has struggled with its release of a new architecture, codenamed Vega. AMD benefits more from the continued strength of coin mining as it hides any potential deficiencies in the gaming segment.