Nvidia has spent the past year and a half targeting ATI's desktop business, which accounts for the majority of the graphics chips sold to Dell Computer, Compaq Computer and other big makers of personal computers. Third-quarter data on industry sales will show Nvidia is the leading supplier of those products for the first time, analysts said.
"Nvidia has been able to offer better price and performance," said Dundee Securities analyst David Hodgson, who rates Nvidia "buy" and ATI "hold." "That means a lot of (ATI's) bread-and-butter business is being won away by Nvidia."
The change underscores how ATI is slipping in the $1.8 billion market for graphics chips.
By the second quarter, ATI's share of the desktop market, excluding chipsets, had dropped to 36 percent from 39 percent, according to Mercury Research. Nvidia's share surged to 35 percent from 12 percent in that period. Chipsets can include memory chips and microprocessors and are considered another segment of the graphics-chip market.
Desktop PCs represent about half of all graphics chips sold. The rest are found in laptop computers, game consoles and TV set-top boxes.
Since early last year, Nvidia has introduced an improved chip every six months. ATI hasn't been as prolific. By the time it started selling its Radeon line in July, the company had taken almost two years to come out with a chip with a similar jump in quality.
