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John G. Spooner

Staff Writer, CNET

ATI Technologies became the top maker of standalone graphics chips in 2004.

The chipmaker accounted for more than half of the world’s shipments of standalone, or discrete, graphics chips during 2004, ATI said Thursday in a statement, citing market share figures from Mercury Research.

“ATI already had a majority share of the notebook market, and it greatly expanded its presence in the desktop market in 2004,” said Dean McCarron, principal analyst at Mercury Research. “The net effect was (ATI) shipped the majority of standalone graphics chips” in 2004.

The PC graphics market boils down to two major categories. Overall, Intel is the dominant player. The chipmaker builds graphics processors into its PC chipsets, groups of chips responsible for routing data inside a PC. Because of the huge number of chipsets it sells with the built-in graphics, Intel shipped the overall greatest number of PC graphics processors in 2004, McCarron said.

ATI, Nvidia and a host of others, including Via Technologies and Silicon Integrated Systems, also sell chipsets with built-in graphics.

However, when it comes to standalone graphics chips–the other main category in PC graphics–ATI had the greatest number of shipments, according to Mercury Research. Standalone chips for desktops and notebooks are either soldered directly to a PC’s motherboard or paired with memory on an add-in graphics card. Intel does not sell standalone graphics chips, leaving that market to ATI, Nvidia and several other smaller companies, such as XGI Technology.

McCarron, who declined to provide exact figures from the Mercury Research report, said ATI finished 2004 by a small margin ahead of Nvidia, which shipped the most standalone graphics chips in 2003.

Although the gap between ATI’s and Nvidia’s standalone graphics chip shipments in 2004 was statistically small, it does mark a major accomplishment for ATI in general and for its desktop PC graphics chip business in particular, McCarron said.

A source familiar with Mercury Research’s report said it showed Intel leading the overall market in the fourth quarter with 40 percent of graphics chip shipments.

The source did not have the year-end figures for 2004 from the report.

The report showed ATI in second place with 27 percent of fourth-quarter shipments and Nvidia as third with 18 percent, the source said.

When measuring fourth-quarter shipments of only standalone graphics chips, ATI was first with 55 percent of the market and Nvidia was second with 41 percent, the source said the report showed.

McCarron declined to comment on the numbers.