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ATI strengthens graphics lead

The company continues to stay strong as the top supplier of speedy graphics chips to the computer industry.

ATI Technologies continued to strengthen its lead as the top supplier of speedy graphics chips to the computer industry in the third quarter of 1998, according to a report..

ATI's cumulative desktop market share for the third quarter was 26 percent, vs. 15 percent a year earlier, according to Mercury Research. ATI has maintained its leadership in the graphics field by extending its technology to the low-cost computer and laptop segments, a strategy the company intends to continue, it says.

With notebook PCs, Toronto-based ATI had a 10 percent market share in the quarter, according to the report, and was the fourth largest player, vs. only entry-level penetration a year earlier.

After the main microprocessor, graphics chips are the most critical piece of silicon in PCs today. These chips handle the manipulation of images users see on their computer screens and are increasingly important as computer interfaces and 3D games become more sophisticated and demanding.

A number of factors have pushed ATI to the top, according to analysts. S3, the previous graphics chip leader, missed out on an important new round of products last year and ATI is enjoying the fruits of that mistake. Moreover, Intel's much-hyped Intel740 3D chip was late to the game.

But most importantly, ATI has a great graphics chip in the 3D RagePro Turbo, analysts say.

PC vendors are using the 3D RagePro in droves, to the point where it's hard to find a consumer PC without it.

Recently, S3 is making somewhat of a comeback with its 3D Virge chip, used by Compaq in its top-of-the-line notebooks.

ATI made a key acquisition in October when it bought Chromatic, a once promising media processor venture for $67 million. ATI will use the new company to move into the market for integrated chips for set-top boxes and other intelligent devices.