A report released today by market research firm Dataquest predicts double-digit growth this year for the international PC graphics and audio processors.
Overall, the report forecasts PC audio chip shipments growing 31 percent this year, increasing to 84.3 million units from 64 million units in 1996. Worldwide PC graphics chips are forecast to grow 19 percent this year, with shipments reaching 84.3 million units, up from 70.9 million units in 1996.
"Look for high levels of competition to force many of the current vendors out of this business over the next two years," said Geoff Ballew, senior industry analyst in Dataquest's Semiconductor Applications Markets program.
Some of the competition may come from chip giant Intel, which has been eyeing the multimedia processor market lately. One of Intel's most feared weapons will be its first graphics chip, called the Intel740, expected later this year.
Ballew, doesn't see Intel as a sure bet in this market, however. Intel's graphics chip is already late, and other companies are already producing very good chips at low prices, he said.
Intel's emphasis on multimedia is less an effort to conquer new markets than a recognition of the increasing focus in computing on multimedia applications, Ballew noted. (Intel is an investor in CNET: The Computer Network.)
Also coming in the graphics market is Intel's Accelerated Graphics Port technology, which should arrive later this year. AGP is Intel's next-generation high-performance, low-cost 3D technology. Many graphics manufactures have already designed chips to fit the new Intel graphics system, according to Ballew, and in terms of moving graphics data back and forth AGP should initially be twice as fast as PCI.
On the audio chip front, Dataquest estimates that about 40 percent of the PCs shipped last year included basic audio features, and virtually all PCs will include such capabilities in the year 2001.
As shipments increase, Dataquest forecasts PCI-based audio cards to surpass older, traditional "ISA" cards--found in almost all PCs today--and emerge as the next bus interface for PC audio.
PCI audio cards have only recently begun to appear in large quantities. The trend will be important for consumers because of the better sound quality this will allow in games and multimedia.
So for now, Ballew said, companies that make those chips will do well. "As along as they can show better performance, they'll have a market," he said.