Intel’s graphics card business is struggling, but that may soon change.

Intel’s first generation graphics cards suffered from software issues. Round 2 may be different.

intel (INTC 0.55%) At the end of 2022, we entered the external graphics card market with our mid- to low-priced Arc graphics card lineup. Although the hardware performed well, software issues hampered the launch and persisted for several months. The company took shortcuts with software drivers that act as a bridge between the hardware and the operating system, leading to bugs and poor performance in some games.

Intel has made significant progress in resolving the software issue and has been steadily releasing updates that significantly improve performance across problematic games. However, early software missteps likely turned gamers off. While Intel’s graphics cards are competitive in their price range, sales have been sluggish.

According to Jon Peddie Research’s latest update on the graphics card market, Intel’s market share in the first quarter of 2024 fell to 0% from 4% in the year-ago period. This compares to a share of 12%. AMD 88% share of market leader nvidia.

Battlemage can be the winner

One of the reasons for Intel’s slowing graphics card sales is likely due to the imminent release of the company’s next-generation products. Intel’s upcoming graphics card, codenamed Battlemage, will launch without the software baggage that delayed the company’s founding efforts.

Intel hasn’t revealed much about Battlemage so far, but we’re getting a glimpse of its possibilities as the company unveils its Lunar Lake laptop chips.

Lunar Lake features an integrated graphics chip built on the Xe2 architecture. This is the same architecture that will be shared with Battlemage when it launches. Intel hasn’t confirmed a release date, but late this year or early next year both seem plausible.

Lunar Lake’s graphics offer several major improvements over Meteor Lake’s latest generation graphics, resulting in a 50% increase in performance at the same power level. Given that Lunar Lake is designed for power efficiency above all else, Battlemage discrete graphics cards will see an even bigger performance boost.

Intel’s problem last time wasn’t hardware, so the combination of more powerful hardware and more stable software will create an attractive product lineup.

a lot of competition

Not much is known about the release dates of AMD or Nvidia’s next-generation graphics cards. Both companies have been focusing more on data center GPUs targeting AI workloads, which has turned into a much larger market than gaming GPUs.

Rumors suggest that both Nvidia and AMD’s next-generation graphics cards will be released in the fourth quarter of 2024, but one of them could be released in 2025. While no release date has been set, Intel, Nvidia, and AMD will likely launch their next-generation graphics cards in the fourth quarter of 2024. A few months from each other. Needless to say, competition will be fierce.

Due to most of the software issues, Intel will have a much better chance at gaining meaningful market share this time around. If Battlemage can deliver the big performance boost that Lunar Lake suggests, the company’s second-generation graphics cards could finally break the Nvidia-AMD duopoly.

Timothy Green holds a position at Intel. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool recommends Intel and recommends the following options: Buy Intel for $45 in January 2025, Sell Intel for $35 in August 2024. The Motley Fool has a disclosure policy.

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