AMD Will Likely Announce New Graphics Cards Next Week

While demand for data center graphics processing units (GPUs) that can power artificial intelligence (AI) workloads is absolutely exploding, a different story is playing out in the gaming GPU market.

Intense demand and sky-high prices during the pandemic have given way to muted demand and manufacturers' suggested retail prices (MSRPs) that mean something again. Jon Peddie Research reported that graphics card unit shipments, the vast majority of which are PC graphics cards, tumbled 38.2% year over year in the first quarter.

Market share losses

While market leader Nvidia and perennial runner-up Advanced Micro Devices (AMD 1.14%) are suffering declines in sales of gaming graphics cards, AMD is feeling more pain. The company managed a unit market share of 12% in the first quarter, down from 24% in the prior year period. AMD is winning a smaller piece of a smaller pie.

AMD's last-gen graphics cards have fallen in price, making them compelling options for gamers, particularly at the lower end of the market. The RX 6600, for example, launched at $329 two years ago but now sells for around $210.

The problem, though, is that these cards are old, and gamers must weigh price against features. AMD's last-gen graphics cards are poor performers when ray tracing is enabled, and they lack some of the fancy features, like the AI-based upscaling that Nvidia's products bring to the table.

AMD has been slow to launch new graphics cards in its RX 7000 family, likely because demand for graphics cards has declined so sharply. At the moment, there are the high-end RX 7900 XTX and RX 7900 XT and the mid-range RX 7600. The RX 7600, priced at $269, competes with AMD's discounted last-gen cards, and the budget card still loses badly in ray-tracing performance, even coming up short of Intel's cheaper Arc A750.

Filling out the lineup

For gamers looking to spend more than $300 but less than a small fortune on a new graphics card, the choice is between Nvidia's latest mid-range graphics cards and AMD's last-gen graphics cards. Nvidia's RTX 4060 sells for $300, while its RTX 4060 Ti sells for $399.

AMD will likely try to change this situation next week. We already know multiple new graphics cards are coming sometime in the third quarter. During AMD's last earnings call, CEO Lisa Su mentioned that new "enthusiast-class" RX 7000 graphics cards are set to arrive in the third quarter.

In a tweet on Wednesday, AMD's graphics senior vice president (SVP) Scott Herkelman tweeted that there would be major product announcements at the Gamescom event in Germany next week. This is almost certain to include RX 7000 graphics cards that fall in between the RX 7600 and AMD's higher-end products.

AMD has been relying on its last-gen graphics cards to compete with Nvidia across a wide range of price points. The company needs new products that are viable alternatives to Nvidia's RTX 4060, RTX 4060 Ti, and RTX 4070 if it wants to win back some of the market share it's lost.

It's unclear how aggressive AMD will be with this launch, but we do know that the company doesn't expect any benefit in the third quarter. AMD expects its gaming segment to decline both year over year and sequentially in the third quarter. This may be because the launch date will be late in the quarter or because AMD doesn't expect these new cards to be big sellers in a down market.

Either way, AMD will have a battle on its hands as it tries to claw back the market share it's lost over the past year.