# The Collapse of the 1990s Graphics Chip Industry How 47 competing GPU makers dwindled into a dominant Nvidia-AMD duopoly. - **Source:** [Rock Paper Shotgun](https://www.rockpapershotgun.com) - **Published:** 2026-11-11 - **Topic:** [Business](https://brifing.si/c/business) - **Original article:** - **On Brifing:** https://brifing.si/s/571e5c3a-7531-4947-94bc-4d5b5092078d ## The 1998 Market Glut In 1998, the PC graphics market was incredibly crowded, featuring 47 different companies designing or selling 3D hardware. This era saw high consumer demand, with graphics card shipments reaching 130 million units, actually outselling the total number of PCs sold. Despite this volume, the industry was unsustainable due to intense competition. ## Rapid Iteration Requirements The industry shifted from rewarding the fastest chip to favoring companies that could iterate the quickest. Nvidia successfully reorganized its operations to release new chips every six months, matching the spring and fall release schedules of PC manufacturers. Many incumbents failed to maintain this grueling pace, leading to their rapid market exit. ## The 3dfx Strategic Failure 3dfx, once the leader in 3D gaming, collapsed after a series of critical errors. The company attempted to move into card manufacturing by acquiring STB Systems for $141 million, which alienated its existing partners like Creative and Diamond. Simultaneously, its proprietary Glide interface lost relevance as Microsoft’s Direct3D became the industry standard. ## Intel’s Market Disruption Intel entered the graphics space in 1998 with the i740 chip, pressuring smaller firms like Cirrus Logic and Oak. By 2001, Intel shifted to integrated graphics, capturing 55% of the market. This move decimated the low-end standalone chip sector, forcing companies like S3 to sell their graphics divisions to survive the pressure. ## Consolidation Through Acquisition As the dot-com bubble burst, venture funding for graphics startups evaporated, leading to widespread industry consolidation. ATI aggressively acquired engineering talent from failing rivals, including Tseng Labs and ArtX, for hundreds of millions of dollars. These strategic hires provided the intellectual property necessary to maintain a competitive edge against the rising Nvidia. ## The Rise of the Duopoly By the early 2000s, only Nvidia and ATI remained as major players. ATI was eventually acquired by AMD in 2006 for $5.4 billion, though the integration proved financially difficult. AMD struggled with debt and reduced R&D budgets, allowing Nvidia to pull ahead significantly in performance, particularly with its specialized ray tracing hardware. ## Intel’s Failed Re-entry Intel attempted to break the Nvidia-AMD duopoly with its Arc series, launching the A770 in 2022. Despite improvements in driver stability and performance, Intel struggled to gain significant market share. Recent reports suggest the company may be pivoting away from gaming cards to focus its resources on more profitable AI-related hardware. ## Current Market Dominance As of early 2025, Nvidia controls approximately 90% of the discrete graphics card market, shipping millions of units quarterly. While the company remains the primary supplier for gamers, the bulk of its massive revenue is now generated through data centers. This shift has left the gaming segment with fewer competitive hardware choices. ## Escalating Consumer Costs The lack of meaningful competition has led to significant price increases for PC gamers over the last several years. The RTX 4080 launched at $1,199 in 2022, nearly doubling the price of its predecessor. Ongoing supply chain constraints and a focus on AI-driven hardware have further pushed consumer prices to historic highs. ## The Legacy of Consolidation The transition from 47 manufacturers to a two-player market highlights the extreme capital requirements of modern semiconductor design. Success now depends on massive R&D spending and software ecosystem control rather than just raw performance. For the average PC gamer, this consolidation has resulted in a stagnant market with limited affordable options. ## Sources covering this story - https://www.rockpapershotgun.com/there-were-47-graphics-chip-makers-in-1998-where-did-they-all-go — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._