Nvidia confirmed that demand for integrated graphics chipsets is hindering its discrete chip business when it posted "disappointing" Q2 results yesterday.

The graphics specialist saw quarterly income plunge year on year as a result of falling revenues. Sales for the three months to 25 July 2004 - fiscal year 2005 - totalled $456.1m, down less than a single percentage point $459.8m reported for the year-ago quarter.

Speaking after the results were posted, Nvidia's CEO, Jen-Hsun Huang, admitted that desktop graphic chip sales fell 17 per cent during the period - far further than the company had anticipated - a result of falling prices and much-improved performance from PC chipsets with integrated graphics engines.

Intel is the world's largest provider of such chipsets and, as a result, the world's biggest graphics chip supplier. The chip giant was also lambasted by Nvidia for shipping its latest PC chipsets, the i915 'Grantsdale' series and the i925 'Alderwood' family, late. That "froze" the high-end graphics market as buyers put off purchasing new, PCI Express-based boards until the arrival of these PCI Express-enabled chipsets.

Looking ahead, Nvidia said it expects Q3 revenues to rise 3-10 per cent sequentially. ®