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Advanced Micro Devices Inc. (AMD - Analyst Report) recently launched its latest notebook graphics processing units (GPUs), AMD Radeon™ HD 8970M. The GPUs are specially designed for ultrathin notebooks or ultrabooks as well as desktops.

AMD’s GPUs are compatible with Microsoft’s (MSFT - Analyst Report) Windows 8 platforms, which give it the desired speed to provide optimal graphics solutions for notebooks and desktops.

The AMD Radeon HD 8970M graphics processing unit (GPU) has been designed for users who need superior performance for gaming.  Powered by AMD Graphics Core Next (GCN) architecture, the new graphics card delivers high speed and consumes less power.

Consumers prefer an improved interface with rich graphics for gaming, which require good battery life to power multimedia applications on notebooks. Thus, AMD’s revenues stand to benefit significantly if the latest GPU can cater to the rising demand of the users.

As per research conducted by Jon Peddie Research (JPR), for the fourth quarter of fiscal 2012, total discrete GPUs (desktop and notebook) were down 9.7% year over year. Infact, all major players witnessed a decline in their overall PC graphics shipments, with NVIDIA’s (NVDA - Analyst Report) graphics shipments declining the most by 16.7%, followed by AMD and Intel (INTC - Analyst Report).

As per IDC, first-quarter shipments of PCs fell 14% worldwide from last year, the steepest quarterly drop since 1994. The market has suffered the onslaught of mobile devices including tablets, convertibles and ultrabooks and going by consumer demand trends, this cannibalization should continue.

Despite the popularity of tablets and smartphones, JPR predicts that PC graphics will grow at a compound annual growth rate (CAGR) of 3.2% from 2012 to 2016 with total shipments of graphics chips to be 549 million units in 2016.

AMD delivered decent first quarter 2013 results. The company’s Computing Solutions segment was down sequentially but the Graphics business did well in the last quarter due to accelerating desktop GPU channel sales, game console royalty sales and workstation graphic sales.

Although the decline in PC demand may affect results in the upcoming quarter, the release of new products, increased game console wins, new offerings and good execution from the company can help win new customers.

Currently, AMD holds a Zacks Rank #3 (Hold).

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