"Their relative position versus Nvidia has improved compared to six months ago, " says Dean McCarron, president of chip tracker Mercury Research. amd is also building ati's graphics capabilities into a new CPU that may see the light of day in the second half of 2009.

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The Santa Clara, Calif. firm has 62% of the market for desktop PC graphics cards, up from 57% a year ago, according to Mercury Research.

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"Research firm Jon Peddie Research pegged Nvidia's Q4 2007 share of the add-in graphics board market at 71% of all units shipped, up from 64% in the prior quarter, " he says.

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