Intel retained its lead in PC graphics chips during the first three months of the year, although the company faced increased competition from nVidia and ATI, according to research figures released Friday.

ATI and nVidia both provide graphics chips to the games-console industry and have supplied them to Apple in the past. The two firms have turned out increasingly sophisticated and in-demand graphics products for desktop and notebook PCs in recent years. Their main advantage is their work in developing graphics for the latest computer-generated movies and electronic games, and they're catching a rising wave of users who demand better graphics quality for photos, games and video.

ATI is challenging Intel in the notebook segment in particular, according to new figures from Jon Peddie Research.

Overall, Intel maintained its global dominance in PC graphics with 39.1 per cent of the market by volume. ATI followed with 28.7 per cent and nVidia took third place with 19 per cent.

Shipments of PC graphics chips expanded 25 per cent from the same time last year, while laptop graphics rose 31 per cent, according to the industry researcher. Approximately 74.9 million PC graphics devices, including chips and chipsets, were shipped from major suppliers during the first quarter of this year.