ATI Technologies yesterday issued a revised earnings estimate for its second fiscal quarter, warning its ($230 million) income would fall below its original estimates.

Until recently, ATI was Apple's supplier of choice for graphics cards. Its position is under attack as graphics-giant Nvidia moves into the fray. ATI does not attribute its loss in projected revenues to its relationship with Apple, for which it continues to supply graphics cards for the majority of machines, including iMacs.

ATI attributes the fall in predicted revenues to weak PC sales and high manufacturing costs – ironically, considering the decline in memory prices, ATI attributes some of this to higher costs for memory. The company expects to deliver a net loss of between eleven and thirteen cents per share when it releases its second-quarter earnings on March 28.

Terry Nickerson, vice president and chief financial officer of ATI said: "We expect to see an improvement in our business outlook by the end of the calendar year as new products are introduced, and assuming the PC market strengthens."