With the most uneventful year in graphics behind us, many punters were expecting a very interesting start to 2012, courtesy of new 28nm chips.

However, not all is great and graphics cards makers are starting to express concerns about upcoming chips and the transition to TSMCs 28nm process. Both AMD and Nvidia are scheduled to launch their first 28nm parts within a couple of months, but even now AIBs have serious reservations about yield rates, which could translate to pricier chips. The transition to 40nm in 2009 was pretty slow and painful, so apparently it still weighs heavily on the minds of AIB execs.

The other source of concern is weakening demand for discrete graphics and decreasing margins. Demand for discrete graphics is declining and the drop in mid-range and entry-level markets is particularly alarming. Many consumers and system integrators are relying on integrated graphics in ever increasing numbers, and who could blame them? Integrated graphics have come a long was over the past couple of years and the vast majority of consumers simply don’t need low-end discrete cards, as they don’t bring much more to the table.

Both AMD and Nvidia are expected to launch their first 28nm products by the end of the year, but in reality volume availability isn’t expected until early 2012 and it still remains to be seen how long it will take AMD and Nvidia to transition to 28nm across the board.

Digitimes claims some vendors will choose to play it safe and watch how the market develops before they make any decisions, which means the transition could be even slower than expected. It’s quite understandable, AIBs don’t want to get burned, especially not in a situation when most of them are struggling to keep up with low margins and slow demand anyway.

More here.