The GPU market has been overheated for months now, with no signs of stopping. Back in 2013 or 2014, when GPU cryptocurrency mining was booming, Nvidia was the primary beneficiary of this trend. AMD cards were incredibly good for these workloads, and that left Nvidia as the only sane alternative. This time, however, Nvidia’s cards have improved in cryptocurrency workloads, which means both companies’ products are under severe price pressure. Now, the hardware marketplace Massdrop is claiming Nvidia has told them to expect GPU prices (See on Amazon) to continue rising through Q3 2018.
There are some caveats to this. As PC Gamer notes, the original note from Massdrop claims, “All new cell phones coming out by Apple and Samsung (and others) last year started using the same memory as graphics cards,” Hutchins writes. “Apple and Samsung are willing to pay more for this memory to make sure they get it first and all of it that they need. This has created a shortage of memory for the much smaller companies like MSI, Gigabyte, Asus, and EVGA to make graphics cards.”
This simply isn’t true, but there may be a grain of truth within it. No, cell phones are not using HBM2 or GDDR5, and they’re not going to use either, given substantially higher power requirements. But it is possible GDDR5 or GDDR5X is under some production pressure as the DRAM manufacturers have moved away from producing other products in favor of DDR4L (low-power DDR4). We discussed this trend and its impact on the PC memory market last month, and there’s no reason to think GDDR5 or HBM2 couldn’t have been impacted as well. It’s also possible that in the shift towards GDDR6, temporary production constraints are also hitting other memory lines.
The same note, from Brian Hutchins, community lead at Massdrop, states that GPU pricing “will continue to go up through Q3 of this year most likely before we start seeing any type of relief.”
That’s an ugly option. Reality could be even worse. When Nvidia first launched Pascal, it ran into severe shortages that continued months after launch. Even if a new GPU family is coming in the not-too-distant future, it could slam face-first into an army of cryptocurrency bots, each dedicated to snapping up cards within seconds of them being available online. Under that kind of pressure, the chances of GPUs being available to ordinary consumers are exceptionally small. The only reason we’re mentioning Nvidia instead of AMD is because AMD isn’t expected to launch a major refresh in the next 6-8 months, while Nvidia’s excellent Pascal architecture is nearly two years old.
If severe shortages aren’t enough, things could get worse than that. Consider what we know about AMD’s and Nvidia’s GPU pricing. Both companies sign contracts with suppliers to sell GPUs at a given price. All of the inflation in GPU prices that’s happened has driven cash into the hands of Newegg and retailers and, to a lesser extent, companies like MSI and Asus (the ODMs). AMD and Nvidia have benefited from being able to sell more cards, but they aren’t necessarily making big money per-GPU. In fact, they probably aren’t.
But leave prices elevated like this, and shareholders are going to start asking when and how both companies will raise their own prices to capture more of the profit. This could result in GPU performance being substantially more expensive in the future, particularly if AMD or Nvidia can exceed the performance of previous generations enough to make the price hike worth it in terms of performance per dollar. The general end of multi-GPU scaling could also feed this trend, because the idea of buying two lower-end / cheaper cards to match the performance of a high-end card won’t apply any longer. Then again, even low-end GPU prices are so inflated now, it might not have mattered anyway.
There’s good reason to take all this with a grain of salt, but it’s not some impossible idea. GPU prices could be stuck in the stratosphere for most of the next year, or even beyond. And of course, at a certain point, that’s going to spell trouble for PC gaming. Who wants to buy a new PC GPU for $800 when you can buy an entire Xbox One X for $500? High-end customers can afford to switch to boutique builders, but everybody else could find themselves priced out of the market.
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