According to the latest report, a sharp drop in graphics card prices could herald a swift end to the global chip crisis, Reuters, an issue that will be at the heart of companies reporting results this week.
Like Intel, Qualcomm and others have reported, investors will weigh the impact on the microchip supply chain from factors such as the impact of inflation on consumer spending, the outbreak in China, and the Russian-Ukrainian conflict.
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Recently, Baird analysts downgraded GPU maker Nvidia to “neutral” after GPU prices fell. Shares of Nvidia are down about 31% this year, rival AMD is down about 37%, and the Philadelphia SE Semiconductor Index is down about 22%. Both companies declined to comment.
Moreover, GPUs are still being sold at a premium, but to a lesser extent. Susquehanna analyst Christopher Rolland said earlier this month that the manufacturer’s suggested retail price, or a markup to the suggested retail price, has fallen from 77% to 41%.
3DCenter reports that AMD’s Radeon RX6000 and Nvidia’s GeForce RTX30 (both graphics cards for gaming) are priced at 80% above MSRP, and both cards were priced above MSRP earlier this year by less than 20%.
However, a recent Reuters investigation found that Nvidia’s GeForce graphics cards are still mostly out of stock at retailers like Best Buy and Newegg Commerce.
Baird senior analyst Tristan Gerra told Reuters that if electronics companies buying chips expected prices to fall further, they would cut large inventories and further reduce purchases, putting pressure on prices.
” It’s a vicious circle,” Gerra said. Demand for graphics processors could also decline, analysts said, as the cryptocurrency, Ethereum is expected to change the way it operates in late summer, which will reduce the need for graphics chips in systems currently used to mine cryptocurrencies.
There is debate over whether the low prices will spread to the entire chip industry. Weak demand in the PC and smartphone markets has also led to lower prices for cutting-edge processors such as CPUs and other chips such as some memory chips, according to Summit Insights Group analyst kingai Chan. He expects some other chips made for older models to face excess capacity in the second half of the year.
“Between all the chip fab investment and all the bullish sentiment, we don’t think the shortage will end until 2023 or 2024,” said Dan Hutcheson of TechInsights. The oversupply will go beyond graphics chips.
