Since the Coronavirus pandemic brought the collective global machine to a screeching halt, manufacturing of various commodities has taken a back seat while demand has skyrocketed. Graphics Cards are no different. More people working from and staying at home means more demand for graphics cards, CPU, and other computer-related products. Factories and plants worldwide have ramped up to their total capacity, yet gamers can hardly find products in stock and at MSRP. Why is it so? Also, when will the Graphics Card prices drop? While no definitive answer is possible at the present moment, we have included as much information as we could gather from various sources.
However, before we move on to discussing a probable timeline for GPU prices to normalize, we must understand what caused the current situation in the first place. As opposed to popular belief, the current lack of GPUs isn’t driven solely by miners buying up all the stock. It is a rather complicated scenario where multiple factors have contributed to an unfortunate outcome- shortage of Graphics Cards for gamers and professionals alike.
What caused the GPU shortage?
GPU companies such as Nvidia and AMD use Samsung and TSMC’s manufacturing process in their products. Generally, companies such as TSMC, Samsung, or GlobalFoundries allot a specific fab capacity for AMD and Nvidia to fulfill a forecasted demand. The factories where fab companies manufacture chips also have a calculated overhead to compensate for higher-than-expected demand. As Linus from LinusTechTips pointed out, these factories are already operating at their total production capacity. Yet, the sheer number of people who have switched to working from home on a global scale and suddenly find their old and neglected systems insufficiently capable is so high that the supply can’t catch up even at said production capacity with the demand.
The value of Cryptocurrencies such as Bitcoin and Ethereum are also at an all-time high. At the same time, both Nvidia and AMD just announced the RTX 30 series and RX 6000 series, respectively. The new lineup of GPUs from both companies offers a phenomenal improvement in gaming and hashing performance compared to last-gen GTX 20 and RX 5000 series GPUs. With the value of crypto at an upward trajectory, the new GPUs’ fantastic hash rates and relative power efficiency are just what the miners need. On the other hand, for gamers mostly on 10th-gen GTX cards such as the GTX 1080, the incredible performance improvement guaranteed by the GTX 30 and RX 6000 series cards makes the same rather lucrative.
Thus, both gamers and miners have significantly been incentivized to upgrade their existing systems, while a significant number of professionals now suddenly need to upgrade their systems as well. Combine all this with the limited staff fab factories have to operate with due to COVID, and the picture becomes clear, as was mentioned earlier. The current lack of supply could be characterized by multiple factors, which have unfortunately culminated into a situation where retailers and scalpers alike prey upon the gamers by charging exorbitant prices, often two-three times MSRP for computer hardware. A blatant attempt at cashing in during a crisis the entire world has joined forces to fight.
Are GPUs card prices going to drop?
Short answer- not any time soon. MSI chairman Joseph Hsu has stated that supply for GPUs and other in-demand hardware components would continue to drop. The said lack is evident from the drop in chip supply from Nvidia and AMD to these companies, which means that prices of GPUs would likely increase even before retailers and scalpers charge their weight in gold. However, all of this is assuming you can find some stock of these products in the first place. Many shady retailers and scalpers alike are likely to use bots every time there is fresh stock available to scoop up the same instantly. Thus, if you can use those few milli-seconds to your advantage and lay your hands on a new GPU anywhere close to MSRP, consider yourself to be extremely lucky.
From all the reports we have been able to find, the situation is not likely to alleviate anytime during 2021. Instead, most forecasts show that prices are set to increase instead of the reverse. Our opinion remains that GPU prices would normalize, optimistically, by Q3, 2022, or Q1, 2023. However, with each passing day, we find more and more evidence to discount our hopes for a better situation during 2022, making 2023 seem like a far more reasonable bet, considering the present scenario.
