EVGA does not release next-generation VGAs

The head of the company partly blames the market and partly blames NVIDIA.

EVGA recently made a serious and shocking announcement on its own forum, which revealed that they are not planning to use next-generation VGAs, that is, they will not present any GeForce RTX 40 series models. Regardless, the company will maintain its current product range, and product support will also be provided, and they have accumulated enough stock for warranty administration.

By the way, the news feed was started by the video embedded above from the YouTube channel called Gamers Nexus, which detailed that EVGA had already made its decision, and that their partner NVIDIA was also informed about it.

Among the reasons, two factors are worth investigating. The main reason may be the extremely low profit margin available with VGAs today, which according to Jon Peddie Research has fallen to only around 5% in 2022. Meanwhile, for example, NVIDIA, which largely serves the market, works with a very high profit margin of over 60%. In addition to the already spectacular difference, the burden on the partners who manufacture VGAs is also not small, since they deal with the warranty, the design of individual printed circuits, and partly also with product support. The latter includes certain tuning software, although their maintenance costs are probably the least proportional.

In the case of EVGA, the burden is slightly higher, because the company works with a 48-hour warranty and they also have customer service that is always available. This is one of the reasons why they can control roughly 40% of the VGA market in the USA, and they also have a bigger share in the western part of Europe. Knowing this, EVGA could rightfully expect NVIDIA to treat them as a priority partner, which was typical before, but now this relationship has been reduced to a simple customer-seller relationship. This certainly offended Andrew Han, the company’s founder and chief executive, and may have played a role in his decision to quit.

While EVGA’s move may seem illogical considering that VGAs make up roughly 70-80% of their overall business, it’s actually a very thoughtful change. This year’s profit margin was so minimal that it practically gave no room to react to market trends. Certain hardware can only be sold at a loss, especially the more powerful and more expensive GeForces. The head of the company probably also sees that this situation will not improve during the next generation either, so there is no point in participating in the market.

So the company’s revenue will surely decrease significantly, but at the same time their profits may improve, since EVGA also manufactures input devices, expansion cards, CPU coolers, motherboards and power supplies. The latter two areas are what bring the company even more significant income, and they will probably be focused on in the future.

In terms of power supplies, they are already starting from a good position, as their previous solutions have been popular at the box office, while the competition on the motherboard market is high, but it is a fairly profitable area. Here, EVGA already serves solutions from Intel and AMD, although for now only in terms of the top category. They can even start to expand the latter downwards, since after exiting the VGA market, a lot of their engineering capacity will be freed up, which could be used very well in the design of motherboards.

Finally, the question may arise as to whether the company wants to manufacture VGAs based on AMD or Intel graphics controllers. Well, for the time being, the company rejects this, which means that the VGA market is generally frozen.