VGA manufacturers have accumulated suffocating stocks

If your desire to buy doesn’t accelerate, GeForce RTX 30 series VGAs will be delivered next summer as well.

The VGA market has experienced strange extremes in recent years. Last year, the biggest problem was that hardly any graphic controllers were in stores, and now we are at the point where the manufacturers’ warehouses are full. These two extremes are not good for the market, although obviously buyers are more happy if the availability of hardware is constant and the prices go down.

At the same time, it is not good for VGA manufacturers if they cannot sell the manufactured sets quickly enough, and they are now facing this problem. They simply can’t commit to a significant price reduction, because they don’t get the GPUs cheap enough from the suppliers, and the production costs of the components haven’t been or are being helped by China’s zero-Covid policy.

Of course, AMD and NVIDIA are trying to help, they typically give different free games in new promotions next to the hardware in order to speed up warehouse sweeps, but they cannot achieve such a breakthrough, although even a small boost should be appreciated these days.

According to our information, AMD still has a significant inventory of GPUs codenamed Navi 21 and 22 that they want to run. It is true that the amount of these has been significantly reduced in recent months, but this process is slower on the part of the manufacturing partners, and taking into account the current demand, it may even take until spring until the amount of VGAs based on the affected chips in the warehouses is emptied to an optimal level. The only good news is that AMD has regrouped its orders at TSMC, so part of the 6 and 7 nm wafers originally dedicated to GPUs will be used for other chips, meaning that a significant supply can no longer be expected for the Navi 21 and 22 GPUs. from

NVIDIA’s situation is a bit more complicated because their accumulated stocks are several orders of magnitude larger. We know that they are currently sitting on billions of dollars of unsold GPUs, and that their partners also have a few pre-packaged VGAs waiting for customers. This is a problem because their entire sales chain is plugged. It doesn’t make sense for manufacturers to buy large quantities of GPUs from NVIDIA until they cash out a good portion of the VGAs already produced in their warehouses. However, this process is very difficult these days, because cheaper prices would be needed to increase demand, but all companies are currently waiting for NVIDIA to take over their losses due to the price reduction necessary to boost sales. Those involved have good reason to trust this, as they know that NVIDIA’s warehouses are also full, and that the Greens have contracts with TSMC and Samsung for significant capacity. Ergo, at the moment, their inventory would not only decrease, but actually increase, moreover, they cannot manufacture alternative hardware using Samsung’s 8 nm process, so they have to order GPUs based on the Ampere architecture from there, since the wafers required for this are already reserved.

If the current demand does not increase, then emptying the warehouses to an optimal level will not be possible even by the autumn of next year, and almost next summer VGA manufacturers will be forced to serve the market mostly with GeForce RTX 30 series VGAs. because it is in stock, and the accumulated stock has to be passed before the new GPU generation is made available in larger quantities.

By the way, the actors of the segment in question expected that the crypto market would explode over time, so this did not come as a surprise to manufacturing partners, but the fact that the change came too suddenly, and the fact that potential buyers did not sufficiently reject the used hardware market. Regarding the latter aspect, VGA manufacturers expected that potential customers would rather buy new VGAs instead of used ones of uncertain origin, but this was nowhere near what happened, which led to the now suffocating accumulation of stocks.

What is good news for customers is that the market players must definitely react to this. Perhaps they will wait until the holiday season to see if the demand for VGAs, especially GeForce RTX 30 series solutions, will increase, and as a result stocks will dwindle more, but we have to react next year.