Why are GPUs so Expensive? The cause of the GPU crisis, and how it could end

Trending

  • How to Mouse out of full screen games without Alt + Tab with Actual Multiple Monitors

  • 7 Reasons Why GTA: San Andreas Is Still The Best

  • 10 Jaw-Dropping Gaming Setups That’ll Make You JEALOUS

  • Cyberpunk 2077 gets delayed again, Keanu Reeves Arrives In November

Video

Why are some CPUs so expensive nowadays? – Quora

www.quora.com

Many CPUs are very expensive. That is true. The main reason is production cost. Much of the production of CPUs involves extremely expensive, highly technical and brand new machinery. You may hear different terms like 5 nano metre and 14 Nanometer….

Seen 185 times

More Reviews ››

Less Expensive GPUs Are Hiding In External Graphics Docks

www.tomshardware.com

Reselling the dock after you load it up with a more affordable GPU could yield more interest than selling it without one, too. Regardless, it wouldn’t surprise us if you end up holding onto the …

Seen 198 times

More Reviews ››

Taxes

The aforementioned tax is a 25% tariff on imports from China, and it affects essentially all major hardware manufacturers. This means an increased total cost for Zotac, EVGA, Gigabyte, XFX, PNY, and other major brands, and most of them are passing on at least some of the cost to consumers.

Essentially, even if no other factors were at play we’d still be paying up to 25% more for graphics cards.

This tariff hit consumers hard, but in conjunction with all-time-high cryptocurrency prices it created the perfect storm.

Is the Titan RTX better than the 2080 TI?

Not only does Titan RTX sport more CUDA cores than GeForce RTX 2080 Ti, it also offers a higher GPU Boost clock rating (1,770 MHz vs. 1,635 MHz). As such, its peak single-precision rate increases to 16.3 TFLOPS.

ADVERTISEMENT

Covid-19

The ongoing Covid-19 pandemic changed the way the world worked.

Both in the abstract, in that it changed social norms, showcased dysfunctional systems, and grew and tore down entire industries. But also in the concrete sense: the pandemic fundamentally changed how people do work in the 21st century.

Offices closed indefinitely, remote work became the norm, and nearly 3% of the workforce revolted over low pay and strict hours, in what is being called “The Great Resignation.” That meant that more people were zooming, and simply using computers than ever before.  

It was that sharp increase in the demand that whiplashed the entire industry into shortage. According to SIA, global semiconductor sales decreased roughly $56 billion in 2019, nearly 12%. Then the pandemic hit.

Initially, many including an April 2020 study by McKinsey & Company, projected that semiconductor sales would plummet in 2020, decreasing by up to 15% annually. That did not happen. Instead, sales of semiconductors increased to never-before-seen levels.

From October 2020 to October 2021 alone, global semiconductor sales increased 24%, more than $100 billion. Those numbers were driven by remote working, home improvements, medical technology, and the myriad of other pandemic surges in tech consumption.

Covid-19 and global supply chain issues pushed the threat of semiconductor shortage into a global upheaval.  

Stock Trackers and Lotteries

Opposite of scalpers punishing consumers for profit are communities like Newegg’s Shuffle. Every day, Newegg sells out of stock or high-demand products, often graphics cards, by allowing users to enter a lottery to buy those products at their original price.

Unfortunately, because of demand, tens of thousands of people can enter lotteries every day for these products, leaving your chances slim.  

Other communities like the StockDrops server on Discord help consumers know when products come back into stock.  Similar communities have popped up across YouTube, Twitch, and Twitter.

In order to avoid bots, many have turned to physical stores like Best Buy’s supply drops to find graphics cards. Otherwise, there are plugins like Distill and Hotstock that can help you know when products come into stock quickly in order to get a jump on buying one.  

Will RAM prices go down 2021?

According to the fresh report by DigiTimes (which is based on an article from Seeking Alpha), contract RAM prices are estimated to be in line for 10% to 20% price jumps in Q3 of 2021, going by whispers from industry sources.

5. Tariffs slam PC parts

Everything we’ve talked about so far would already be enough to send graphics card prices skyrocketing, but things got much worse once the calendar flipped to 2021. In January, significant new tariffs on Chinese products went into effect for many PC parts, exacerbating the crunch.

Asus served as the canary in the coal mine, informing its fans of impending price increases in early January. “Our new MSRP reflects increases in cost for components, operating costs, and logistical activities plus a continuation of import tariffs,” Asus technical marketing manager Juan Jose Guerrero III said. Prices of Asus graphics cards immediately jumped by $150 to $200 per GPU.

Asus Asus

Other GPU makers rolled out significant price hikes shortly after Asus. Most EVGA graphics cards went up by around $70. Zotac silently raised prices by $100 to $300 freaking dollars depending on the model. The new government policies continue to wreak havoc on GPU costs to this day.

“Right now, there are tariffs on the pricing of the product,” Herkelman said when asked about the Radeon RX 6700 XT’s seemingly high $479 price. “We have to make sure we are adhering to the legal standards we’re required to. There are mitigations we’ve put in place to make sure we can consistently hit that $479 on AMD.com. It’s all reflected in our business model of getting those products to $479 on AMD.com.” 

Chip shortage

Another huge factor of expensive graphics cards is the global chip shortage which comes from the world’s demand for semiconductor chips. These are what run the graphics cards and any product that requires these integrated circuits. In modern times this affects nearly any electronics technology. They all will be sharing the same fabrication capacity and so any effect on those will affect all the industries.

There are multiple causes to why the output of the factories was reduced, and the first one is as mentioned the pandemic. Not all exempt from lockdown meant a stop in production and eventual depletion of their inventories. Another factor is the disruption at some of the fabs. With the main producer for GPUs, TSMC experiencing a lack of material with Taiwan experiencing the worst drought in 2021. Causing a lack of ultra-pure water it requires to produce the parts.

Outlook

Don’t count on Nvidia’s mining cards to bail us out of this abysmal situation. We can hope, but the outlook isn’t exactly great. Expect GPU prices to stay high, and perhaps even continue to rise.

It seems like Ethereum 2.0’s release will likely be the bigger impetus for lower GPU prices, as there will likely be a mass surge of second-hand mining cards on eBay and other second-hand marketplaces in the months prior to Ethereum’s proof-of-stake debut.

A massive increase in the supply of used graphics cards should cause a sharp drop in price, should this happen. It’s too seen to tell at the moment, but at least there’s a glimmer of hope on the horizon.

Scalpers

Where there is profit to be made, you’ll find people taking advantage of the situation. One of the GPU hoarders are the scalpers, these are resellers of hot commodities making a profit on very wanted items. They are managing to buy the cards at close to MSRP and then resell them to consumers for a much higher inflated price and netting the difference.

At the release of this generation of graphics cards even with a lot of hardware enthusiasts wanting to buy a new card, scalpers had an ace in their sleeves. With the use of bots, they were able to snatch up the GPUs from under people’s noses, much quicker than a human can and in much larger quantities.

Bots are automatic scripts that will scan through websites selling GPUs and purchase them with stored info. They can do this without the limitation of having to click through everything and on a much larger scale, with hundreds being able to run at a time. This quickly consumes the inventory of retailers and leaves none for people and end up being sold on third-party websites for a much higher price.

RTX 3080s selling for more than double their MSRP
RTX 3080s selling for more than double their MSRP

3. International shipping slows

IBM, Maersk IBM, Maersk

Shipping containers leave a port via railroad.

Supply and demand aren’t the only factors affected by the pandemic. International shipping between Asia and North America has been an absolute mess. It costs significantly more to get products into the United States now.

We spoke to several system integrators about their own difficulties acquiring PC parts right now, and they told us the following about shipping woes:

“As trade relations soured between China and the U.S., container ships that once hauled tons of goods in both directions now mostly come full, and then sit empty as exports have dried up, vendors said. Because shipping companies are reluctant to ship back empty containers unless someone pays, vendors face more surcharges and delays.

Even air freight has become an issue. While cargo planes are dedicated to shipping freight, most commercial passenger flights actually fill an estimated 5 percent to 10 percent of their capacity below the passenger compartment with freight. With commercial air travel down almost 50 percent globally, it’s difficult to receive air freight in a timely manner. Although air freight charges have dropped from the peak they reached in May, they’ve been trending up for the last two months.”

If you want to dive deeper into the vagaries of international shipping during this crisis, the New York Times published an insightful article dubbed “‘I’ve Never Seen Anything Like This’: Chaos Strikes Global Shipping.” Gizmodo’s “The Pandemic Fueled a Boom in Empty Ghost Shipping Containers Traveling the High Seas” dives into another key aspect of why international shipping costs so much right now.

Bottom line though? The current cost of international shipping adds significant costs to most PC hardware right now, several graphics cards makers and system integrators have told PCWorld.

Reader Interactions

Comments

  1. Dick SmithDick Smith says

    The reason GPUs are expensive is do to the chip shortage the original RRPs are much lower then second hand and resale prices

    Reply

Tags