GPU prices plummet, AMD is stepping up to try to overtake Nvidia

As reported by Intel, Qualcomm and others, investors will weigh how much inflation, China's coronavirus lockdowns and Russia's invasion of Ukraine will dampen consumer spending to balance supply chain blockages for microchips.

The trigger is a drop in the price of GPUs, or graphics processing units, which are the brains of gaming consoles and are expanding into other uses.

Analysts at Baird recently downgraded GPU maker Nvidia to "neutral" after prices fell. Nvidia shares are down about 31% so far this year, while rival AMD is down about 37%. In contrast, the Philadelphia SE Semiconductor Index fell 22%. Both companies declined to comment.

GPU prices are still selling at a premium, but at a smaller price. Susquehanna analyst Christopher Rolland said earlier this month that the markup on the manufacturer's suggested retail price, or MSRP, has fallen from 77% to 41%.

3DCenter, a graphics chip and hardware news site that tracks graphics chip prices in Europe, reports that prices for AMD's Radeon RX6000 series and Nvidia's GeForce RTX30 series, both for gaming, have steadily declined from 80% at the start of the year to less than 20% above MSRP .

Baird senior analyst Tristan Gerra said that if electronics companies buying chips expected prices to fall further, they would cut a lot of inventory, cut purchases further and drive down prices. "It's a vicious circle," Guerra said.

Demand for GPUs could also decline, analysts said, as the cryptocurrency ethereum is expected to change the way it operates later this winter, reducing demand for the graphics chips that power the systems used to mine cryptocurrencies today. power.

There is debate about whether lower prices will spread to the entire chip industry.

Weak demand in the PC and smartphone markets has also led to lower prices for other chips, such as cutting-edge processors such as CPUs and some memory chips, according to Summit Insights Group analyst Kinngai Chan, who expects some others made on older machines in the second half of this year. The supply of chips will face excess capacity.

But Bank of America said weakness in gaming or cryptocurrency mining could be balanced by strong demand for graphics chips in data centers, and reiterated its "buy" rating on Nvidia.

Meanwhile, major chipmakers, including Intel and TSMC, plan multibillion-dollar expansions.

"Between all the fab investment and all the optimism that the shortage won't end until 2023, 2024, we're saying we can see a surplus coming," said TechInsights' Dan Hutcheson, which goes beyond The range of graphics chips, says Dan Hutcheson of TechInsights, who has been watching chip supply and demand for more than 40 years.

Nvidia vs AMD

The RX 7000 graphics card "will destroy Nvidia's efficiency across the product line," and the possibility that RDNA 3's performance upgrade could be higher than Nvidia's Ada GPU.

Regardless, the battle for the next-gen GPU market is sure to be an interesting one between the two tech giants. It's a golden opportunity for AMD to overtake Nvidia as the leading GPU maker, but only time will tell which company comes out on top.

Elsewhere, while the next-gen RDNA 3 Navi 33 cards are expected to feature eight PCIe 5.0 lanes, Moore's Law is Dead hints at the possibility of Nvidia dropping PCIe 5th-gen compatibility entirely for its RTX 40 GPUs.

As spotted by VideoCardz, the insider pointed to a tweet from another high-profile intelligence officer with a noteworthy track record in Nvidia hardware leaks. Kopite7Kimi was blunt, and the Green team clearly chose to stick with PCIe Gen4.

PCIe 5.0 is a relatively new standard and thus not yet widely adopted by the technology industry, so this revelation is not surprising. This also naturally increases Nvidia's cost.

Overall, gamers won't necessarily miss out much if Nvidia's RTX 40 cards don't support PCIe Gen5.