Right now seems to be a difficult period to be a PC player. Compared to the last generation’s lacklustre offerings, Nvidia’s new GeForce RTX 30-series and AMD’s new Radeon RX 6000-series graphics cards blaze new performance trails. But most people have little hope of getting their hands on either, especially at a reasonable price.
New graphics card supply drops at online retailers vanish in minutes, if not seconds, at astronomically high prices. Many of those cards emerge on resale sites like eBay and Craiglist shortly after for double the advertised price, if not more.
Here’s a practical example from recently. The AMD Radeon RX 6700 XT got released in mid-March for $480. We noted that the pricing was around $100, too expensive for the performance delivered in a reasonable GPU market. Sapphire said their amazing, custom-designed Nitro+ variant would cost $580, with a $100 premium.
However, when the Nitro+ 6700 XT first went on sale at Newegg, it priced a whopping $730 and quickly sold out. On eBay, the card is presently selling for over $1,000. Surprisingly, most people have had better luck claiming a vaccine shot than a new GPU this year.
So, why are graphics cards so expensive at the moment? Everyone wants to point the finger at scalpers and crypto nerds, but there’s more to it than that.
Right now, demand is rising.
With everyone bored and confined at home during the epidemic, demand for gaming hardware skyrocketed. Nintendo’s fantastic Switch console proved quite popular during the early days of the US and Chinese lockdowns. Replacement controllers and certain games were also difficult to come by.
As time went on, Nintendo Switch supplies became much more plentiful. Still, when manufacturers introduced the new graphics cards and next-generation PlayStation 5 and Xbox Series X consoles last fall, they also faced high demand (and still do).
During the epidemic, PC gaming exploded, with Steam setting new concurrent user records every week.
People want to have fun: many people, even some who had never played before.
Problems with supply
Even though Nvidia and AMD have said that they are shipping as many or more graphics cards as in previous launches, it is still not enough to meet the enormous demand for various reasons.
Last fall, AMD released not just the Radeon RX 6000 series but also the best-in-class Ryzen 5000 desktop and laptop processor cores, as well as those next-gen consoles, all of which include AMD chips that combine Ryzen and Radeon on a single die. The company also intends to soon release mobile Radeon RX 6000-series GPUs for laptops.
IN TAIWAN, the TSMC foundry manufactures all those goods using the same 7nm technique. All of them are vying for the same 7nm chip wafers. As part of their agreements with Microsoft and Sony, AMD is quite likely obligated to prioritize wafers for the next-gen consoles during the key Christmas sales season.
Ryzen CPUs, which have also been in low supply, not only outperform Intel’s champions for the very first time in a long time. But they also utilize considerably smaller dies than the huge Radeon processors, putting them ahead of graphics cards until the 7nm crisis subsides.
TSMC, on the other hand, does not anticipate its “supply chain constraint” to ease until new fabrication facilities begin operations in 2023. Sigh.
The launch of smaller-die Radeon GPUs (such as the Radeon RX 6700 XT mentioned above) may also make it more cost-effective for AMD to concentrate on graphics cards. The smaller the die, the more chips a single wafer can produce.
Apart from the AMD-specific TSMC supply deficit, the semiconductor industry also got plagued by supply issues. Even automakers and Samsung have stated that they are having difficulty meeting demand.
We’ve heard rumours that chip-making components, ranging from the GDDR6 memory used in recent GPUs to the substrate material required to build circuits, have been in limited supply as well. Chips of all kinds appear to be in high demand in almost every business right now.
There are other industry headwinds that our entire supply chain team is looking at across the PC ecosystem
Radeon CEO Scott Herkelman said in an exclusive interview on the launch day of the Radeon RX 6700 XT.
Some components on a graphics card—or, for that matter, a motherboard—are even longer today, so you’ll need to prepare ahead.
Nvidia concurs
There are certain limitations in substrates and components, in addition to what we’ve seen with wafers and silicon.
Over a call with investors in November, Nvidia chief financial officer Colette Kress said,
We continue to work on our supply during the quarter, and we believe…that demand will probably surpass supply in Q4 for total gaming.
And it appears to be growing worse.
The most urgent issue for GPUs right now is the lack of Nvidia’s GPUs,
Asus, one of the world’s largest PC component makers, recently warned investors.
[In Q1], there was a decline in shipments from the previous quarter.
We’re witnessing price increases as a result of scarcity.
Unfortunately, Nvidia predicts that demand for GeForce GPUs will surpass supply in 2021.
Cultural activities play a little impact as well.
“Most people are unaware that the Chinese New Year falls in February,”
Herkelman explained. Workers at overseas factories typically take a week or more off for the holidays, which is beneficial to them but does little to help with the supply side of the ongoing deficit.
International shipments are slowing down.
The epidemic has an impact on more than just supply and demand. Between Asia and North America, shipping has been a complete mess. Getting things into the United States now costs a lot more.
We asked a few system integrators about their current challenges obtaining PC parts, and they informed us the following concerning shipping issues:
As economic ties between China and the United States deteriorated, sellers said, container ships that formerly delivered loads of goods in both directions now usually came full, then lie empty as exports dried up.
Vendors suffer higher costs and delays because transportation companies hesitate to return empty containers unless someone pays.
Airfreight has also become a problem.
While cargo aircraft usually transport goods, most commercial passenger planes contain freight filling up to 10% of their capacity beneath the passenger cabin. It’s challenging to get air freight promptly, with commercial air travel down nearly 50% globally. Airfreight rates have been moving up over the previous two months while dropping from their peak in May.”
But what’s the bottom line? Several graphics card manufacturers and system integrators have stated that the present cost of overseas shipping adds considerable costs to most PC gear.
Scalpers
High demand and supply constraints are ideal for earning fast cash by flipping graphics cards. The current generation of GPUs was immediately targeted by “entrepreneurs” who used bots to buy stock quicker than humans could then sold their ill-gotten gains on sites like eBay, StockX, and Craigslist for a high markup.
Snapshot of eBay results for Sapphire’s Nitro+ RX 6700 XT captured on March 22, 2021. The MSRP for this GPU is $580.
It’s not a trivial problem. By the end of January, over 50,000 RTX 30-series graphics cards had been sold on eBay and StockX.
Most latest GPUs sell for double (or more) their suggested retail price on those sites, and you’ll nearly never find new stock from trustworthy stores unless you use bots or Discord chats to track down hardware as soon as it arrives online.
Tariffs
Everything we’ve discussed thus far would be enough to drive graphics card costs soaring, but after the calendar flipped to 2021, things got even worse. Significant additional tariffs on Chinese exports for several PC parts went into force in January, worsening the situation.
In early January, Asus functioned as the canary in the coal mine, advising its fans of anticipated price rises.
“Our revised MSRP incorporates increases in component, operational, and logistical expenses, as well as the continuance of import duties,”
stated Juan Jose Guerrero III, Asus technical marketing manager. Prices for Asus graphics cards skyrocketed from $150 to $200 per GPU almost quickly.
Shortly after Asus, other GPU manufacturers announced significant price increases. The majority of EVGA graphics cards have increased in price by roughly $70. Depending on the type, Zotac quietly hiked costs anywhere from $100 to $300. To this day, the new government rules are still wreaking havoc on GPU costs.
When queried about the Radeon RX 6700 XT’s ostensibly high $479 price, Herkelman stated,
“There are tariffs on hardware prices at the moment.”
“We need to ensure that we comply with all legal standards.”
We’ve put mitigations to ensure that we regularly achieve $479 on AMD.com. Our business plan of bringing those goods to $479 on AMD.com reflects all of this.”
Crypto coins
After the implementation of tariffs, the situation was already intolerable for PC gamers, but crypto coin speculators added fuel to the flames.
Graphics cards become rare whenever bitcoin values rise, as we observed in 2013 and 2017. You cannot use consumer graphics cards to mine Bitcoin; the most well-known cryptocurrency, regular GPUs, on the other hand, must be utilized to mine Ethereum.
You may then swap your Ethereum for Bitcoins or cash at cryptocurrency exchanges. In October 2020, the price of Bitcoin soared, and in January, the cost of Ethereum followed suit. According to Coindesk, one Ethereum was worth $140 in April 2020, and by October, when Bitcoin’s ascent began, Ethereum was worth $350 per token.
And by the beginning of January 2021, it quadrupled to $1,000, peaked at $1,958 in mid-February, and is still selling for nearly $1,700.
Any graphics card with more than 4GB of RAM may be beneficial while Ethereum prices are this high. As a result, the already severe GPU scarcity worsened, with even used two- or three-generation graphics cards retailing for more than they were new a few years ago.
To help with supplies, Nvidia resurrected the RTX 2060 and the four-year-old GTX 1050 Ti. Gross.
This ideal s***storm ultimately solidified into the GPU nightmare we’re experiencing today, thanks to Ethereum’s meteoric rise.
When is it going to be over?
You could be out of luck for months if your rig doesn’t already look like this.
Unfortunately, no one knows when this insanity will come to an end. None of the underlying causes of today’s GPU shortage is showing signs of abating, and we’re hearing increasing concerns about semiconductor shortages outside PC components.
Expect to wait a long time for relief.
We can’t propose paying today’s ludicrously marked-up costs for a graphics card, or paying scalpers, because the value is in the eye of the beholder. Consider overclocking your GPU or tweaking the graphic settings in games to increase the life of your current hardware if you have one.
There are a few possibilities if you don’t have a powerful graphics card and need something to fuel your gaming during a period when everyone is spending more time at home.
If you don’t mind going to a retail store, you could have a better chance of finding a graphics card. If you don’t mind buying new games to play, a next-generation system is a possible option (or subscribing for the amazing Xbox Game Pass Ultimate).
Unfortunately, since their release in late 2020, the Xbox Series X and PlayStation 5 have likewise proved tough to get. They are, however, easier to get by than PC components.
Finally, if you have a strong Internet connection, you may stream your games from a cloud server for a high-definition gaming experience. We recommend Nvidia’s unexpectedly decent GeForce Now service, which allows you to play many games from your current PC library. Here’s what you’ll need to get the most out of GeForce Now.
Google’s Stadia is a streaming service as well. It works more like a cloud-based console, with games purchased only available through the Stadia service.
Assume, however, that you paid $60 to preorder Resident Evil Village for Stadia. In that instance, Google will provide you with a free $100 Stadia Premiere package, including a white Stadia controller, a Chromecast Ultra for streaming the game to your TV, and a one-month free trial of Stadia Pro for new users.
Good luck with any decision you make. It will come in handy.
