According to those at the forefront of the industry, GPU prices are not expected to normalize until some time in 2023. This is supposedly when the global semiconductor manufacturing shortage will start to subside and the GPU market can finally adjust itself reasonably to demand. Additionally, this is also when a possible crypto bear market will occur. The combination of these two factors should result in increased GPU production and reduced demand from miners hopefully leading to significant drops in GPU prices.
The development of this extended GPU supply nightmare from the perspective of PC enthusiasts has been quite interesting, especially when compared to the first crypto-mining boom a few years back. Although this time around, A whirlwind of numerous factors and the overall world situation have made this GPU supply crisis much worse than anyone could have expected.
Why Are GPU Prices So High?
Starting the middle of the year 2020, an avalanche of cascading events overlapped with one another, which eventually caused a supply bottleneck to chip manufacturers and distributors all around the world. Long story short, a combination of all of these factors listed below have caused high GPU prices:
A global semiconductor manufacturing shortage
Following the decreased number of working employees is the cutting down of various huge industrial activities. Combined with the sudden boom in demand for semiconductor chips in almost any modern system (including cars), companies like TSMC were eventually unable to properly supply all required sectors which lead to less GPU production resulting in higher prices.
Crypto mining taking advantage of the huge performance gains of recent GPUs
While mining on other altcoins like Ethereum and Ravencoin was already progressing steadily since Bitcoin went ASIC, it is the appearance of RDNA1 (notably the RX 5700 XT) and the Ampere architectures (notably the RTX 3060 Ti and 3070) along with some old generation of graphics cards from AMD and Nvidia respectively that significantly boosted crypto mining activities over the last two years. This effectively created an infinite demand for the new and shiny GPUs, further bottlenecking the already strained supply line.
Scalpers just overall making the situation worse
To make things even uglier for gamers, scalpers saw the opportunity to strangle the remaining GPU supplies, snatched all of them up, and sold them at ridiculously marked-up prices. It is a losing game for regular PC consumers because even with the use of notification bots, scalpers would often make use of much more advanced purchasing bots, in order to instantly drain dry the slow trickle of supplies that came at official retailers. Crypto miners don’t care about scalped prices, by the way, since GPUs are an investment for them. This results in a vicious supply cycle that drastically transformed the GPU market today.
Tariffs on certain items, like GPUs, returning in the middle of the pandemic
At least in the United States, another factor that contributed to the increased base prices of GPUs was the expiration of the tariff exemptions by electronic hardware such as GPUs by the year 2020. Plans are already underway to enact another exemption in the near future. But until then, a percentage of the cost of GPUs in the US will be attributed directly to this.
Manufacturers saw the profit potential of this GPU “crisis” and cashed on it themselves
AIB partners, in particular, announced increased base prices for their GPUs starting the latter half of 2020. And even without prior notifications to consumers, retailing directly to companies such as EVGA still had a significant amount of pre-added markup that is much higher than the paper MSRP of that particular GPU.
Nvidia and AMD eventually gave MSRPs directly reflecting default price increases
Of course, the chip manufacturers themselves would eventually move to exploit the current situation. This is most evident with the release of the RX 6600 XT and RX 6600 for AMD, the RTX 3070 Ti, 3080 Ti, 2060 12GB, and the mind-boggling RTX 2050 mobile for Nvidia. All given a paper MSRP that is already marked up for the AiB partners, distributors, retailers, and scalpers to mark up even more.
Possibility That GPU Prices Will Never Become Normal Again
While hopeful people still speak of the current GPU crisis as just another phase, much like the regular peaks and lows of memory modules year after year, there is an actual probability that this will be our “new normal”.
The main argument is rampant consumerism. AMD, Nvidia, and their AiB partners now know that consumers will gobble up anything that they offer, given no other alternative choice. All they need to do is to squeeze the market long enough for inexperienced PC enthusiasts to accept.
Indeed, this has been the case when we observe the absurdly high-profit margins for GPUs during 2020 and 2021. Nvidia in particular was super proud to have increased its overall revenue at a whopping and unprecedented 68 percent in just a single year. Pretty interesting figures for a company that was supposed to be “struggling” from the so-called global chip shortage.
Further supporting the observation that Nvidia and AMD can just control prices willy-nilly at this point is the lack of attention for the entry-level discrete GPU market over the past two years. While the global semiconductor shortage does play a role, 50/500-tier cards such as the 6500 XT and RTX 3050 are extremely overpriced for the lackluster performance they provide.
The final nail in the coffin for this particularly grim assessment is that GPU chip makers and AiB partners no longer look at gamers and graphics professionals as their primary customer base. An MSI subsidiary has been caught red-handed offloading scalped RTX 3080s and 3090s on eBay. Sapphire, Powercolor, and XFX deals tons of GPUs in bulk to crypto mining farms. Nvidia themselves tried to market the exorbitantly expensive and architecturally outdated RTX 2060 12GB to “relieve supply issues”, despite not even being optimized for either gaming or mining.
And that, my friends, is just the tip of the iceberg. If you have been monitoring the situation as often as some disillusioned enthusiasts did, you are bound to see tons more news related to this very depressing period in PC building history. We haven’t even mentioned the content creation circles that have also been badly affected by this GPU price inflation.
On the bright side, you still have options. First, if you absolutely need to buy a GPU for something relatively important, such as work or content creation, then you have no other option than to buy at current retail prices. Second, if you want to buy somewhere near MSRP, stake out your local PC store or online on the first day of a GPU’s release.
Finally, as many of us continue to do, just wait. Triple-A gaming is not as glamorous as it used to be anyway. Enjoy life’s other pleasures… or let’s just have fun playing Jump King.