Gadgetory

current GPU prices would put one high-end video card at about the same price to build our entire high-end rendering and editing PC when we built it a bit over a year ago so it's reasonable to say that they've gone up a bit some of these are because of third-party sellers some of it is because of mining although actually a lot less than current discourse would have you believe and some of its just supply demand and cycles in the industry annually so this is a revisit of video we did in July 2017 six months later we asked the manufacturers and board partners again how do you feel about mining before that this video is brought to you by thermal Grizzly makers of the conductor not liquid metal that we recently used to drop 20 degrees off of our coffee lake temperatures thermal grizzly also makes traditional thermal compounds we use on top of the IHS like cryo not and hydro not pastes learn more at the link below so to recap the previous video very quickly we had a few rules in place for that one this is all anonymous and aggregate data so that we've spoken to the board partners to manufacture as we've spoken to power supply makers a lot of people who are indirectly or directly involved in products that go to miners and we've asked them for their thoughts either as an individual or as a representative of a large company that makes products used in mining whether they intend them to be used there or not the point of anonymizing it is twofold one they couldn't talk to us otherwise and two it allows people to speak their minds more freely the point of aggregating it is so that it's just a big pool of information and everyone's isolated and what they said so we may show b-roll of video cards during this video if we do it has no correlation with what I'm saying the manufacturer is shown and the b-roll may not have even been spoken to you and the video editor doesn't know which company said what anyway so we have even isolated ourselves from the information so if there's b-roll it doesn't mean anything now I starting out so let's let's look at the first company we spoke to for what do you think of six months later these companies generally aligned with one another when we first in this video and that remains mostly true now only a couple of defectors so first company we spoke to said that there is there are a few factors playing into the current market one limited supply and we'll talk about that more in a moment to end of year in holidays drying up supply anyway and manufacturers never want to invest a lot in reviving or continuing a product line in the face of potential new launches as happens every year and then there's another aspect of this where once mining goes away the miners aren't long-term customers so this is a big one that we talked about in the first video a few of the manufacturers we spoke to then and the same ones now actually suggested that miners are not brand loyal there's two sides to this a crypto minor we'll go out and find GPUs and buy them and whatever quantity they can get from whomever sells it because those cards only do one thing and the only thing you really need out of the card is that it's in stock so this is not a customer that you have to use customer acquisition methods on they don't really require marketing they don't require advertising they don't require buying incentives like $20 rebates so that's the positive side of it from the manufacturers perspective from those we've spoken to there's really no customer acquisition cost the negative side of it is that these customers mining buyers are also not brand loyal they don't care who you are or what you offer outside of a video card there's no expansion into a greater ecosystem and that goes with some of the other points we talked about in the first video that are still true today for the vendors we've spoken with that sell multiple product lines for example perhaps they sell motherboards or monitors peripherals pretty much everyone sells peripherals at this point anything gamer targeted alongside their GPUs the concern is that miners are not customers also of those components so you may have a scenario where you've tipped the scales of GPU sales going up but all the other products in the ecosystem aren't really selling quite as much as they typically would be in relation to the GPU sales so the ratio of GPU to other components is now skewed which is a potential problem depending on what they're saying and how much of it they're expecting to sell the same first company we spoke with is looking for long-term gaming customers and it didn't really seem like just pandering either it seems pretty legitimate from a business sense in that with with gaming users who buy a single or maybe two or three cards and that's kind of it you're looking at someone who if they have a good experience with your company they're very likely to buy from your company again because they have no reason not to and if they've used customer service and it turned out positive there's more reason to use your company again selling the GPUs so long term you're losing that with minors and if they can't solve the gamers today that's a problem now another concern here so we we ask the obvious question well why don't you just make more cards and speaking with everyone here this is data from all of them it sounds like none of the vendors really think that they are at least pushing Nvidia to the maximum GPU supply meaning the vendors we've spoke to believe that Nvidia could supply more GPUs if the manufacturers did request more GPUs however the manufacturers are the ones who ultimately get stuck holding a bag if they can't sell them so this happened in a couple years ago and one of the first crypto kind of booms and busts where manufacturers who bet on crypto mining either did very well if they got in early or got burned bad if they got in a little too late right before a crash because you have all the the cards sitting on shelves and warehouses or coming back to return channels so it's not as simple as just buying more because purchases of GPUs with everyone we spoke spoken to pretty much happen from a quarterly analysis so you look at what are your expectations for the quarter let's buy based on that and then from there you either bet on crypto or you don't and you just stick with what you would typically order for your volume move then for your customers and there's no real way to track minor versus game or purchases for these board partners so they don't have a good indication of how many to buy and they're also generally concerned about being left with overstock where you've invested more than you make back here's where we diverge from mining though I said that mining was not as big a factor as we may have been led to believe and part of that is supply so you may have noticed that DRAM prices are and you were from two to four times what they used to be this plays into GPU prices as well because the memory that is on GPUs comes out of the same three fabs pretty much that supply all of the system memory chips and all of the NAND for the most part so you've really only got a couple of manufacturers there you have micron you have SK Hynix and you have Samsung and memory prices for ddr4 have gone up a lot ddr3 Ghana plot SSDs have increased in price well GPU is also use memory they've also increased in price now some of this is from third-party or secondary sellers as opposed to primary markets so when you're looking at prices online be sure that you differentiate between the two but from what we understand and we've confirmed this with multiple of these vendors GPU memory prices gddr5 have gone up for an eight gigabyte card by about twenty to thirty dollars in recent days this is a much bigger movement in price and this is cost this is not what you pay this is what the manufacturer pays if they mark that up you pay a whole lot more so and this is from direct sales as well by the way this isn't sold by AMD or Nvidia these are direct contacts to the suppliers so that's a big price movement we asked what the typical price movement would be maybe quarter to quarter it's more around $5 so to go up to twenty to thirty is significant and that increases the bill of materials cost which could potentially increase what you pay or it decreases the amount of incentives that are applied to GPUs for sale incentives would include rebates instant discounts free games stuff like that those if there's high demand which there is right now and cost has gone up all of the incentives go away so that's a lot of what we're seeing right now rebates are pretty much non-existent and that's because they don't need to offer them so that's something where mining has a direct impact the supply costs have a direct impact and gamers get burned for it and actually miners would technically be paying a bit more as well because they lose incentive offers if they even cared about them and speaking with the companies we also learned that well this is kind of obvious but resale value of cards goes down with new architectures so there's a point here where the longer mining holds up until a new architecture it's kind of better for the manufacturers because if mining stops being a thin or stops being profitable to the point where people are selling off their extra cards that secondhand market gets flooded bored partners can't sell as many devices when they're being sold secondhand for dirt cheap and people are buying them there so there's actually a potential decrease in revenue or expected revenue as the second-hand market floods and if the second-hand market floods assuming mining at some point takes a dip it would be better for the manufacturers the board partners if it's closer or after the release of a new architecture because 10 series cards 500 series cards and Vega cards would be worth less secondhand than today whereas today you're cutting closer to whatever the retail prices as opposed to whatever the value is after new architecture ships with new features and speeds one of the other vendors we spoke to really wanted to illustrate the difference between primary and secondary markets so this is where they were pointing out to us that a lot of the high prices as in the prices reported by some rumor mill websites of around $2,000 we're actually from third-party sellers on Newegg marketplace and on amazon's third-party marketplace as opposed to the first party sales where the card should be closer to MSRP just without incentives so manufacturers don't benefit from second sailes we also asked when do you all expect new shipments of cards when should people be on the lookout for actual reasonably priced video cards so they're ordering more every week we know that a couple of the manufacturers are expecting a lot of supply at the time this video goes live this week and so you should be on the lookout in the next couple of days or so one thing that a couple of folks recommended is actually going retail instead of online this makes a bit of sense retail you can go to the store they might be more expensive than online but you can't buy it online doesn't really matter and ask the folks who work there when's your next shipment and then show up that day and get one so it's kind of sad that's the recommendation but that was the general recommendation to make sure you can get a card so there are new shipments all the time we were also told that there's no expectation that these new shipments will impact prices and the best advice is try and get one immediately when they show up if you can there was also again from this other manufacturer concerned about betting too much on mining in the event of a collapse and noted that production cycles plus shipping time can be several months and it's all based on quarterly projections so even if a couple months ago they saw this coming maybe in December because in December prices were reasonable so in December they see this supply shortage come in of video cards and say you know we need to order a lot more there was probably still aren't import from personal experience we know now thanks to the mod mat that if you're shipping by boat to save money and it does save a lot of money versus air you're looking at shipping times that could be upwards of 60 days so and that counts Kustoms that counts from the factory to the port whatever needs to happen on in China with that shipment and then from the port to the port that's obviously a long interval as well and then you have customs and then you have shipping to the warehouse and then you have shipping to the customer so it can take a long time which all goes to say if manufacturers bought in December in anticipation of today those cards aren't here yet unless they're shipping them which in that case the margin goes away very fast and there's not a lot of margin on video cards either assuming they're sold at reasonable prices so no expectation that shipments are impacting price and production cycles take a while and shipping takes a while so it'll be a bit before you see supply refresh fully our price wouldn't drop unless orders exceeded demand anyway even if supplies increased so even if they're all buying more cards and GPUs as long as there's a market that's split between gaming mining AI everything else because these cards can be used there as well you're gonna see high prices another vendor we spoke with thought that mining was a bit more of an issue than some of these others who indicated more an issue on supply from memory going way up and that vendor suggested that mine for altcoins is becoming more of a concern especially for the lower end cards I guess meaning non TI non 1080 or 64 class so that same manufacturer had concerned about other products in the ecosystem as last time things targeted at gamers if you're buying one board and 6 plus cards that's only one board sale you might not be buying to monitor you're certainly not buying a hundred forty-four Hertz monitor you're probably not buying a gaming keyboard and mouse or any of those other things so that's a big concern as well and let's go through the overall now overall I suppose one of the bigger questions is what would a company like Nvidia or AMD you think and one could assume that for Nvidia AMD just like all the board vendors the biggest issue is being unpredictable and unstable if this were a stable market if crypto mining proved itself to be a something that will stay long-term and its current capacity and its current demand and this isn't saying that crypto won't stick around it's saying that we don't know to what extent mining will stick around especially for current cards if there were stability there they could account for this by increasing how many cards that buy and how many GPUs they're buying because then they wouldn't be worrying about am I to be left holding a 500 pound bag of video cards when it all collapses so that's the biggest possible problem is instability and unpredictable behavior in the mark and in addition to that right now it's just as much of a gamble for the manufacturers as it is for the crypto miners to buy the cards because manufacturers again don't want to be left with them when new architectures are probably around the corner so a couple things to go over here then mining isn't necessarily as much to blame as you think there are other market factors at play memory cost is a gigantic one 20 to 30 dollar increase in Bill of Materials is significant especially when you're expecting five so that's a big deal and it sounds like the GPU makers could probably put out more GPUs if they were requested it's just the board partners aren't buying them so not as simple as saying Nvidia could make more GPUs or AMD could make GPUs in greater quantities because yeah they probably could but someone's got to buy him they're not just gonna make them and leave them on the shelves so that's I've seen some commentary online this is Nvidia named these fault for not making enough product now they have customers they don't sell the card to you and Vidya makes reference cards they saw them in a quantity limit of two Andy I don't know that they they've they technically have reference cards they don't really make them that much anymore it's up to the board partners now so in either case you can't make more unless one buys it how you could but what's the point so it's not quite that simple so let's talk about the final point here which is Nvidia AMD as GPU makers despite significant reach in deep learning data center ai automotive and royalty sales Nvidia still moves the vast majority of its revenue via gaming markets it's actually quite significant it's about 58% of Nvidia's total revenue is because of gaming GPUs so from Nvidia is perspective and speaking with people in the industry the or I should say assumes perspective anyway the concern is that investors may see a decline in enthusiasts PC adoption that is similar to the decline in consumer desktop PC adoptions enthusiasts is the only space where we've seen growth for desktop computers any time in the last couple of years and if suddenly there's a dip because gamers can't buy cards and RAM to build a computer that's gonna reflect poorly investors might get spooked and they might move their money elsewhere so from Nvidia's and AMD's perspective that is a potential concern because enthusiasts PC adoptions really the only fortress in a declining desktop market so that's something to keep in mind where you know if you see desktop going down why would you keep investing in gaming GPUs especially when the company's revenue is 58% Gaming GP is as for AMD we know that Andy has publicly rebranded its now-defunct frontier Edition card as a blockchain pioneers card so we know that they they're definitely making a play there which is reasonable it is a market after all sadly frontier editions one of the most affordable video cards in the face of $2,000 Vegas 64 is which just comes down to them being in stock for good reason but we also know that RTG has invested considerable resources in gaming markets the last six months it's been drivers for gaming regularly the most consistent drivers AMD has put out in a long time with all these gaming targeted features so there's a lot to lose if that's not being leveraged by gamers all of that goodwill all of that effort is not getting really noticed by the audience that they've invested it for so they also faced new competition both Nvidia and AMD groups like TSM see the one of the major manufacturers of silicon now service mining companies like Pitt made so if you've got more competition buying from your primary supplier for chips price could play a bit there on the manufacturing side as well so that all comes down to whether TSM sees at maximum capacity or not though but that should pretty much sum it up so a bunch of thoughts very few of those were mine except for kind of talking about stuff towards the end and some in some capacity but most of that comes from manufac just kind of aggregated and anonymized for you overall it would seem that a lot of the opinions are the same as six months ago when we spoke to them just now I definitely got the sense speaking with some representatives that it's like this is getting a little crazy like this six months ago we were all so naive that Cohen went up to what was it two thousand dollars at the time and that seemed high and altcoins I've exploded recently hence why get manufacturers saying all coin mining is a potential concern for low-end cards so yeah that said though it's not just mining either its memory prices too so there's a lot a lot of things going on now that are driving up prices so if you're trying to buy a GPU for gaming they're coming in regularly shipments haven't stopped some manufacturers are betting bigger on mining than others I'm not gonna talk about who those are but the point is keep an eye out every week because stock refresh is basically every week at this point and if you have a store near you just go there make friends with representative and ask them when the cards are coming in and just go buy locally and pay the tax because it's gonna be easier than waiting for retailers online as far as retailers are concerned they probably don't really care who buys the product because they're really just mercenaries in the space they have a unless the sale of GPUs does not outweigh the sale of everything else that goes into a computer that you have no reason to care either direction so our conclusion here is pretty much the same as it was six months ago people like power supply manufacturers are perfectly happy with all of this they're selling more high wattage power supplies than they've ever sold high wattage PSU sales were down thanks to the decrease in power needs by GPUs and CPUs and now they're up because of mining so they're quite happy with that as far as the board partners they're benefiting from immediate gains immediate sales because of the increased demand from to markets existing simultaneously mining and gaming but they're still concerned about long term impact and some companies are more afraid than others to bet hard on crypto mining which means that they're not getting in really much more supply than they normally would which is what gives us our current situation that's it for this one subscribe for more as always if you like this type of reporting go to patreon.com/scishow set slash mod Matt I'll see you all next time the card should be closer to a Mazar P just without incentives here