Falling graphics chip prices could signal the end of semiconductor shortages

The combination of increased supply, slowing demand, and additional capacity is lowering the price of graphics chips. It could also mark the beginning of the end of the semiconductor shortage that has plagued the world since the start of the Covid pandemic.

The fall in graphics chip prices is a simple example of supply and demand, said founder and chief analyst Jack E. Gold. J. Gold AssociatesAn IT advisory company located in Northborough, Massachusetts.

“The demand for graphics chips is declining as PC sales decline after the pandemic,” he told TechNewsWorld. “It’s reducing demand, coupled with the tight restrictions on the ability of graphics companies to perform crypto mining on their chips.”

Demand could continue to be hit this summer as the Ethereum crypto community adopts new ways to mine its crypto. The method called “Proof of Stake” does not require much computing power and graphics power to mine the cryptocurrencies required by previous models.

Gold continued that the current slump in demand does not mean that graphics chips are becoming less popular. “It’s really a short market adjustment period,” he said.

“Price is almost always a function of supply and demand,” he added. “If prices are down, the market is producing more chips than people are buying.”

“This could also indicate that a new generation of chips is coming soon and vendors are clearing inventory,” he said. “It’s around this time that many new chips are introduced to be available during the holiday season.”

Capacity guarantee

The entire chip market, not just graphics chips, is affected by softening demand and rising supply problems. “Things will continue to improve throughout the year.” IDC Semiconductor analyst Shane Lau told TechNewsWorld. “The chip that is currently missing is in the field of power management.”

Regarding the graphic chip market, “In terms of demand, demand for PCs has softened this year compared to last year throughout the year,” he said.

“On the supply side, Nvidia and AMD have taken steps to increase supply by purchasing additional capacity and making promises to wafer and package suppliers. When they increased capacity We are proposing to buy all the capacity you can buy to reduce the risk to our suppliers. “

Fluctuations in chip prices can affect the prices of other components built into graphics cards, he added.

“Nvidia and AMD often help board customers get the graphics memory, so they can buy the memory they need at a reasonable price, which can create dependencies,” he said. Explained. “If the demand for GPUs goes down or the price of cards goes down, it can affect the demand for graphics memory and the price of the memory installed on the board.”

“It’s important to note that customers don’t buy GPU chips,” he added. “They buy a PC with a built-in GPU card or buy a card. The card has many other components that move different parties along the supply chain. Each of them , Contributes that margin to what the customer pays, so there are many variables in the final price that the customer pays, not just the GPU. “

It may also be the reason why the shortage still plagues the graphics card market. For example, a recent check by Reuters found that Nvidia’s GeForce graphics cards are almost out of stock at retail stores such as Best Buy and Newegg Commerce.

Unbalanced tip supply

Another sign that the tip shortage is nearing its end is Gartner Inventory semiconductor supply chain tracking index. “”[The index] Gaurav Gupta, Gartner’s Vice President of Semiconductors and Electrical Devices, said:

“GIISST is expected to be in the normal zone by 3Q22 because 4Q21’s performance is slower than expected,” he told TechNewsWorld.

There are still missing chip types such as PMIC / FPGA / enterprise grade network chips and automotive grade MCUs. Chips that rely on 8-inch wafers will be in a difficult situation for years, he added. He added that there is a temporary shortage of 4G SoCs due to the strong transition to 5G.

Demand for home appliances such as smartphones and notebook computers is also softening, he continued. He pointed out that the main reasons for this were rising costs and inflation, fuel prices rising, logistics disruptions due to continued Covid regulations in China, and raw material prices rising due to Russia’s invasion of Ukraine.

“The unbalanced tip supply situation remains strong, causing the index to reach the normal zone before supply normality across different tip types is achieved,” he said. “We expect regular inventories in all chip categories to be achieved by the second quarter of 2011.”

Non-uniform recovery

The tip supply appears to be recovering, but there may be road bumps that can hinder recovery.

“The execution of semiconductor manufacturers is very important,” says Rau. “If we haven’t been able to produce enough GPUs in the last few years, we may run out. This is a wildcard to watch out for.”

Even if the processor is supplied, a shortage of other components can hinder production. “If a PC manufacturer lacks one key component to build a PC, it can hinder the production of the entire PC,” Rau explained.

“PCs also need to be on the market,” he continued. “PCs with discrete GPUs tend to be preferred because they are expensive and can be carried on planes, but most PCs are shipped by boat. Ports in Asia and the United States still have some deadlocks and systems It prevents us from getting to market in a timely manner. “

Blockades in China can also affect shipments. “If the blockage continues for a few more weeks, it can have a significant impact on system construction,” Lau said.

“Whatever the period of shortage, some chips will reach full capacity to cover market needs faster than others, resulting in a non-uniform recovery in supply,” Gold adds. I did.

“It depends on how the market for a particular device changes, such as the process nodes they generate, memory chips and CPUs,” he continued. “Therefore, you need to pay attention to the rough strokes, saying that the supply is or is not in short supply.” Falling graphics chip prices could signal the end of semiconductor shortages

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