AMD revealed something during its most recent earnings call that precisely explains why there aren’t a tonne of inexpensive GPUs available right now. No, it’s not merely the way the pricing was first determined.
In the past few quarters, AMD has “under-shipped” chips to try to stem the decline in demand for graphics cards. What does that imply for future GPU pricing?
Only a few graphics cards are now in limited supply. The RTX 4090 from Nvidia is hard to find at MSRP. There are several last-generation options available from AMD, as well as the subpar RX 7900 XT. The top-tier RX 7900 XTX is frequently out of stock, so plan if you want one. In the most recent earnings call for the firm, AMD CEO Lisa Su explains why that is the case.
Despite only recently introducing new Ryzen 7000 CPUs and Radeon RX 7000 graphics cards, AMD anticipates a challenging first quarter of 2023 in terms of sales. The market has slowed down significantly, and demand has been declining. According to AMD CEO Lisa Su, “We do believe the first quarter is the bottom for our PC market — for our PC business, and we’ll see some increase in the second quarter and then a typically stronger second half.”
AMD confesses to “under-shipping” chips, which refers to limiting its supply rather than flooding the market with a large number of goods, to address the imbalance between supply and demand for chips. This is a stark contrast to just a few years ago when the chip manufacturers were unable to meet the rising demand. “We under-shipped in the third and fourth quarters. To a lesser extent, we will intern in Q1, according to Lisa Su, who also added that “the first half [of the year] is typically a seasonally weak client time anyway.”
People aren’t enticed to purchase new PC hardware in the present economic scenario. Numerous things have specifically hurt GPU performance. The demand for graphics cards during the GPU shortage was far higher than the supply, which drove up prices and resulted in cards selling out in a matter of seconds. Scalpers have also had a field day constantly, purchasing GPUs to resell at enormous markups. The majority of the top graphics cards from AMD and Nvidia were in great demand.
But those times are long gone. Intel chose to reduce employee pay and perks as a result of experiencing its worst financial loss in years. Although it lacks the same level of information that AMD did, Nvidia also manages the supply of its GPUs. Even some of the best CPUs from this generation couldn’t keep up with the declining demand, as seen by AMD’s latest Ryzen 7000 chips, which saw a price decrease within only six weeks of their release.
Given this, it makes it natural that AMD would choose to restrict supply over further lowering the cost of its products. But it’s unfortunate for PC manufacturers. Although the chip shortage is officially over, it appears that even now, affordably priced hardware could be extinct.
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