Nvidia cuts GPU orders, but does this mean prices will drop?

A new report shows that Nvidia, AMD and Apple may all be trying to cut their chip orders from TSMC. This is a direct response to the lower demand for electronics that we have experienced in recent months. Just a year ago, most of us would have thought this would be impossible, and yet here we are.

If this turns out to be true, many things come up to think about. With AMD and Nvidia soon to release the next generation of GPUs, will the reduced consumer interest result in a price drop, or will the potentially smaller supply simply mean fewer next-gen graphics cards to buy?

From Shutterstock by Kiklas Kiklas/Shutterstock

The information comes from DigiTimes which cites its own anonymous industry sources. The report (translated by Twitter user retired engineer) claims that AMD, Nvidia, and Apple, who are all TSMC customers, have tried to change their chip orders — but not all three have been successful.

Apple managed to cut the first shipment of iPhone 14 chips by about 10%. AMD, on the other hand, has revised its orders for 7nm and 6nm wafers, reportedly slashing the amounts by about 20,000. This applies to shipments in Q4 2022 and Q1 2023. However, AMD has not changed its order for 5nm wafers intended for PCs and servers.

Nvidia seems to be in a sticky spot compared to the other two tech giants. It has made prepayments to TSMC to secure their 5nm wafers for the upcoming RTX 4000 series graphics cards. Now, faced with a drastic drop in consumer demand, Nvidia tried to change its order, but TSMC didn’t budge, according to DigiTimes. The companies reached an agreement to postpone the first shipments by a quarter, but Nvidia would now have to find replacement customers for TSMC’s freed-up production capacity. A year ago that would have been easy, but now it may be nearly impossible.

After many long months of GPU shortages, graphics card prices are now falling rapidly, leaving both retailers and manufacturers with a surplus of GPUs that no one wants to buy. The second-hand market is flooded with used GPUs that have spent their time mining crypto and are no longer profitable to keep running due to the crash in the cryptocurrency market.

It’s not just graphics cards that have suddenly become much less sought after. Global PC shipments are on track to fall 9.5% by 2022, according to a Gartner forecast. The personal computer market is experiencing the sharpest drop of all other device segments Gartner analyzes, but mobile devices (tablets and phones) are also seeing a drop in shipments. Consumer PC demand is losing more than corporate PC demand, which stood at 13.1% and 7.2% respectively in 2022.

Will this affect the pricing of next-gen graphics cards?

Jacob Roach / Custom Hour

Many aspiring PC builders wonder if the current market situation will affect the pricing of Nvidia’s RTX 4000 graphics cards. Since the company is currently experiencing a decline in demand and seems to predict that this downward trend will continue, it makes sense that this could also change the pricing of next-gen GPUs.

Unfortunately, it’s hard to say for sure what Nvidia could do in this situation. A year ago, we were in the middle of a market where demand far outstripped supply. That is no longer the case, and unless the crypto market miraculously recovers, we won’t be back on that for a while. With the global economy in a shaky place and inflation soaring, lowering pricing could be the only thing that would get GPU sales going again.

Nvidia still hasn’t announced the price of its next-gen graphics cards, but looking at the current generation gives us a bit of an idea of ​​what to expect. AMD’s best graphics cards are cheaper than Nvidia across the board, so Nvidia didn’t aim to be competitive in that regard this time around. It also still hasn’t slashed prices on all the surplus GPUs it has laying around, and with the RTX 4000 launch imminent, it’s high time Nvidia tried to sell those.

One thing is certain: we are finally in a buyer’s market. Whether you’re buying a new GPU or waiting a while to see the next generation hit the shelves, it’s refreshing to no longer see graphics cards hitting 300% of the MSRP and selling out in seconds.

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