We all know that lack of supply was a massive issue for Nvidia with RTX 3000 GPUs, but now it seems that problem has morphed into waning demand – which is seemingly set to impact its incoming RTX 4000 graphics cards.
As spotted by VideoCardz (opens in new tab), an article from DigiTimes (opens in new tab) – translated by RetiredEngineer on Twitter, and served with a course of caution, plus a side-order of skepticism thrown in – asserts that Nvidia is facing a combination of factors which when cumulatively considered are bad news for the RTX 4000 range.
pic.twitter.com/Zg12dLuUT2July 1, 2022
Those factors are reportedly that Nvidia is experiencing weaker than expected demand from the gaming sector, coupled with an ‘enormous channel inventory’ hanging around, meaning there are a load of current-gen RTX 3000 graphics cards still to sell through. Then there’s also a flood of used GPUs being dumped by miners following the recent big crypto crash, exacerbating the situation around selling off that current excess Ampere GPU stock.
It's a painful combination of factors, and one that means Nvidia purportedly wants to cut orders at TSMC in respect of next-gen Lovelace GPUs; but supposedly TSMC is unwilling to give any ground to Team Green.
With Nvidia already having made ‘huge prepayments’ to TSMC to reserve 5nm capacity, the report argues that TSMC won’t make any concessions regarding cutting back that quantity, and that Nvidia will have to find replacement customers itself to take up any slack regarding production capacity that it no longer needs.
However, the report does note that Nvidia may be allowed to avail itself of a delay of shipments by a quarter, or even two quarters, to give Team Green a bit more breathing room regarding the apparent excess capacity.
The report talks more broadly about the drop in PC demand affecting not just Nvidia, but also AMD, and how Team Red has reduced its orders at TSMC – although not for 5nm, but for 7nm and 6nm wafers, meaning current-gen, not next-gen, products.
Analysis: What does this mean for the next-gen Lovelace launch?
There are a lot of pretty far-reaching claims in this piece, which make us wary and mindful to tread more carefully than usual around this particular vein of rumors. That said, it’s not exactly a surprise to hear some of this.
Speculation had already pointed to Nvidia stumping up a ton of cash to secure capacity at TSMC for its next-gen graphics cards. And we’ve already heard several times on the grapevine now that Nvidia has a lot of excess stock to clear in terms of RTX 3000 models, with the problem that gamers (and PC owners more broadly – indeed, all consumers) are now being squeezed by inflation and the cost-of-living crisis.
Part of the problem is that price tags for Nvidia GPUs still remain relatively high – albeit that they’ve dropped a good deal, and are just (a touch) over the MSRP – and so higher-end graphics cards in particular are still costing the best part of a couple of limbs.
All this pretty much backs up the assertions made here, and again it’s clear enough that the big crypto GPU sell-off is also making things much harder in terms of shifting that existing Nvidia stock. Some folks are apparently willing to take chances on second-hand mining cards, which look like quite the bargain (certainly in comparison to those still relatively lofty price tags on new boards), despite the inherent dangers with these GPUs which we’ve covered in-depth elsewhere.
If Nvidia’s next-gen graphics cards are revealed too soon, then RTX 3000 sales are going to stumble and slow-up further – and that’s maybe something that Nvidia (and its partners) really can’t afford. If this report has some truth to it, and Nvidia is indeed exploring options for cutting, or at least postponing some, RTX 4000 production at TSMC, could we now be looking at a later launch date for next-gen Lovelace GPUs?
Or maybe Team Green will hold to the same launch timeframe – purportedly September, although October has recently been mentioned, too – but only relatively small numbers of RTX 4000 graphics cards will be produced to begin with, perhaps?
If that’s the case – and it’s still a big old if at this point – then that could lead to another GPU launch where stock is thin on the ground, and prices are therefore pushed higher (with scalpers falling over themselves to get involved, no doubt; and all the inevitable chicanery). Nvidia might even set pricing for RTX 4000 higher anyway – it surely won’t be more affordable than current-gen products – to help sustain demand for Ampere, while dropping price tags further on RTX 3000 GPUs in order to clear through the aforementioned ‘enormous’ amount of these graphics cards which are apparently still kicking about.
All of this is just theorizing, but nevertheless, there appears to be a growing sentiment on the rumor mill that Nvidia is not in an ideal situation regarding balancing selling through RTX 3000 models (lots of them) while introducing RTX 4000 cards, and something may have to temporarily give regarding the latter. Especially if inflationary forces and the wider economic picture worsen as the year rolls on (not an unimaginable scenario, by any means).
So, Nvidia had to fight the specter of supply issues with RTX 3000 for a long, long time, but now the battle is against the headwinds of demand? It seems a feasible scenario to us. However, the positive facet here is that if the RTX 3000 stock build-up really is along ‘enormous’ levels as suggested, then presumably we can look forward to some much bigger Ampere GPU price drops than we’ve already seen, as the effort to shift these products doubtless moves into a higher gear.