Executives from Asus said at the company's recent investor conference that supply of Nvidia's graphics processors dropped in the first quarter. As a consequence, one of the world's largest suppliers of PC hardware expects shortages of graphics cards to persist. Asus believes that under supply might have been caused, among other things, by lower-than-expected yields of Nvidia's latest GPUs.
"The most pressing issue for GPUs right now is the shortage of Nvidia's GPUs," an Asus executive said at the company's latest investor conference. "There was a quarter-over-quarter decrease in shipments [in Q1]. Because of that shortage, we are seeing [graphics cards] price hikes."
Nvidia supplied about 9.1 million of standalone graphics processors for desktop PCs in Q4 2020, about a million more than it shipped in Q4 2019, according to data by Jon Peddie Research. Because of strong demand for PCs and gaming graphics cards in Q3 and Q4 last year, which neither Nvidia nor AMD could meet, the price of graphics cards has skyrocketed. After the prices of cryptocurrencies also soared, demand for GPUs from cryptominers increased also, increasing the prices of graphics cards. At present, it is nearly impossible to get a modern graphics board at its MSRP.
Asus admits that it cannot estimate what percentage of the graphics cards it sells end up at the hands of cryptominers. On the one hand, it does not make much financial sense to mine Ethereum using GPUs, but on the other hand over the past few months we have seen people mining cryptocurrency using gaming notebooks. Therefore, while the root cause of graphics cards shortages is under supply, miners clearly have an impact on availability of boards in retail.
From Nvidia's standpoint, the drop of supply in Q1 compared to Q4 makes sense. Fabless chip designers book production capacities quarters in advance. Typically, sales of graphics cards peak in Q3, then drop in Q4, then drop once again in Q1. To that end, when Nvidia made orders for GPU production in Q4 2020 (before demand started to skyrocket), it was illogical for it to increase GPU production in the fourth quarter as it anticipated sales to drop in Q1 2021.
Asus believes that yields of Nvidia's Ampere GPUs at Samsung Foundry are below anticipated, which limits the company's ability to quickly boost supply even if it has a chance.
"As for when we will be able to resolve this gap [between supply and demand], it is really hard to tell," an executive from the company said. "Our guess is that the gap might have been caused by lower yields upstream. As for when [Nvidia] can increase that yield is something hard for us to predict."
If Nvidia's Ampere yields at Samsung Foundry are below expectations, this will make GPU supply even worse and the situation on the market even more uncertain.