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EKWB to Cut Workforce by 25% as Watercooling Sales Plummet

EK-Quantum Vector FE RTX 3090 D-RGB Water Block
(Image credit: EKWB)

In a statement and interview provided to TechPowerUp, watercooling specialist EK Waterblocks has announced a severe, 25% cut to its workforce. Citing lower than expected sales volume for watercooling components, around 60 of its current 200 employees based in Slovenia, the company's home base, will be dismissed. In addition, the company's 1Q2022 report outlines a 20% reduction to its quarterly earnings since October 2021, a far cry from the company's 30% growth between 2020 and 2021.

The move stands as a step back for the company, resetting its 2021 development, which led to the addition of 64 employees to its roster thanks to five consecutive years of sustainable revenue growth. EKWB even received the Golden Gazelle Award by the Slovenian chamber of commerce to recognize its management success.

EKWB seems to be cautiously approaching current and future market dynamics. In its statement, EKWB justifies its decision based on lower than expected consumer spending, which it attributes mainly to the COVID-19 pandemic, the industry's logistics and supply issues, and spikes in PC hardware prices. EKWB CEO Matjaž Krč goes further, citing the pandemic's possible sociological impact on consumers' consumption priorities as they opt to spend more on outdoors experiences and products than those that would keep them mostly indoors (such as gaming).

There is one possible cause that EKWB didn't attribute to its lower than expected revenue: GPU market dynamics following the crushing availability issues in the latest, Best Graphics Cards from AMD and Nvidia. These graphics cards are the prime candidates for EKWB's product portfolio. So it stands to reason that increased pricing on GPUs would hit the sales of specialist aftermarket add-ons due to the additional strain on consumers' budgets.

While GPU sales have experienced record-breaking revenue (something Nvidia almost provocatively touted to its investors), a significant portion of those sales were attributed to cryptocurrency miners. These customers generally don't upgrade their GPU cooling solutions due to both the nature of Ethereum mining's workloads (partial to VRAM) and the additional overhead placed on recouping their hardware investments. Scalping also does little to aid the situation, as it drives GPU purchase costs up, potentially locking consumers out of costly - yet ultimately dispensable - GPU hardware upgrades such as the waterblocks EKWB manufactures.

EKWB stated that its workforce cut has been designed to prime the company for further, sustainable growth whilst shielding it from the current market dynamics. Rampant energy and commodity prices in Europe will likely maintain a downwards pressure on the company's sales for some time. 

It seems safe to say that the longer the Russian-Ukraine conflict lasts, the more specialist PC hardware companies such as EKWB will suffer. While specialists expect the industry-wide shortages to disappear throughout 2022 and towards 2023 on the back of demand adjustments, consumers spending less won't do companies such as EKWB any favors.

Francisco Pires
Francisco Pires

Francisco Pires is a freelance news writer for Tom's Hardware with a soft side for quantum computing.

  • hotaru251
    a far cry from the company's 30% growth between 2020 and 2021.

    thats to be expected...the pandemic inflated most tech related fields due to nobody being able to go anywhere.
    Reply
  • Eximo
    There are going to be a flood of used GA102 cards on the market at some point. All with fans that have been running 24/7. I would think those would be prime candidates for water cooling. But then I suppose all the enthusiasts will jump to the 40 series and putting existing 30 series waterblocked cards on the market.

    Then you have 450W-600W cards on the horizon... Time for more partnerships.
    Reply
  • jkflipflop98
    Eximo said:
    There are going to be a flood of used GA102 cards on the market at some point. All with fans that have been running 24/7. I would think those would be prime candidates for water cooling. But then I suppose all the enthusiasts will jump to the 40 series and putting existing 30 series waterblocked cards on the market.

    Then you have 450W-600W cards on the horizon... Time for more partnerships.

    I came in to write pretty much the same thing. Just hang in there a little longer, guys. Watercooling sounds like it's going to be mandatory going forwards with 600W+ GPUs. You're going to have to send all that heat somewhere.
    Reply
  • Geef
    First Paragraph: ... a severe, 25% cut to its workforce. Citing lower than expected sales volume for watercooling components, around 60 of its current 200 employees based in Slovenia, the company's home base, will be dismissed. In addition, the company's 1Q2022 report outlines a 20% reduction to its quarterly earnings since October 2021, a far cry from the company's 30% growth between 2020 and 2021.

    ---

    You might need to look at your numbers again.

    60 of 200 employees = 30%

    If the number was closer to 40 of 200 then it would be around 20%.
    Reply
  • Ryan F. Mercer
    I bought a new motherboard, CPU, and tower last year. Spent a small fortune on the liquid cooling. I didn't want to bend the hardlines myself, so I went with glass pre-bent 90s. Looks great and works like a charm, but it also required using a lot of fittings. It must be 10 pounds in brass alone.

    I had purchased my CPU literally a day before the prices shot up over MSRP on Amazon. I felt pretty good about that, but then I had to find a motherboard for it. That required some careful consideration due to wide spread shortages, but I felt like I lucked out again with a less sexy overlooked board that met my specific needs. I added a quadro to it to round out its capabilities for liquid cooling and I have not been disappointed.

    Unfortunately, by the time I got around to considering graphics cards, it was already a post apocalyptical wasteland. So I'm still using the old card from my old tower. It's literally 13 years old and driver updates ended a long time ago. On the bright side, it has an HDMI port. I future proofed it when I bought it. Hard to over appreciate that now.

    Anyway, its been a full year of waiting for prices to come down and it looks like it will be just another few months before I can finally pull the trigger. I already have my coolant bus ready to go and all the parts I need to finish. I just need to select my coolant block. $$$
    Reply
  • IceQueen0607
    EKWB was my first choice for a custom cooling solution, which I would dearly love to install in at least 2 PCs, preferrably 3. But with a price tag of over A$2500 for a beefy solution to cool some HEDT CPUs, it was just out of reach :(

    Some of the parts are not even available locally and had to be shipped over to Australia, which is never cheap and these days, rarely quick.
    Reply
  • IceQueen0607
    jkflipflop98 said:
    I came in to write pretty much the same thing. Just hang in there a little longer, guys. Watercooling sounds like it's going to be mandatory going forwards with 600W+ GPUs. You're going to have to send all that heat somewhere.

    And take out a second mortgage to cover the electricity costs :)
    Reply
  • cryoburner
    The move stands as a step back for the company, resetting its 2021 development, which led to the addition of 64 employees to its roster thanks to five consecutive years of sustainable revenue growth. EKWB even received the Golden Gazelle Award by the Slovenian chamber of commerce to recognize its management success.
    That just goes to show you how much awards mean. What a poorly-managed company. Hire a bunch of employees on without looking into the actual reasons why they are experiencing increased sales in the short-term and whether those conditions could change in the near-future, then let a similar number of employees go the following year because it turns out that growth was largely down to short-term industry conditions that were inevitably going to correct themselves a short while later. 2020 saw higher sales of computer equipment due to people staying at home out of necessity. But after those in need of new systems bought them, that reduces the market for those who will be shopping for a system in the near future. Rather than hardware sales increasing in the long-term, future sales were simply getting shifted ahead. Potential customers who would have normally held off a little longer moved up their purchase and are now no longer in need of their products.

    Geef said:
    You might need to look at your numbers again.

    60 of 200 employees = 30%

    If the number was closer to 40 of 200 then it would be around 20%.
    I noticed that as well, but considered that if 200 were referring specifically to their workforce in Slovenia, it's possible that they may have additional employees outside the country as well. Though looking at the referenced article at TechPowerUp, they describe those numbers as being "over 60" and "200+", so Tom's seems to be misreporting the numbers a bit, listing them as if those were the specific values. The TPU interviewer also asked EKWB about ex-employees suggesting that the number of layoffs is even higher when including additional layoffs from recent months, but the company representative talked around the question and tried to put a positive spin on it by referencing an unrelated "employee engagement survey" from last year, so it's likely that the number of layoffs is even larger than what the company is suggesting for this "one-time measure to optimize operations".

    Also, TPU brought up in their interview that it looked like "most of the people let go were R&D engineers/technology personnel". The representative from the company suggested that all departments saw similar cuts to personnel, though if big cuts to R&D is true, perhaps they are planning on outsourcing design, or scaling back their product offerings.

    Eximo said:
    There are going to be a flood of used GA102 cards on the market at some point. All with fans that have been running 24/7. I would think those would be prime candidates for water cooling. But then I suppose all the enthusiasts will jump to the 40 series and putting existing 30 series waterblocked cards on the market.

    Then you have 450W-600W cards on the horizon... Time for more partnerships.
    Who exactly is going to spend top-dollar on high-end water-cooling equipment for a used, generation-old card that was operated under harsh conditions and could be more prone to failure at any time? The kind of people putting water-blocks on their cards are far more likely to be buying new hardware, and those buying used tend to be looking for a bargain and not willing to spend more the bare minimum.

    And while I'm not sure if EK has ever done partnerships, they seem more like an aftermarket hardware company. They also appear to be relatively pricey, and a graphics card manufacturer would be more likely to go with some less-expensive solution to improve their bottom-line. I also don't expect waterblocks on high-end consumer cards to become common, as its a relatively niche market. A custom loop requires more planning and maintenance than the vast majority of people would be willing to dedicate to it, and to the manufacturer, water-cooling can open up more potential points of failure that they won't want to deal with returns or recalls over.

    As for 600 watt consumer graphics cards... eh, maybe, though I wouldn't count on current rumors necessarily being accurate. And such a card would likely be super-niche, potentially priced at a few thousand dollars, and probably just there to claim some performance crown rather than being a practical product seeing widespread distribution. Cards have managed to reach similar power levels before, like the "580 watt" Radeon R9 390 X2, and that card utilized air cooling, so water cooling isn't necessarily a requirement for such a card.
    Reply
  • lothear
    They got greedy and started raising prices Imho. They also got rid of some products that I preferred. Not surprised at all.
    Reply
  • escksu
    2020-2021 sales are not true indication of growth. They are basically 3-4yrs of growth compressed into slightly over a yr.
    Reply