The Drop In Graphics Chip Prices Signs The Global Chip Crisis Is Ending

The global chip crisis is expected to end. (photo: doc. pixabay)

JAKARTA - A sharp drop in graphics chip prices could signal an unexpected end to the global chip crisis that has crippled manufacturing from smartphones to cars, and the issue will be a major issue for chip companies reporting their results this week.

As Intel, Qualcomm and other chip companies are reporting, investors will be considering how to reduce consumer spending from inflation, China's COVID19 lockdown, and Russia's invasion of Ukraine to balance supply chain blockages for microchips.

The trigger was a drop in the price of GPUs, or graphics processing units, which were the brains of gaming engines and spread to other uses.

Analysts at Baird recently downgraded GPU maker Nvidia to "neutral" after prices dropped. So far this year, Nvidia's shares are down about 31% and rival Advanced Micro Devices has fallen about 37% compared to a roughly 22% drop on the Philadelphia SE Semiconductor Index. Both companies declined to comment.

GPU prices are still at a premium, but smaller. Susquehanna analyst Christopher Rolland said earlier this month that the markup above the manufacturer's suggested retail price or MSRP has fallen to 41% from 77%.

Graphics chip and hardware news site 3DCenter, which tracks graphics chip prices in Europe, reported that the prices of the AMD Radeon RX6000 and Nvidia GeForce RTX30, both used for gaming, fell steadily to less than 20% above the MSRP of 80% at the start. year. year.

However, a recent Reuters report found that Nvidia's GeForce graphics cards remain largely out of stock at retailers such as BestBuy and Newegg Commerce.

Baird senior analyst Tristan Gerra told Reuters that if electronics companies buying chips expect prices to fall further, they will cut inventories, cut buying further -- and push prices down. "This is a vicious circle." Gerra said.

Demand for GPUs may also fall as the cryptocurrency Ethereum is expected to change the way it operates later this summer, reducing demand for the graphics chips that power systems use to mine cryptocurrencies today, analysts said.

There is debate whether the lower prices will spread across the chip sector.

Weakening demand from the PC and smartphone markets has also resulted in lower prices for other chips such as leading-edge processors such as CPUs and some memory chips, according to Summit Insights Group analyst Kinngai Chan, who expects supply of some other chips made on older machines to increase. facing excess capacity in the second half of the year.

But Bank of America said weak demand in the gaming or cryptocurrency mining segments could be offset by growing data center demand for graphics chips and has reaffirmed its "buy" rating for Nvidia.

Meanwhile, major chipmakers, including Intel and TSMC, are planning billion-dollar expansions.