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Editorial: Why Graphics Cards are So Expensive

This is an editorial piece. The views and opinions expressed in this article are those of the author and do not necessarily represent the views and opinions of, and should not be attributed to, Niche Gamer as an organization.

If you are into PC gaming at all, you’re probably aware that the price of graphics cards has gone up drastically. Let’s go over each issue in detail here.

The major offenders for the issue are due to the absolute fiasco of COVID-19 wrecking supply chains and productivity, people being stuck inside their homes, tariffs coming into effect, scalpers, and the return of crypto currency mining.

Firstly, this may be of no surprise to you, but after the lockdowns, new social distancing regulations, and slowing of global trade has made supply lines in every step just a few days longer to get the items where they need to go.

The markets outside Asia and the US were further impacted by the recent Suez Canal blockage. As graphics cards take longer to get to shelves and into hands, less sales are achieved overall. As such, prices rise to compensate.

This issue is also extended to graphics card manufacturing. Everything from the raw materials, to the memory chips capacitors, and even the fans and cooling devices are in shorter supply. AMD’s CEO stated at the start of the year that production will still experience “some tightness for the first six months of 2021, undoubtedly affecting production of the PlayStation 5 and Xbox Series X|S.

Though this was mostly an issue last year and productivity has increased, global trade has still ultimately slowed.

The other issue is PC gaming has grown quite a bit over the past few years, and people being stuck in their homes has increased demand exponentially. You can see this with the supply shortages from last year, thus making the list of people looking for an upgrade even larger.

As for the tariffs, it is a 25% increase on goods to vendors, but for the consumer it depends on the product. Even so, the latter has increased the price of products anywhere from 5 to 15%, along with increasing costs on memory. This likely won’t be coming back down soon.

That is an increase on MSRP however, and 5 to 15% isn’t all that insane; nowhere near double you’re seeing on eBay right now. Which brings us to our next point…

Scalpers are something our audience maybe familiar with, but for those unaware, a scalper refers to a person who buys large quantities of in-demand items, hoping that the items either sell out or are very limited in availability. The scalper will then sells the item at a higher price. These often include event tickets, and new electronics.

Scalpers have been buying GPUs from places like Best Buy, Amazon, Newegg, B&H, and others at retail; and reselling them at nearly double the price for months. A quick browsing of Ebay, Craigslist, or apps like Offer Up will show GPUs listed massively above selling price.

The RTX 3080 was supposed to originally retail at $699 USD, though due to tariffs and rising costs the MSRP went up around 10%. In the example above we see the card selling for just under $2,000 USD at the cheapest.

Prices in recent months have been showing signs of rebounding, as mining has become less profitable, and more stock is getting into gamers hands. Finally and as aforementioned, crypto currency miners have also been buying up GPUs at a breakneck pace, and run these GPUs all day to make a profit from transactions that people using that specific specific coin (generally Etherium).

The profits from this are invested in more cards; generally growing their business until it’s no longer profitable. They then sell off the GPUs at a loss. How long they remain profitable depends on the market, how many people are mining, how valuable the crypto currency is, and how fast newer cards are at mining.

A quick glance of Coinwarz.com shows the Etherium difficulty chart, which closely tied to profitability. It has had a 57% increase in difficulty since February 2021, and as miners make less per card per day, the value for them to buy new ones goes down. This should drive down costs, and lead to less scalpers, and eventually cheaper GPUs.

We’re still a while from being able to pick whatever specific model and brand of GPU you want, but the ability to at least buy something has gotten much better; especially at retail with stores like Microcenter generally restocking once a week.

So, when is pricing expected to normalize? In a recent video Hardware Unboxed noted that between their industry sources and information AMD and Nvidia has publicly stated, they expect prices to retain good availability and better pricing towards the second half of the year.

Though it is important to note that manufacturers have mentioned that they expect a lack of supply in general for silicon wafers. These are used in everything from CPUs, GPUs, smart devices and cars.

Hopefully we will see more availability in the coming months, as scalpers see less and less reason to buy up cards, and miners move on to greener pastures. There is also the upcoming Nvidia cards that have limiters on their mining profitability as well. Let’s hope that the issues die down before more consumer hindering methods are employed.

This is Niche Gamer Tech. In this column, we regularly cover tech and things related to the tech industry. Please leave feedback and let us know if there’s tech or a story you want us to cover!

Image: AMD, Taiwan Semiconductor Manufacturing Co., Ltd.

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Allen Watts

About

A long time PC gamer, He enjoys FPS, RTS and RPG games. He also has a love of PC hardware.




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