NVIDIA Gamers need to realize current graphics card prices are
Hardware

NVIDIA: Gamers need to realize current graphics card prices are “normal”.

Almost half of his forty-minute speech at a technology conference Goldman Sachs NVIDIA CFO Colette Kress had to address the overproduction crisis in the gaming graphics card segment. According to her, prices have already reached almost normal levels, and by the spring of next year the company will be able to return to growth in the volume of deliveries of its products. Not far away is the announcement of a new graphics architecture, as she confirmed.

Image source: NVIDIA

According to Colette Kress, over the past five years, NVIDIA has grown its gaming segment revenue by an average of 20% annually, with about half of that increase coming from an increase in the average retail price of graphics cards and half from the increase in video card sales Number of graphics cards shipped provided. Since the pandemic began, NVIDIA’s gaming segment revenue is up 70%, mostly due to an increase in average selling price, although shipments have also increased.

In the long term, NVIDIA management sees an opportunity for further growth in the average selling price of gaming graphics cards, but now the conditions are not conducive to this. First, warehouses have accumulated many current-generation graphics cards. Second, the time of the pandemic (and cryptocurrency boom – approx. author) has formed such a high basis for comparison that it will be difficult to surpass the indicators achieved at that time in the current economic conditions.

Regarding the consequences of the cryptocurrency boom, Colette Kress did not dare to quantify the impact of this factor on the company’s sales in 2021, although she did the relevant analysis after the previous wave of “cryptocurrency fever”. The new NVIDIA CFO considers the influence of aftermarket graphics cards on the current sales situation to be limited. Unlike the used car market, it is very difficult to assess the condition of a used graphics card, which is why gamers prefer to buy new graphics cards.

According to Mrs. Kress, the demand for graphics processors is already very high, but many finished products have accumulated in the warehouses, which is why the company is forced to reduce the volume of deliveries on its part. “Our ultimate goal is to meet that demand and help people understand that GPU prices are already approaching normal levels, which is what we expected.” – said the finance director of NVIDIA. The company strives to get rid of excess inventory through pricing methods to stimulate demand. Normalization of the situation will occur somewhere in a few quarters. According to Colette Kress, by the end of the fourth business quarter (that is, in January), it will be possible to talk about the normalization of stocks of video cards in warehouses. In the period from February to April, the shipping volume of chips for gaming graphics cards from NVIDIA is expected to grow again.

The company is characterized by a surplus of products in the segment of solutions for professional visualization. That is, problems with the imbalance of supply and demand exist not only in the direction of the game.

About the author

Dylan Harris

Dylan Harris is fascinated by tests and reviews of computer hardware.

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