Hardware

NVIDIA said it is not afraid of higher prices for the production of chips

Colette Kress, NVIDIA CFO, took part in the Citi Global conference, and the list of issues discussed was predictable. The shortage of video cards and other components, rising costs and the situation with mining – all these topics have not disappeared from the agenda for several months in a row.

Image source: Citi

Image source: Citi

First of all, let us pay attention to the fact that NVIDIA admits that the prices for video cards are still far from the recommended ones, and that the growth of costs for the production of video cards has taken place in recent months. Note that costs will continue to rise as contract manufacturers, including Samsung and TSMC, have announced upcoming price increases for their services. However, Colette Kress argues that NVIDIA is not afraid of this trend, as it has become accustomed to continuous cost increases since its inception. The company manages to maintain an acceptable profit margin by changing the structure of product sales. In other words, more expensive video cards are coming to retail, and so far this allows us to compensate for the increase in costs.

Senior NVIDIA Employee acknowledged an up-to-date forecast about the absence of a real opportunity to eliminate the shortage of gaming video cards by the end of this year. At the same time, the company is doing everything possible to solve the problem. It helps manufacturers of video cards to receive in adequate quantities not only graphics processors, but also related components. Long-term contracts are entered into with suppliers, and NVIDIA emphasizes that it has sufficient weight in the business world to successfully conduct such negotiations.

With all this, NVIDIA is pleased with the results of cooperation with both TSMC and Samsung. In the current generation of graphics solutions, the former supplies it with 7nm Ampere accelerators for the server segment, and the latter supplies 8nm gaming GPUs for GeForce RTX 30 series graphics cards. The last to be seen by NVIDIA’s management team is the bright future, as only 20% of GeForce owners have switched to ray-traced graphics cards, and the market still has a lot of upgrade potential.

Last but not least, NVIDIA explains its confidence in the absence of the threat of another “crypto hangover”, which left the company with an impressive stock of unrealized Pascal generation chips a couple of years ago after the collapse of the cryptocurrency market. This time, as the management of the company likes to repeat, gamers are ready to buy the current generation of Ampere, since demand significantly exceeds supply. At the same time, according to Colette Kress, miners simply could not buy a significant number of video cards with this architecture, since they were simply produced in a limited edition. That is, in the secondary market, even in the event of a collapse of the cryptocurrency market, we will not see a significant number of used video cards of the Ampere generation.

NVIDIA continues to consider the decision to divide products into target segments in terms of suitability for mining very effective. Professional cryptocurrency market players have gained access to CMP accelerators that will not be in demand by gamers in the secondary market. Game lovers buy LHR series video cards with artificially limited mining performance. NVIDIA management continues to insist that the experiment has fully justified itself, and in the end it has become easier to buy gaming video cards.

About the author

Dylan Harris

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

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