GPU prices set to rise due to DRAM shortages and cryptocurrency mining

With the release of AMD's new lineup of GPUs, including the Vega brand, many expected the increased competition as AMD nears performance parity with Nvidia to drive GPU prices down. That may not be the case, however, if analysts from a Japanese financial giant are to be believed.

Vijay Rakesh from the Mizuho Financial Group believes that not only will Nvidia see strong demand for its GPUs in the coming quarter but that sales may even exceed the company's estimates by as much as 30-50%. This is largely as a result of increased demand from buyers not looking to play games but rather using the hardware for mining cryptocurrencies like Bitcoin, driving sales of GTX 1060 and 1070 cards immensely.

On the other hand, as demand is increasing at a ludicrous rate, supply channels are becoming increasingly taxed as the DRAM memory GPU need is starting to face shortages. IC Insights, an industry research firm, is already estimating a 40% increase in price-per-bit, making it the largest ever increase of this nature.

According to IC, less than fair practices by GPU manufacturers in the past may partially be to blame for the increase in costs:

"Just one year ago, DRAM buyers took full advantage of the oversupply portion of the cycle and negotiated the lowest price possible with the DRAM manufacturers, regardless of whether the DRAM suppliers lost money on the deal. Now, with tight capacity in the market, DRAM suppliers are getting their ‘payback’ and charging whatever the market will bear, regardless of whether the price increases hurt the users’ electronic system sales or causes it to lose money."

The effects of these changes in the market are already being felt by the OEMs and the shockwaves may soon reach buyers in retail channels. According to Rakesh, OEMs noted that "pricing was up [approximately] 25 percent in the last six months" while they had "zero inventory of GPUs in the channel."

As the two fingers of the invisible hand of the market come together, customers will be the ones to feel the pinch as OEMs may soon push their higher costs down to retailers. Nvidia isn't the only one to be affected, though, as rumours suggest increased demand from cryptocurrency miners have already delayed AMD OEMs' release of Vega products as well.

Source: IC Insights, Barron's Asia via VentureBeat

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