AMD and Nvidia under-shipping graphics cards to keep prices high

AMD and Nvidia have been under-shipping graphics cards in the past few months, keeping prices from plummeting amid weakened demand due to rising inflation and a significant dip in cryptocurrency mining.

PC Gamer reports that AMD CEO Lisa Su told investors her company had been under-shipping the sell-through or consumption of GPUs between July 2022 and December 2022, and would continue to do so in the coming months.

“We under-shipped in Q3 [2022], we under-shipped in Q4 [2022]. To a lesser extent, we will under-ship in Q1 [2023],” Su stated.

That means AMD is carefully balancing supply and demand to ensure its GPU prices don’t spiral to the point of becoming loss-makers.

This approach, combined with surging server chip sales, helped ensure that AMD posted a profit at the end of 2022, despite a 51% drop in AMD client PC sales.

Lisa Su, AMD chief executive officer. Photographer: Marlena Sloss/Bloomberg

GPU demand has plunged due to lower consumer spending and a crash in the cryptocurrency market that made mining less profitable, resulting in miners dumping cards on the second-hand market.

Su’s admission comes after Nvidia chief financial officer Colette Kress also told investors it was taking a similar approach to gaming GPUs in November 2022.

“We have been under-shipping gaming at this time so that we can correct that inventory that is out in the channel,” said Kress.

As a result, prices of Nvidia’s RTX 30 series cards have remained relatively high despite the launch of the RTX 40 series late last year.

Nvidia has also endured heavy criticism for the out-of-touch launch pricing of the RTX 40 series.

It also made a sneaky attempt to try and push up the price of what should have been the RTX 4070 by initially releasing it as a lower-end RTX 4080 card.

PC World reports that AMD’s RX 6000 series cards are also selling for very high prices, despite being two years old.

AMD and Nvidia in the same corner?

While there is a widely-held perception that Nvidia is more interested in making profits off cryptocurrency miners than putting cards in the hands of gamers, AMD was once widely regarded as the “good guys” of the gaming industry.

That was because it often released better-value graphics cards, offering customers an alternative to the dominant Nvidia.

Although it certainly makes sense that these companies want to improve their financial standing, particularly during a period of weak economic growth that could be detrimental to PC gamers.

Scalping and bulk-buying of GPUs for mining have meant that demand for GPUs skyrocketed in the past few years, leading to over-inflated prices.

A critical observer might think that AMD and Nvidia want this status quo to remain.

Some gamers are hopeful that Intel’s entry into the fray with its competitively-priced Arc graphics cards could pile the pressure on AMD and Nvidia to revise their approaches to pricing.

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AMD and Nvidia under-shipping graphics cards to keep prices high