We reported early this month that NVIDIA GeForce GTX graphics card prices will see a price uptick amounting to roughly 10% starting this month due to a global memory shortage. A new report by Mizuho’s chief semiconductor analyst emerged yesterday claiming that this pricing inflation trend will continue until December, when cryptocurrency driven demand is expected to die down.
GPU Channel Inventory Is Drying Up & DRAM Prices Are Going Up
Demand for NVIDIA graphics cards among cryptocurrency miners is better than expected this quarter, reports Mizuho, who have driven GPU prices up by 25% in the past six months.
“Our checks with the leading GPU and motherboard OEMs indicate SepQ GPU card trends are very strong, with card shipments coming in ~30-50% ahead of flat q/q expectations on strength from cryptocurrency mining. Cryptocurrency demand is driving strength in NVDA’s GTX 1060/1070 cards. The GPU/motherboard OEMs also noted GPU pricing was up ~25% in the last six months.”
Strong demand among cryptocurrency miners is expected to decline going into December, the analyst notes. Citing global DRAM shortages and bans on cryptocurrencies by China as driving factors for softening graphics card demand among miners.
“The OEMs also noted zero inventory of GPUs in the channel and constrained short DRAM supply and pricing also affecting GPU shipments. Coming off a very strong SepQ, there are also expectations in the supply chain that DecQ GPU sales could be muted in pricing and demand on recent cryptocurrency bans and DRAM shortages.”
Graphics card supply from both NVIDIA and AMD has consistently been under pressure over the past several months, due to the recent boom in the cryptocurrency coin Ethereum. Unlike other cryptocurrencies which can be mined with highly specialized ASICs, Ethereum can only be efficiently mined using GPUs.
As with any cryptocurrency, the mining difficulty for Ethereum is rapidly rising and is disproportionately outpacing its market value, making it less and less profitable to mine by the day. Combined with the latest crackdown on cryptocurrencies by governments globally and recent slump in the cryptocurrency market at large, the profit incentive to mine is slowly eroding. Hopefully overtime these unfavorable market conditions will help offset the rise in DRAM prices to bring GPU prices back down. In the meantime, strap-in folks, it’s going to be a bumpy ride for the remainder of the year.