We’re sitting on the edge of Nvidia GTC, where it’s all but confirmed that the company will launch its next-gen RTX 4090 graphics card. The last time we were in this situation almost two years ago to the day, Nvidia’s launch kicked off what would become the worst GPU shortage we’ve ever seen, and it’s just that if you’re nervous , we could be caught in this situation again. .
The RTX 4090 will almost certainly sell out when it launches, but you don’t need to get your F5 key ready to receive a GPU. Several factors have contributed to the GPU shortage, none of which apply this time around. If you’ve been waiting for next-gen GPUs to pull the trigger, don’t get carried away by the launch hype – all signs suggest the RTX 4090 won’t cause another GPU shortage.
Where demand meets supply
The biggest difference in this round is the absence of a pandemic that supply chains have to deal with. We’re down from the peak in cases earlier this year, and while there was a brief spike a few months ago, it doesn’t look like we’re headed for another lockdown. It helps, but the main reason we won’t see a shortage comes down to the supply chain.
The chip shortage, which ultimately led to the GPU shortage, has largely eased. Supply chain issues haven’t been fully resolved, but there are plenty of indications that there is an oversupply of chips and not enough demand for them. Nvidia alluded to this fact in its latest earnings call, saying it has “excess inventory” of RTX 30-series graphics cards and will start slashing prices to sell them. We see the effects now.
Demand for PCs, and by extension graphics cards, skyrocketed in 2020 and throughout 2021. Now that people are returning to the office, that demand has all but disappeared, but the components created to meet that demand remain. This is why we see GPU prices crashing so quickly. For example, the RTX 3090 Ti, which launched in April for a list price of over $2,000, is now closer to $1,200.
Even with an unforeseen COVID spike, the supply chain is unlikely to be in the dire state it was in 2020. Not only are businesses now sitting on excess inventory, but they have also navigated in the turbulent waters of rebuilding the supply chain during the worst of the pandemic.
While the pandemic certainly made the GPU shortage worse, it wasn’t the root cause. Nvidia’s problems in the previous generation started with Samsung. The RTX 30 series graphics cards use Samsung’s 8nm node, and reports shortly after the launch of these cards indicated that Samsung had a higher than expected defect rate.
If you don’t know, Nvidia is “fabless”, meaning that it doesn’t actually manufacture the GPUs for its graphics cards. Instead, chipmakers like Samsung take care of the manufacturing while Nvidia takes care of the design. It was a risk to go with Samsung in the previous generation, and clearly Nvidia doesn’t want to take the same risk this time around.
Nvidia uses chipmaker TSMC for the RTX 4090 and likely all RTX 40-series GPUs. TSMC was Nvidia’s partner until the RTX 30-series, and while we’ve seen past shortages, none of them they did not result from faulty manufacture. Going back to TSMC hopefully means fewer defective chips, which triggered the GPU shortage in the first place.
Manufacturing issues caused the GPU shortage, but crypto extended it. In particular, Ethereum has extended it. Although Bitcoin steals the show, the Ethereum blockchain is where the majority of GPU mining took place throughout the shortage – around 25% of all GPU sales during the shortage went to miners. Ethereum according to an estimate.
But Ethereum is in bad shape right now, which is why GPU prices are falling so quickly. This is a good sign, but GPU prices have been influenced by crypto for the past four years, so an Ethereum rebound could have been catastrophic. Fortunately, this is no longer the case.
Ethereum just went through its long-awaited “merger” which reduces the energy required for the blockchain and completely eliminates mining. Although the Ethereum group has been promising the change for some time, it has been perpetually delayed. Frankly, it didn’t look like the “merger” would ever happen, leaving the fate of the next GPU supply in limbo.
Now that the hammer has fallen, it’s much easier to have confidence in the upcoming GPU supply. Even if there are shortages, another crypto boom is unlikely to prolong and worsen the shortage, which we saw in 2020 and briefly towards the end of 2017.
While it’s highly unlikely that we’ll see another GPU shortage on the scale of the one that occurred in 2020, short-term shortages are likely. Whenever a new generation of GPU or CPU is released, there is a short period of a few weeks where they are sold out everywhere and prices skyrocket on the used market. Usually, prices drop quickly as supply stabilizes.
I expect we’ll see an exaggerated version of that with the RTX 4090. Given how big the cash cow GPUs have been over the past two years – one estimate says scalpers made $61.5 million in selling GPUs in 2020 alone – I wouldn’t be surprised if the first wave of GPUs sold out immediately and ended up on the used market at 2020 prices.
That should fade quickly though, so don’t get carried away with the launch hype. It’s generally a bad idea to buy a GPU on release day anyway. The RTX 4090 won’t cause another GPU shortage on the scale of the one we just released, so don’t worry too much about picking one up on launch day.