Why are graphics cards so expensive?

Why are graphics cards so expensive?

In this article, we’ll look at the reasons why graphics cards are so expensive right now. Many of these factors are obvious. Here are the reasons why it is difficult to get new graphics cards at the moment. Whether you are looking for a next generation card or an older card, all the cards in the market currently boast of inflated prices and limited availability.

GPU shortages picked up steam in early 2020 as the COVID-19 pandemic sent millions into lockdown. This encouraged cooperative gamers to consider overdue upgrades, which tightened supply. And then cryptocurrency values ​​rose sharply throughout 2020 and 2021, and as GPUs are used to mine many cryptocurrencies, gaming hardware often ends up in mining rigs where their video outputs go unused. Above all, ongoing semiconductor shortages had already constrained supply, so powerful video cards quickly became scarce and expensive.

At the peak of the pandemic, it was not uncommon to see the latest RTX 30-series cards on eBay and Amazon for thousands of dollars. But any confusion about the normalization of prices in the short term is now being dispelled. Based on data from 3DCenter, Nvidia cards are now 72 percent off MSRP. Meanwhile, AMD cards are in even worse shape at 83 percent on MSRP. Most importantly, the trends are moving in the wrong direction. Last month, the same data set revealed that the prices of Nvidia and AMD cards had increased by 70 percent and 74 percent, respectively. This is probably due to the increase in crypto prices.

Reason 1: Increased Requirement of GPUs due to COVID-19

Another consequence of the pandemic: broken supply chains. Due to COVID-19, more and more people are working remotely or staying at home as much as possible. This has resulted in an increase in the demand for personal electronics. GPU prices are high right now because the market is hungry for them more than ever.

Whether it is for work or entertainment, many people are looking to buy electronic devices like computers, smartphones or tablets. This has greatly increased the demand for graphics cards, which is why graphics cards are so expensive at the moment.

Many towns and cities globally have implemented lockdown restrictions, limiting the amount of imports and exports that can pass through the region. A graphics card is considered a luxury item when compared to other essentials like food or water. you do the math. There are fewer GPUs floating around than the people who have the means, the need and the cash to buy them, and that is partly the fault of COVID.

Reason 2: Chip shortage due to increased floats

The demand for graphics cards is high when supply is low. The biggest reason behind the increase in the cost of graphics cards is the lack of chips.
Due to COVID-19 and other shipping problems, there has not been enough supply of semiconductor chips to meet demand. With fewer chips to go around, it throttles the graphics card’s output.
This means that only a few graphics cards are issued every day.
It’s not just graphics cards that use these special chips.
Other electronics such as laptops, video game consoles and smartphones depend on them for their production. They are also used in airplanes. A chip is required for practically anything electronic.

Reason 3: US duty on imports is also the reason for this

During Trump’s tenure as US president, new tariffs were being imposed on imports from Foreign Weekly, including a tariff that added a 25 percent tax on top of the asking price for graphics cards imported from China. This additional cost is passed along to American consumers through higher prices.

The Biden administration has not announced any plans to dial back Trump’s tariffs on China. The team would like to reevaluate their existing business agreements before proceeding with any new strategy.

Reason 4: The reason for this is also cryptocurrency mining

That being said, cryptocurrency mining in particular is a big part of why graphics cards are so expensive. The growing demand for graphics cards for cryptocurrency mining dates back almost a decade now, but came to a head in 2020. In mid-2020 Nvidia and AMD released their latest, fastest generation of graphic cards.
When we are discussing the increasing demand, it has been generalized with semiconductors. It is now true that there is a shortage of semiconductors globally, which has made graphics card production the slowest and most expensive. Graphics cards have become a hot commodity, along with global semiconductor shortages, amid the biggest jump in cryptocurrency’s value.

For each cryptocurrency transaction, the miner, again a third party for the transaction, receives payment for generating the correct hash. For cryptocurrencies like bitcoin, the amount of bitcoin per successful hash is constant. So when the value of bitcoin increases, a miner receives more money per successful hash: miners earn more money for the same amount of work.

Reason 5: Increased Expenditure on Goods

Since people were unable to leave their homes, many people chose to shop from online retailers to buy the things they needed. Many online retailers keep their factories out of the country, so they have to ship them to the country of origin for delivery. This made the shipping problem even worse as there were few ships in operation and shipping containers to be processed and unloaded. There were also fewer dock workers. This caused traffic jams at ports and further delays on goods.

A ship full of graphics cards has to wait its turn before docking at the port. Online shopping increased dramatically during the pandemic, which meant a lot of ships were at ports with cargo. Without the manpower to process those ships, many had to wait their turn. This made graphics card shortages even worse as they were unable to hand over products and deliver them to suppliers on time.

Hope this article is helpful to you.