Content of the material
- What’s the Reason Behind The Expensive Graphics Cards?
- Economic reasons of world
- New trade duties
- Nobody regulates prices
- Global inflation and the dollar exchange rate
- How You Can Get Your Hands on a Graphics Card
- Chip Shortages
- 4. One word: Scalpers
- Should You Build a PC in 2021?
- Buying a Console Instead
- Getting a Gaming Laptop
- Covid-19 and Gaming
- The pandemic
- 6. Those damned cryptocoins
What’s the Reason Behind The Expensive Graphics Cards?
Getting your hands on the latest Nvidia and AMD graphics cards was already difficult due to the ongoing COVID-19 pandemic, as the infectious virus harmed the entire manufacturing and supply chain.
Not to mention, the entire situation also led to an increase in the demand for graphics cards, as well as computer hardware in general, with people forced to stay at home for their safety. Companies and schools also shifted to a different arrangement with their employees and/or students staying at home to continue their work or education.
Further compounding the problem are cryptocurrency miners and scalpers that tend to empty retailer inventories within minutes of making the graphics cards available.
With fewer stocks available and a marked increase in demand, retailers simply couldn’t keep up.
However, what arguably drove the prices through the roof are the tariffs imposed on Chinese imports by the Trump administration.
The said tariffs took effect on December 31, 2020. Previously, traffic exemptions covered PC components such as graphics cards and motherboards. Unfortunately, the exceptions weren’t extended, which saw the price of high-end graphics cards like the Nvidia RTX 3090 and AMD RX 6800 XT increase in price by as much as 25 percent.
Without the tariff exemptions, building a PC in 2021 could get even more expensive going forward. Even though the price hike is most evident on graphics cards and motherboards, the increases will likely extend to other components soon enough.
Economic reasons of world
New trade duties
From the beginning of 2021, new duties on imported products from China will begin to apply in the United States. Until 2021, computer hardware was an exception to these duties, but now that is about to change. Prices are expected to rise from 7 to 25% for video cards, motherboards, power supplies, hard drives, etc. The main offices of the main component manufacturers are located in the United States, and since January 1, the companies have inflated official prices.
Moreover, global prices are formed based on the situation in the domestic market, and their rise is spread evenly across the globe. To circumvent duties, companies can bring near-finished products to the United States and perform only final assembly and packaging on-site. Or you will have to transfer production from China to other countries. But it will take time to adapt, and until then, computer hardware will become more expensive.
Nobody regulates prices
Graphics cards high-tech products. They do not belong to basic necessities such as food and medicine, and therefore their prices are not regulated by states. Here, manufacturers and retailers can pursue whatever pricing policy they want.
In official online stores, cards are sold at the manufacturer’s recommended price, but they are sold out in the very first minutes.
Nvidia is trying to convince stores to sell the cards at the recommended price in the early days after launch, but retailers quietly ignore the manufacturers’ admonitions. The same GeForce RTX 3060 should cost $ 330 \ € 330, but it is sold in stores 1.5-2 times more expensive. Of course, the company can end its partnership with the offending store. But in a situation where absolutely everyone is doing this, it will be madness and will only increase the shortage of equipment, and, therefore, its cost.
Global inflation and the dollar exchange rate
The gradual depreciation of money is going on all over the world. Over the past decade, the dollar has been depreciating by an average of 2% per year, that is, in 5 years it loses 10% of its value. There is also an element of psychology because the average user updates the map every 2-3, or even 5 years. Roughly speaking, the top-end card in 2022 will cost 30% more than the top-end video card in 2016 due to inflation alone. In our country, both the general economic recession and the growth of the dollar/euro exchange rates in recent years make their contribution, because it is in these foreign currencies that vendors set the price.
How You Can Get Your Hands on a Graphics Card
Wonderfully, during this struggle for graphics cards, communities have been born attempting to help others find and purchase graphics cards at the prices they were supposed to sell at.
Consumers of all stripes have also found loopholes to purchase graphics cards even when they are out of stock. Let’s go over a few strategies you can use to get your hands on one.
Lastly, chip shortages have ravaged production capacities of a multitude of companies in almost every industry. Companies are more dependent than ever on microchips developed by companies like TSMC (Taiwan Semiconductor Manufacturing Company) and Samsung.
Everything from cars to CPUs require chips, and production slowed to a fraction of its normal rate due to the Coronavirus pandemic.
To make matters worse, demand for chips took off as more and more people were staying home and buying electronics. The supply of chips dwindled as the demand for them increased.
GPU chips are the core component of graphics cards, so the current chip shortage only exacerbates the issue.
4. One word: Scalpers
High demand and supply shortages are the perfect recipe for folks looking to flip graphics cards and make a quick buck. The second they hit the streets, the current generation of GPUs were set upon by “entrepreneurs” using bots to buy up stock faster than humans can, then selling their ill-gotten wares for a massive markup on sites like Ebay, StockX, and Craigslist.
It’s no small matter. By the end of January, over 50,000 RTX 30-series graphics cards had been sold on Ebay and StockX.
You’ll usually find most modern GPUs going for twice their suggested retail price (or more) on those sites, and almost never find fresh stock at reputable retailers unless you’re using bots or Discord chats of your own to seek out hardware the moment it appears online.
Don’t count on Nvidia’s mining cards to bail us out of this abysmal situation. We can hope, but the outlook isn’t exactly great. Expect GPU prices to stay high, and perhaps even continue to rise.
It seems like Ethereum 2.0’s release will likely be the bigger impetus for lower GPU prices, as there will likely be a mass surge of second-hand mining cards on eBay and other second-hand marketplaces in the months prior to Ethereum’s proof-of-stake debut.
A massive increase in the supply of used graphics cards should cause a sharp drop in price, should this happen. It’s too seen to tell at the moment, but at least there’s a glimmer of hope on the horizon.
Should You Build a PC in 2021?
What’s currently happening right now is what many refer to as the “perfect storm”.
While retailers and manufacturers are trying their best to supply interested parties with the graphics cards that they want at their suggested MSRPs, there’s just so much that’s outside of their control. Until the supply can keep up with the rising demand, don’t expect to get yourself a high-end graphics card for its minimum MSRP rate.
So, what does this mean for those who want to build a gaming PC in 2021? Well, unless you plan on building a $500 gaming PC, we suggest that you don’t.
If you currently have a mid-end gaming PC that you built with components bought and/or installed within the last couple of years, we suggest that you hold on to it. The current prices won’t agree with your wallet. As a matter of fact, you could probably sell your current set-up for as much as you paid for it years ago if not more, depending on the components.
If you’re building a PC from scratch, being patient and thorough is crucial. It’s impossible to avoid price hikes. However, you can avoid paying for overpriced graphics cards from scalpers if you reach out to retailers and ask to be put on their waitlist if they have one.
You can also check online marketplaces for second-hand graphics cards from people who aren’t looking to cash in on the whole price hike and are selling their older graphics cards for a fair price.
There are also other viable alternatives, such as:
Buying a Console Instead
Sure, they’re not exactly easier to get your hands on, and they’re also just as prone to scalping. But, the whole stock shortage is starting to show signs of improvement and should only get better.
Getting a Gaming Laptop
If you do really need a gaming PC, we also suggest getting yourself a gaming laptop instead.
At the current price that desktop-grade graphics cards and processors are going, their laptop counterparts currently present a much better value. Plus, you get the added benefit of the laptops being much more portable.
Covid-19 and Gaming
For anyone who is a gamer, it isn’t a surprise that the amount of gaming done during a lockdown surged. Apparently, the rest of the world didn’t get the memo.
Sales of consoles and time spent playing video games spiked in March of 2020 and haven’t really gone since. All that interest created unprecedented demand for consoles.
The terrifyingly well-timed release of Animal Crossing: New Horizons in March of 2020 and the subsequent sales of Nintendo Switch consoles grew the company’s profits threefold in 2020.
As Steam put it in their ‘2020 Year in Review,’ “Video game playtime surged when people started staying home, dramatically increasing the number of customers buying and playing video games, and hopefully bringing some joy to counter-balance some of the craziness that was 2020.”
Long story short, people were spending record-breaking amounts of time gaming, and interest in consoles grew to a breaking point.
Then the next generation of consoles was released in November of 2020 with the Xbox series X and S and Playstation 5. Initial demand led to sellouts across the globe almost immediately. Supply for both consoles hasn’t caught up with that wild demand more than a year after their release.
In December 2020, Lawrence Hryb, the director of programming for Xbox live said in a Microsoft year-end podcast: “I get some people [asking], ‘why didn’t you build more? Why didn’t you start earlier? Why didn’t you ship them earlier? […] It’s really just down to physics and engineering. We’re not holding them back: we’re building them as fast as we can.”
And unfortunately, he’s right: chip producers like TSMC are running at or beyond full capacity. Even the prospects of raising those limits can take years.
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The COVID-19 pandemic sent the world into disarray. With national lockdowns around the world, people started working from home or were just unable to work. Resulting in a shutdown in production as well as an increase in demand, a simple supply and demand issue. More people at home, especially working, resulted in people wanting upgrades to their hardware or investing in new hardware. Such as monitors, new parts, computers, consoles, and so on.
With such a higher demand for stock, retailers were unable to keep up, with everything they have selling out. Then trying to get any stock again would prove difficult with everyone else also trying to get the same products. Any stock the retailers and suppliers would try to get everyone else would be aiming for too, increasing the demand drastically without enough supply.
This situation across multiple countries would put a massive strain on the manufacturers and transporters. So with limited capacity in manufacturing, and transporting across the globe everything became backed up. With unprecedented demand, everyone was waiting for these parts to come through along with other essential supplies that would be needed. Leading to either low or no stock being produced or a massive delay on anything being sent out.
6. Those damned cryptocoins
The situation was already untenable for PC gamers after the tariffs rolled out, but then cryptocoin speculators poured gasoline on the fire.
Whenever cryptocurrency prices boom, graphics cards become scarce, as we previously saw in 2013 and 2017. You can’t use consumer graphics cards to mine Bitcoin, the most well-known cryptocurrency, but you have to use standard GPUs to mine Ethereum. You can then trade your Ethereum for Bitcoins or cash at cryptocurrency exchanges. Well, Bitcoin’s price exploded starting in October 2020, and in January, Ethereum’s price followed. In April 2020, one Ethereum was valued at $140, per Coindesk; by October, when Bitcoin’s surge started, Ethereum hit $350 per coin. That tripled to roughly $1,000 by the beginning of January 2021, hit an apex at $1,958 in mid-February, and currently still goes for nearly $1,700.
When Ethereum prices go this wild, pretty much any graphics card with more than 4GB of memory can be profitable. As a result, the already-outrageous GPU shortage became even more pronounced, with even used two- or three-generation-old graphics cards selling for more than they cost new years ago. Things are so bad that Nvidia revived the RTX 2060 and four-year-old GTX 1050 Ti to help with supply. Gross.
And with Ethereum booming, this perfect s***storm finally coalesced into the GPU disaster we’re seeing today.