Nvidia have a huge inventory excess problem, 300,000 GPUs returned from a single board partner

[Master Disaster]

So this one sounds a little out there but coming from Semi Accurate it's being reported that Nvidia have a huge excess of (presumably) Pascal GPUs in stock, one single Taiwanese partner has apparently returned 300,000 items to Nvidia and some are saying this is the reason why Nvidia are delaying the release of the next gen cards.

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NVIDIA seems to be having lots of trouble managing their GPU inventory or the excess of it as highlighted in new reports from Taiwanese based sources. Now the inventory issues may have exploded at NVIDIA HQ since a major Taiwanese OEM has allegedly returned 300,000 GPU units back to NVIDIA, that may end up causing a delay for the next-gen GeForce parts.

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Reports out of Taiwan now suggest that Nvidia has a gaming GPU inventory problem.

‘Semiaccurate’ reported on the issue yesterday, and cited excess inventory in the channel as the primary reason for new gaming GPU delay.

The glut is so severe that one top Asian OEM partner reportedly returned 300k GPUs to Nvidia.

This idea was discussed in more depth with members of my private investing community, The Razor’s Edge.

One of the reasons why Nvidia may have over produced GPUs is because Jen Hsun said back in February that he wants to get cards back in the hands of gamers.

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We’re working really hard to get GPU down to the marketplace for the gamers and we’re doing everything to advise retailers and system builders to serve the gamers. And so, we’re doing everything we can, but I think the most important thing is we just got to catching for supply.

 

Jen-Hsun Huang – NVIDIA’s CEO

Nvidia estimated that the mining craze would probably normalise in Q3 18 but here we are in Q2 are prices are almost back to normal already.

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“While NVIDIA was here they also let us know that the pricing in the market will continue to go up through Q3 of this year most likely before we start seeing any type of relief,” Hutch says.

 

Unfortunately, the end to this is not right around the corner and we have not seen the worst of it yet,” writes Hutchins. He also went on to pledge that Massdrop will continue to list graphics card deals when it can and that it’s currently selling cards “right above our cost just barely covering back-end expenses.” Massdrop.com via PCGamer

 

Strong demand in the cryptocurrency market exceeded our expectations. Cryptocurrency mining accounted for a higher percentage of revenue than the previous quarter. Keep in mind that’s very difficult for us to quantify down to the end customers view. Our main focus remains on our core market, as cryptocurrency will likely remain volatile.

 

Colette Kress – NVIDIA’s Executive Vice President and Chief Financial Officer

The backlog might explain why Nvidia have introduced those weird SKUs recently, new SKUs is a good way to reduce inventory.

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Due to crypto fall, NVIDIA OEM partners are returning the excess of supply. Now NVIDIA is known to have a tight grip on their top partners with programs such as NVIDIA Green Light and GPP (the highly controversial GeForce Partner Program which they pulled the plug from last month), but it looks like this time they have no option than to accept the GPU supply return. You might know that NVIDIA partners offer several GeForce SKUs such as the GTX 1060 with 5 GB memory and also a 3 GB variant of the GTX 1050. All of these are to reduce the huge inventory that NVIDIA and their partners currently have a hold of.

Nvidia are also buying huge amounts of GDDR5 ram at the moment, presumably so they can produce more cards to reduce stock.

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It is also stated that NVIDIA is buying large supplies of GDDR5 memory to feature on graphics boards featuring their overstocked GPUs. NVIDIA might try to sell the cards themselves to limit inventory but 300,000 is a huge number and gamers have been waiting for two years since the previous GeForce gaming cards to get something new for their PCs. But this overstock can actually result in a short delay for the upcoming generation since who’ll buy older cards when new ones are just around the horizon?

Now here's the WCCF bit, they're wondering if this is the reason why Nvidia are saying next gen cards are a long way off.

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This would also explain why Jensen Huang, NVIDIA’s CEO, said during Computex 2018 that next-gen GeForce cards are a long way from now.

https://wccftech.com/nvidia-oem-partner-300k-gpu-inventory-issues-next-gen-geforce-delay/

 

Interesting situation but I somehow doubt Nvidia delayed an entire new line because they have to much old stock although anything is possible I suppose.

[TheGlenlivet]

Interesting if true, but isn't the way to get rid of excess inventory to sell it at discounted prices?  GPU prices are down, but not under MSRP....

[TVwazhere]

3 minutes ago, Master Disaster said:

Nvidia estimated that the mining craze would probably normalise in Q3 18 but here we are in Q2 are prices are almost back to normal already.

Very close to MSRP in some cases (thank god)

 

Seeing an RX580 8gb under $300 is a relieving sight

[AlTech]

They could just pull an Apple and introduce new generation at regular prices and then discount the previous generation products but continue to sell them side by side whilst supplies last.

[Centurius]

2 minutes ago, TheGlenlivet said:

Interesting if true, but isn't the way to get rid of excess inventory to sell it at discounted prices?  GPU prices are down, but not under MSRP....

Why would they? There is no competing product so they'd literally be throwing away money when just riding it out until stocks dry up is likely to have little to no cost.

[Deus Voltage]

Not sure how to interpret this news. Part of me thinks that a miscalculation happened at some management level, hence it merits being called "unintended". Another part of me, the less reasonable part, feels there is something fishy going on that, as always, we're left on the dark about.

Either way, it merits further investigation and analysis. 

[Master Disaster]

1 minute ago, AluminiumTech said:

They could just pull an Apple and introduce new generation at regular prices and then discount the previous generation products but continue to sell them side by side whilst supplies last.

 

4 minutes ago, TheGlenlivet said:

Interesting if true, but isn't the way to get rid of excess inventory to sell it at discounted prices?  GPU prices are down, but not under MSRP....

I'd imagine someone paid a lot of money has analysed everything and concluded that the ROI isn't there and this would lose them money.

 

[Levent]

I highly doubt this is true (considering the article is on wccfshit), if they 300K gpu excess they would have already so it to an OEM (like HP)

[mynameisjuan]

Why does everything need a tin foil hat explanation. No competition is a very valid reason to not release a new product. 

[Master Disaster]

4 minutes ago, Centurius said:

Why would they? There is no competing product so they'd literally be throwing away money when just riding it out until stocks dry up is likely to have little to no cost.

I can 100% see the sense in this but then I have to imagine that RnD for the 1100 series must have been astronomical and every day Nvidia sit on the product is another day they've paid for and will not take any profit from.

[Master Disaster]

8 minutes ago, Levent said:

I highly doubt this is true (considering the article is on wccfshit), if they 300K gpu excess they would have already so it to an OEM (like HP)

It's been reported by multiple other sites first, in fact WCCF quote both Semi Accurate and Seeking Alpha numerous times as sources.

 

Did you read the article? These were sold GPUs that have been returned because there's simply no demand. Everyone made to many during cryptocurrency mining and now that's over everyone has to much inventory.

[Princess Luna]

I don't get this market, one day there simply is no way to address the high demands, shortages worldwide and super over-inflated prices, then the other day, hundreds of thousands of over-stocked cards, no idea what to do with them... purpose delay due to excessive stocks.... whaaat?

[AtlasWraith]

2 minutes ago, Princess Cadence said:

I don't get this market, one day there simply is no way to address the high demands, shortages worldwide and super over-inflated prices, then the other day, hundreds of thousands of over-stocked cards, no idea what to do with them... purpose delay due to excessive stocks.... whaaat?

Ah, the corporate world! It's great, ain't it?

 

/s

[Mira Yurizaki]

14 minutes ago, Deus Voltage said:

Not sure how to interpret this news. Part of me thinks that a miscalculation happened at some management level, hence it merits being called "unintended". Another part of me, the less reasonable part, feels there is something fishy going on that, as always, we're left on the dark about.

Either way, it merits further investigation and analysis. 

I think it's just poor timing. Nobody really knew if the crypto craze was going to last as long as it did and NVIDIA could've been ramping up production to try and appease the gamers. But then the whole thing collapsed on itself and high-volume production runs tend to have high inertia.

 

On top of that, there's the rumor of a new generation lingering so nobody's going to buy anything anyway unless they need something now.

[porina]

Random thinking... what is the typical worldwide sale rate for GPUs? That would give perspective to how significant 300k is. Also, what GPUs? Low end? High end? Mix? 1080 Ti seem to be holding onto elevated pricing compared to lower cards for example.

[Mira Yurizaki]

11 minutes ago, porina said:

Random thinking... what is the typical worldwide sale rate for GPUs? That would give perspective to how significant 300k is. Also, what GPUs? Low end? High end? Mix? 1080 Ti seem to be holding onto elevated pricing compared to lower cards for example.

It's a few years old, but I did find something on Anandtech: https://www.anandtech.com/show/10613/discrete-desktop-gpu-market-trends-q2-2016-amd-grabs-market-share-but-nvidia-remains-on-top

 

Supposedly there was a rise in 2016 and likely another one last year.

 

EDIT: Found a slightly more recent article: https://www.anandtech.com/show/10864/discrete-desktop-gpu-market-trends-q3-2016

Edited June 20, 2018 by M.Yurizaki
I said Anandtech, but posted Extremetech, lol

[NumLock21]

GTX 1080Ti, buy 1 get 2 free?

[Mira Yurizaki]

5 minutes ago, Sampsy said:

GPUs being at MSRP two years after launch is certainly not normal. They should be significantly below MSRP by now. 

Computer hardware is always going to be at MSRP unless something better comes out. They don't lower over time just because.

[Master Disaster]

13 minutes ago, M.Yurizaki said:

It's a few years old, but I did find something on Anandtech: https://www.extremetech.com/gaming/240208-gpu-sales-surged-2016-strong-demand-high-end-desktop-laptop-gaming

 

Supposedly there was a rise in 2016 and likely another one last year.

 

EDIT: Found a slightly more recent article: https://www.anandtech.com/show/10864/discrete-desktop-gpu-market-trends-q3-2016

So rounding that up to the closest whole is 15 million per year.

 

So that's 2% of the total yearly sales, not an insignificant amount to get back from a single partner.

 

Nevermind, I don't math good.

[porina]

4 minutes ago, M.Yurizaki said:

It's a few years old, but I did find something on Anandtech: https://www.extremetech.com/gaming/240208-gpu-sales-surged-2016-strong-demand-high-end-desktop-laptop-gaming

Let's take the 2015 44M figure, and assume say 75% nv share (making that up, no idea) that would still work out to be around 2.75M per month. 300k in that context is nothing. I'm not claiming any accuracy on my numbers, this is just to get a feel for the magnitude. It may be that everyone is full of GPUs already so it's 300k on top of that.

3 minutes ago, Sampsy said:

GPUs being at MSRP two years after launch is certainly not normal. They should be significantly below MSRP by now. 

We also have the ram pricing playing into this...

3 minutes ago, NumLock21 said:

GTX 1080Ti, buy 1 get 2 free?

Start promoting SLI again, sell more cards!

[yian88]

They can send me an 1080Ti that its in excess ill pay the shipping/taxes thank you Nfuckinvidia for your caring and understanding. /s

[Mira Yurizaki]

1 minute ago, yian88 said:

They can send me an 1080Ti that its in excess ill pay the shipping/taxes thank you Nfuckinvidia for your caring and understanding. /s

Why do you want an NVIDIA card if you're going to call them that?

[porina]

4 minutes ago, Master Disaster said:

So rounding that up to the closest whole is 15 million per year.

It looks like those are quarterly numbers, so combined it is still in ball park of 40M+ a year

[Master Disaster]

1 minute ago, porina said:

It looks like those are quarterly numbers, so combined it is still in ball park of 40M+ a year

Yeah you're correct, those numbers are also for Nvidia and AMD combined so what I said was useless

[yian88]

1 minute ago, M.Yurizaki said:

Why do you want an NVIDIA card if you're going to call them that?

I think you are just being confused by something, i can buy a product i need from you and curse you at the same time if i dont like you and your ways of doing things. Are you still confused? i dont feel like writing an in-depth novel.