Jensen Huang of Nvidia and Lisa Su of AMD were both happy to announce that the market and especially graphics revenue increased - both putting it down to gaming. What they represent as gaming were, however, graphics card sales that mostly went to cryptocurrency enthusiasts. As one of our industry friends put it, Ethereum with a decent graphics card appeals to young guys as a money printing machine, especially as Mommy and Daddy are paying the electricity bill.
Second-hand graphics market
Now comes the bad part that will negatively affect both Nvidia and AMD. The graphics card supply is returning to its normal cycle. Nvidia and AMD cannot charge people massive amounts above average selling price and they have to return to the pre-cryptocraze stage. This is destroying margins in the first place, but there is an even uglier poison pill that slowly, but surely, has started to dissolve.
The aftermarket will be flooded with GPU and this creates two sets of problems. First, it will affect both Nvidia and AMD graphics card sales. When we say Nvidia and AMD, of course, this translates to AIBs and partners too.
First, there will be cheaper than average second-hand market gaming cards as people will want to get rid of them fast, for as much money as they can get. It is a simple demand and supply thing and this will drive prices down. The second problem is RAM, which can potentially skyrocket.
The cards have been mining for months, maybe even for a year at 24/7 and they were never designed to run so long atthis higher power and performance. There will be significant damage to the brands as people will curse the AIBs and chip manufacturers for the card failures.
Many GPUs were sold to miners under three months warranty terms.
Here at Fudzilla we expect a serious dip in GPU revenues this quarter and in the future. Nvidia will pick up with the launch of the Turing Geforce later this year, but it will be next to impossible to reach the volumes and especially revenues of the second half of 2017 and early 2018, ever.