For just about ten months and counting, a GPU supply shortage has made it very near to impossible for gaming enthusiasts to get their hand on Nvidia’s premium offerings like the RTX series of GPUs. The situation with the company’s closest rival, Advanced Micro Devices (AMD), wasn’t any better. In fact, it mirrored the demand that outstripped the supply and the inflated prices on secondary markets.
Though the effects of the supply deficit seemed to hit in a sudden instant, the build-up to where we are now began a little while before 2020 exposed all the gaps.
The Timeline Of Events that lead to GPU shortage
The first signs of trouble came in February of 2020. The world leader in GPU production, Nvidia, reduces its projected revenue for the first quarter by approximately $ 100 million as the company grew concerned about the possible impacts of the Covid-19 outbreak.
About a month later, the situation is only worsening. Following the World Health Organisation’s declaration of a global pandemic, the whole world begins to go into a state of “lockdown”, which devastated supply chains as borders are closed.
As the world economy rapidly slowed, many of the people fortunate enough to remain employed now need to work from home. As a result, the internet economy was booming, driving up demand for computers and other related products at the worst possible time for manufactures and distributors.
As if getting products to their end consumers wasn’t already tricky enough for Nvidia and AMD, the entry of the so-called “scalpers” only intensified the pressure that chip makers were already being subjected to. By making use of bots, the scalpers were able to rapidly get ahold of new release GPUs. Then sell them on the secondary market for two to three times their original market price.
The scalpers didn’t stop there, a successful run at disrupting the supply of GPUs to gamers was just the beginning. From there, scalpers set their sights on Sony and Microsoft’s highly anticipated launches of their latest consols, the PS5 and Xbox One – scooping up all available stock to sell it at inflated prices on sites like eBay and Amazon.
Crypto and its effect
Last but definitely not least, the global lockdowns came as a boon for the cryptocurrency market. Just like in 2017, the growth in retail demand for digital assets led to a spike in demand for GPUs, which are used to “mine” some of these coins/tokens.
It is probably worth noting that the global chip shortage is not limited to GPUs. Part of the reason that the PS5’s and Xbox Ones we’re so quickly and easily bought out has to do with a worldwide silicon chip supply deficit. One that’s been there for quite some time, but only recently reaching a climax.
What Might The Future Hold?
This is not the first time the world experiences a chip shortage, a similar situation played out during the mid-eighties to the early nineties. During that time, Nintendo was unable to fully meet the demand for the highly anticipated release of Super Mario Bros 3. Even going as far as cutting the production of other releases to try to make more room for it.
However, the shortage was filled as the cost of manufacturing chips steadily decreased. As the world starts to get the pandemic under control, we can expect the availability of chips to increase. For now, though, we have to make do with what we have.