Due to falling graphics DRAM prices, overall prices for NVIDIA and AMD GPUs that power graphics cards for the PC segment and consoles will no longer rise as of this quarter.
Crypto Fall Hurts Graphics DRAM Market in Q3 2021, NVIDIA and AMD Graphics Card Prices Expected to Drop in Q4 2021
In TrendForce’s latest report, it is stated that the recent drop in crypto has hurt the entire DRAM market, specifically the graphics DRAM segment which includes GDDR6 and GDDR5 products. Several factors led to this drop, but the report points out that cryptocurrency is the main one, as demand for graphics cards from NVIDIA and AMD has declined significantly, with investor interest in BTC and ETH drastically declining.
It should be noted that given the highly volatile nature of the graphics DRAM market, it is relatively normal for graphics DRAM prices to reverse or fluctuate more drastically compared to other consumer DRAM products.
As such, if the cryptocurrency market remains bearish and smartphone or PC makers reduce their upcoming production volumes in light of the ongoing pandemic and component supply issues, there is little Graphics DRAM prices are likely to see a further increase in 4Q21. Instead, TrendForce expects prices in 4Q21 to remain broadly flat from Q3.
We have seen reports that NVIDIA and AMD graphics card prices are returning to normal and are nowhere near their “3X MSRP” peak that we saw in May 2021. Growing demand for DRAM and increasing Contract prices have been the main reason why we have seen prices increase with the pandemic situation and increase the cost of components / logistics as a whole. But with the DRAM prices halted and an improvement expected over the next quarter, we can expect graphics card prices to drop, especially if the crypto remains down.
This is also great news for the latest consoles from Sony and Microsoft, as graphics DRAM such as GDDR6 is one of the most vital components that power their new solutions. With the prices of graphics DRAMs coming down, we can expect the availability and prices of these parts to improve over the next quarter as well.
Sudden drop in cryptocurrency prices hurts graphical DRAM market in 3Q21, TrendForce says
Sudden drop in ETH prices caused GDDR5 and GDDR6 spot prices to drop
Recent observations on the spot trading of DRAM graphics products indicate that changes in this market are closely correlated with changes in the value of Ether (ETH) as graphics cards are the crucial tool for algorithm processing. mining of this cryptocurrency.
ETH prices have fallen by more than 50% in the space of two months following the latest measures adopted by regulators around the world to suppress speculation in cryptocurrencies. As a result, the interest of cryptocurrency miners and investors in ETH has also declined significantly.
Falling demand from cryptocurrency miners also means that a significant number of graphics cards are being pushed into the second-hand market. TrendForce’s survey shows that spot graphics card prices have fallen by around 20-60% over the past month or more. The differences in the extent of the decline depend on the generation of the brand and the technology. In addition, the widespread decline in spot graphics card prices has also severely constrained the spot demand for graphics DRAM.
According to TrendForce’s understanding, even though spot prices are always higher than contract prices for GDDR6 chips, the difference is quickly narrowing. This, in turn, will have a negative effect on the general price trend for GDDR6 chips in the future. The trade is even more moderate for GDDR5 chips which are used in previous generations of graphics cards from NVIDIA and AMD. Spot prices are currently around 20% lower than contract prices for GDDR5 chips. The difference here indicates that there is an overabundance of older graphics cards and the GDDR5 chips built into them are no longer in high demand.
Contract graphics DRAM prices are expected to increase by almost 15% for 3Q21, as the execution rate of graphics DRAM vendors remains relatively low.
With regard to the contractual graphics DRAM market, the seller side has considerable leverage in price negotiations, as these suppliers favor the production of server DRAM over other product categories. In today’s discrete graphics card ecosystem, graphics DRAM buyers such as Nvidia still opt for a bundled sales-based business model (i.e., graphics card makers who buy Nvidia GPUs must also buy graphics DRAMs from Nvidia).
Since Nvidia and AMD have cornered the vast majority of the graphics DRAM supply, laptop OEMs and manufacturers of small and medium-sized computer components (such as motherboards) will have a hard time sourcing enough DRAM graphics, while the performance rate of DRAM vendors for graphics DRAM chips remains relatively low. These aforementioned factors are responsible not only for the almost 15% increase in QoQ in overall contract graphics DRAM prices for 3Q21 (which is slightly higher than the corresponding price increases for consumer PC and server DRAM products for 3Q21) , but also why the spot prices of GDDR6 chips are about 10-15% higher than the contract prices.
Overall, prices in the graphics DRAM spot market, which is an extremely responsive market, have already started to reflect weakening demand from the finished product segment, especially for used graphics cards (NVIDIA / AMD). in cryptocurrency mining. As the supply of used graphics cards increases, some graphics card manufacturers may launch promotional price reductions to boost sales. In addition, buyers in the spot market may also start to anticipate even lower prices, and this anticipation will likely result in either a massive drop in their demand for graphics cards or a speculative attitude of those buyers regarding graphics DRAMs. TrendForce therefore estimates that the gap between spot and contract prices for GDDR6 chips will start to narrow in 3Q21.