Graphic Chip Price Drop Raises Questions on Whether End of Shortage Is in Sight
A sharp drop in graphic chip prices could presage an unexpectedly quick ending to a global chip crunch that has crippled manufacturing from smartphones to cars, and the issue will be a central one for companies reporting results this week.
As Intel, Qualcomm and others report, investors will weigh how dampened consumer spending from inflation, China's COVID lockdown and Russia's invasion of Ukraine balance out supply chain blockages for microchips.
The trigger is a drop in prices of GPUs, or graphics processing units, which are the brains of gaming machines and are spreading to other uses.
Analysts at Baird recently downgraded GPU maker Nvidia to “neutral” after prices dropped. So far this year, Nvidia stock is down roughly 31 percent and rival Advanced Micro Devices has fallen about 37 percent compared with a roughly 22 percent drop on the Philadelphia SE Semiconductor Index. Both companies declined to comment.
GPU prices are still being sold at a premium, but a smaller one. Susquehanna analyst Christopher Rolland earlier this month said that the markup over manufacturer suggested retail price or MSRP has fallen to 41 percent from 77 percent.
Graphics chips and hardware news site 3DCenter, which tracks graphic chip prices in Europe, reported that the price of AMD's Radeon RX6000 and Nvidia's GeForce RTX30, both used for gaming, dropped steadily to less than 20 percent above MSRP from 80 percent at the start of the year.
Still, recent Reuters checks found that Nvidia's GeForce graphics cards remained largely out of stock at retailers like BestBuy and Newegg Commerce.
Baird senior analyst Tristan Gerra told Reuters that if electronic companies that buy chips expect prices to drop further, they will cut fat inventories,
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