As the PC industry falters, Intel suffered such disastrous sales last quarter that it began cutting wages and other marginal measures going forward. AMD’s server PC sales also fell dramatically — a whopping 51 percent year-over-year — but the company managed to turn a small profit despite the sky-fall. So why aren’t CPU and GPU prices dropping? In a call with investors on Tuesday night, CEO Lisa Su confirmed that AMD has been “reducing shipments” of chips for some time to balance supply and demand.
“For the past two quarters we’ve either sold through or reduced consumption,” Sue said, as observed by PC Gamer. “We shipped less in Q3, we shipped less in Q4. We will reduce to a lesser extent in Q1.
With the pandemic abating and inflation rising, fewer people are buying CPUs, GPUs and PCs. It’s a hard, abrupt reversal from just a few months ago, when companies like Nvidia and AMD were churning out graphics cards as quickly as possible to keep up with surging demand from cryptocurrency miners and PC gamers alike. Now that GPU mining is dead, the shelves are full of unsold chips.
Update: Drew Prairie, AMD’s VP of Communications, reached out with the following explanation: “We ship below consumption because there is too much inventory in the channel and partners want to carry lower levels of inventory based on the demand they see and their expectations. The idea that we are doing this to keep prices “high” for their business…is not correct. Our server ASP was flat year-over-year due to a mix of CPUs shipped.
This article was originally published with the headline “AMD is sending chips under pressure to keep CPU, GPU prices high,” but has been updated to reflect AMD’s clarification.
Despite the painfully high price tags of the new next-generation GPUs, the last-generation GeForce RTX 30-series and Radeon RX 6000-series graphics cards are still selling. Most High prices considering their two year old condition. Strategic low shipping helps companies maintain high prices for their goods.
AMD isn’t the only one doing it.
“We’re continuing to watch every day in terms of the sales we’re seeing,” Nvidia CFO Colette Kress told investors in November. “So we shipped less. We are suppressing gaming at this time so we can fix that inventory in the channel.
Since then, Nvidia has released the $1,200 GeForce RTX 4080 and $800 RTX 4070 Ti, two very high-priced graphics cards in an attempt to position them as enthusiast-grade top sellers of the RTX 30-series, rather than treating them as regular cyclical upgrades. have. AMD’s $900 Radeon RX 7900 XT offers similarly disappointing value, and the company recently released a blog post positioning its new GPUs as enthusiast-grade top sellers.
Gross margin is a key metric for chip companies, which invest tons of money in R&D and cutting-edge technology processes. AMD’s market tactics helped it achieve a 51 percent non-GAAP gross margin last quarter, while Intel forecast a 34.1 percent gross margin for the upcoming quarter (hence its belt-tightening moves).
All of this helps explain why street prices for standalone GPUs haven’t dropped, even as deals on desktops and laptops have started to pick up. We expect—hope?—that sanity will return to graphics card prices as shares fall and competition rises, reflecting AMD and Intel’s recent CPU price adjustments. This morning, Intel announced that it will drop the price of its Arc A750 graphics card to $250, instantly making it a rare tempting target for PC gamers on a budget.
