GPU demand not sustainable -- heading for a big drop?

Posted on Friday, Jun 11 2021 @ 15:15 CEST by Thomas De Maesschalck
Jon Peddie Research predicts the video card market is in for a big correction. The research outfit notes current GPU demand is unsustainable and that a return to normalcy could arrive as early as the end of this year. EE Times reports Jon Peddie is concerned that vendors are making the same mistakes as in the boom-bust cycle of 2018, which left NVIDIA with a lot of excess inventory.

Pandemic, cryptocurrency, speculation, and phantom demand

On one hand, Jon Peddie points out remote offices have all been equipped with new PCs, and there's little room for new growth there. Next, the firm argues that cryptocurrency mining is another key driver of the additional demand:
The other wild card is possible phantom demand for graphics AIBs. “The supply has gone to zero and the prices to the stratosphere.” Peddie blames crypto miners, who are rewarded with crypto coins for completing blocks of verified transactions added to a blockchain. The chances of solving a complex hashing puzzle and gaining coins is often proportional to “the total mining power of the network,” Peddie explained.
And finally, Jon Peddie believes some of the current GPU demand is artificial "phantom demand".
Overall, Peddie concludes current graphics demand is “artificial.” He cites anecdotal evidence of customers—sometimes entire families—lining up at Best Buy outlets to purchase individual graphics boards, then flipping them on eBay. Similar scams have plagued other sectors: The retailer Target recently suspended sales of another hot pandemic commodity, trading cards, after a violent incident at a Milwaukee-area store.
Meanwhile, a lot of gamers are still dying to get their hands on a new video card. For the best part of the last 12 months, video cards for normal prices have been pretty elusive.

About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

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