AMD admits to restraining chip supply to keep higher CPU and GPU prices

[Dale Eaton]

How about 'We restrain our money supply so we have more to spend elsewhere'... ... ...

 

[GoldenGoat]

It's going to take them a couple quarters to figure out that the pandemic isn't coming back I guess.

 

[waclark]

I've argued the same thing, a sane price for the 4070ti would be closer to $650.
This is hard cope. The reason nobody bought AMD is AMD wasnt shipping products! Higher ASP is more important then actually sales volume to AMD.

Given that a 3070Ti was $599, the inflation adjusted price would be closer to $677 and the 4070Ti performs between a 3080Ti and a 3090Ti so I would say a comparable price is closer to $750. It's too expensive either way, but $650 just seems low for the level of performance compared to last gen 70 series.

 

[waclark]

How about 'We restrain our money supply so we have more to spend elsewhere'... ... ...

Restricting the money supply would actually help prices come down because fewer people would be throwing money out the window and companies would be forced to reduce prices.

 

[waclark]

Good grief, man. It's a video card, not food or shelter. It's a luxury, not a necessity. No one needs a video card. No one needs to have the best visuals possible. It's a luxury, not a necessity. No one is ethically or morally obligated to get consumers cheap high-end video cards.

Well there you go talking common sense. Yeah, there is a sense of entitlement surrounding GPUs these days. People need to wake up and smell the coffee.

 

[Avro Arrow]

I've seen lots of comments saying that public companies are legally required to make/maximize profits. I was thinking that this is BS, and here's a link that basically states the same thing https://skeptics.stackexchange.com/a/8177

As I see it, the definition of maximizing profits is something that is tenuous at best, which the reference post concurs with.

IMO, AMD, while they may be acting to maximize their profits, are doing so in a way that serves only one thing - to control market pricing in a manner that is specious at best. I am not happy about it, but the market will respond and AMD may find themselves up sh!t's creek without a paddle.

To me, its obvious that AM5 was introduced when AM4 stocks had also not been selling up to their production levels, and they want to keep the AM5 prices high so that AM4 stock will sell. But at what cost, AMD?

Unfortunately, executives get the boot if they don't bring the shareholders the highest return possible on their investments so they're kinda stuck between a rock and a hard place. This whole NeoLiberal Capitalist system is a failed experiment. Give me back the days of Keynesian Economics because that was a capitalist system that at least worked.

 

[Avro Arrow]

Good grief, man. It's a video card, not food or shelter. It's a luxury, not a necessity. No one needs a video card. No one needs to have the best visuals possible. It's a luxury, not a necessity. No one is ethically or morally obligated to get consumers cheap high-end video cards.

You're not wrong.

No one is ethically or morally obligated to practice price fixing, whatever the product sold either! Are you implying that, because a graphics card is a non essential product (I do agree on that BTW), one is entitled to organize a scam? That would be a little bold IMHO...

You're not wrong either.

 

[Endymio]

Are you implying that, because a graphics card is a non essential product (I do agree on that BTW), one is entitled to organize a scam?

Allow me to clear things up for you.
Selling you a $1000 video card - not a scam.
Selling you a $1000 video card but shipping you lead weights instead -- scam.

Any more questions?

 

[Endymio]

This whole NeoLiberal Capitalist system is a failed experiment.

To paraphrase Winston Churchill, capitalism is the worst possible system-- except for everything else we've ever tried.

 

[waclark]

I've seen lots of comments saying that public companies are legally required to make/maximize profits. I was thinking that this is BS, and here's a link that basically states the same thing https://skeptics.stackexchange.com/a/8177

As I see it, the definition of maximizing profits is something that is tenuous at best, which the reference post concurs with.

IMO, AMD, while they may be acting to maximize their profits, are doing so in a way that serves only one thing - to control market pricing in a manner that is specious at best. I am not happy about it, but the market will respond and AMD may find themselves up sh!t's creek without a paddle.

To me, its obvious that AM5 was introduced when AM4 stocks had also not been selling up to their production levels, and they want to keep the AM5 prices high so that AM4 stock will sell. But at what cost, AMD?

I think there's a difference between "maximizing" profits and being financially healthy. Now someone may say (and I did say this in a post some time ago) that a company (like AMD) will want to maximize profits on their products but that doesn't necessarily mean they will price for maximum profit per product sale. For example, AMD might use the rationale that the 7900XTX performs like a 4080 and therefore price it at $1200. However, they may realize that people do not want to pay $1200 for a 4080 and then price at $1000 to maximize their profits. Meaning, they think they will sell more at $1000 than $1200 and therefore profits will be maximized.

It's a bit of a nuance and I don't think any company has a legal obligation to "maximize" profits but I do believe that officers of a publicly traded company are obligated to attempt to make the company profitable and sustainable. AMD is walking a fine line between making money and giving up the GPU market to Nvidia. Right now, they would not pass a field sobriety test walking that line.

 

[Loadedaxe]

Its business 101, you all are preaching to deaf ears.

 

[Loadedaxe]

It's going to take them a couple quarters to figure out that the pandemic isn't coming back I guess.

Pandemic sales have nothing to do with the now. If they (AMD, Nvidia and Intel) were that simple minded they would not be in business.

 

[redgarl]

She never said it was for maintaining the prices artificially higher. Like in any business facing a downturn, you don't flood the market over stuff you can't sell, and that's what AMD did.

But yeah, let's SPECULATE that it is market manipulation without any proof of any kind... /sarcasm

In the meantime, the 4080 is 1200+$, the 13900ks is 700$ and the 4090 is 1600+$.

BAD AMD BAD AMD!!!! /sarcasm

 

[redgarl]

Hey, you know how AMD only has 8% market share, and how people were going on about how it's nvidia mind share and AMD was being treated unfairly?

Yeah no, they did this to themselves.

There is a difference between sales and shipment to retailers... I guess you don't understand JPR numbers then.

Nvidia hit that threshold because they were desperate to sell their oversupply of Ampere cards.

 

[redgarl]

I don't mind AMD being business smart at all.

I'm still not gonna touch their GPUs until they bring something to the table that makes them worth picking over Nvidia.

Having the second fastest GPU out there with 15% performances over a 4080 is not enough for 1050$?

Ah yeah, nah, let's deny that an AIB card cost 50$ more than MSRP and can OC 10% over the reference model easily.

 

[redgarl]

Guys, this is nonsense... Look, this was what was said:

"So we have been under shipping sort of the sell-through or **consumption** for the last two quarters in an attempt to renormalize that as soon as possible [the high inventories]"

AMD is shipping below the sell rate at retailers/distributors. If they were shipping above consumption, there would be so many CPUs in werehouses that many parties would be bankrupt from lack of liquidity. This is par for the course and AMD is still loosing money on non-server CPUs. What did you expect, for them to loose more money and pull out of client CPU manufacturing?!

Even though they have done this, their inventories have *doubled* in one year to almost $4 billion! Though some of that attributable to Genoa shipping right now.

These things need to balance out and if you think CPUs are too expensive down the line, that is fine, everyone needs to adjust prices in a way that is sustainable:

- TSMC lowers costs for newer nodes,
- AMD produces smaller cores,
- Consumers come back to paying less for more.

One of the problems right now is TSMC hasn't really been hit with order cuts and won't lower prices. So while this doesn't take place, there is not much to do.

And they will not since they are also manufacturing the automotive industry chips... and they are still 2 years late in orders for their current lineup of cars. There is a reason why Warren Buffett is betting on TSMC.

 

[Beerfloat]

Having the second fastest GPU out there with 15% performances over a 4080 is not enough for 1050$?

Not sure what handpicked benchmarks you're looking at to arrive at that interesting performance estimate.

Regardless, feature for feature the 4080 is the better GPU. 'Almost as good for cheaper' is quite typical for the GPU sales pitch that AMD has branded throughout most of its history, and I can see how it is compelling for many people (though lately, really not that many..). It's just not something that excites me personally.

 

[Beerfloat]

For those nVidia shills moaning here, for some reason, AMD cards are under Their own MSRP, while nVidia's are above Their own MSRP, so imagine what Jensen is doing to Your wallet.

Speaking of moaning, please allow me a moment to reflect on what I consider to be poor phrasing in your post.

As an Nvidia shill, I feel 'moaning' is not a particularly effective characterization. I prefer the term 'gloating'.

 

[wiyosaya]

To paraphrase Winston Churchill, capitalism is the worst possible system-- except for everything else we've ever tried.

In other words, lets keep doing the same things over and over again and expect different results.

Your link is (thankfully) incorrect, or more precisely the question is phrased improperly. All corporations -- public or otherwise -- have a fiduciary duty to their shareholders. Most US public corporations are incorporated in Delaware, and as such, have three primary fiduciary duties: duty of loyalty, duty of care, and duty of good faith,

The legal ramifications are extensive, but in brief, a company *must* act in a shareholder's best interests -- if you intentionally reduce profits, or even miss a glaring opportunity to increase them, you better have a justification for so doing, or you risk a shareholder suit. If a corporation so much as buys a McDonald's meal for a starving orphan, their end-of-year financials will include a corresponding term for "good faith", which is the officer's attestation that the act benefitted the company's value by increasing the public's perception.

Rather than a rambling stackexchange thread, you might wish to rely on a source like this:

Directors’ Fiduciary Duties: Back to Delaware Law Basics

Read our latest post from Skadden partners Peter A. Atkins, Marc S. Gerber, and Edward B. Micheletti.

corpgov.law.harvard.edu

You do understand, I assume, that you added nothing to the argument. If you had actually read that stackexchange link, instead of pretending you understand what you are talking about, you just might have gathered that taking an exec to court to try to prove that they were not acting in the best interests of the company would be a challenging task due to having to prove they willfully acted in a manner that was in their own self interest, or was deliberately intended to harm the company.

Now consider fiduciary responsibility. Any legal argument made against a company leader for acting in a manner that is not consistent with fiduciary responsibility would likely take a similar form To win such a legal argument, it would have to be proven that the fiduciary acted in self-interest, or deliberately acted in a manner that was inconsistent with the fiduciary responsibility such that the company was harmed.

The legal argument would be much the same. All you did was deflect the discussion to a topic that you believe was more suitable to your position. Tell me, what's the "deflection fallacy"?

 

[wiyosaya]

She never said it was for maintaining the prices artificially higher. Like in any business facing a downturn, you don't flood the market over stuff you can't sell, and that's what AMD did.

But yeah, let's SPECULATE that it is market manipulation without any proof of any kind... /sarcasm

In the meantime, the 4080 is 1200+$, the 13900ks is 700$ and the 4090 is 1600+$.

BAD AMD BAD AMD!!!! /sarcasm

The market will ultimately make that decision.

 

[Endymio]

If you had actually read that link [you] just might have gathered that taking an exec to court to try to prove that they were not acting in the best interests of the company would be a challenging task

Are you intentionally being obtuse? Proving otherwise is often difficult, but the legal duty to act in a company's best interest still exists. Your argument is like claiming that, because some people are found innocent of murder, that murder must be legal. Shareholder suits are brought to trial every year, and many are won. The stackexchange link was wrong, plain and simple.

Here is just one of thousands of examples:

"SCANA Shareholders Score Settlement Worth $63 Million...the lawsuit was filed by investors, which claimed that the SCANA executive team and board owed the shareholders damages for destroying the value of the utility company..."

In other words, lets keep doing the same things over and over again and expect different results.

Eh? We've tried your alternatives; they didn't work. Perhaps you missed the whole USSR thing? And the US itself experimented heavily with Keynes failed ideas-- that led to the disastrous "stagflation" of the 1970s. And when China converted from its statist government-dictated economy to even just a partially capitalist model, the average citizen went from earning $200/year to $12,000 a year literally overnight.

The most ironic and hypocritical aspect of this argument is that capitalism's worst detractors are those benefitting from it the most. You yourself criticize it incessantly, but I don't see you emigrating to a consumer paradise like Cuba or North Korea. Why not?

 

[Puiu]

I've argued the same thing, a sane price for the 4070ti would be closer to $650.
This is hard cope. The reason nobody bought AMD is AMD wasnt shipping products! Higher ASP is more important then actually sales volume to AMD.

the moment you admit that 650 is "normal" is the moment you already lost

 

[Peter Farkas]

Good grief, man. It's a video card, not food or shelter. It's a luxury, not a necessity. No one needs a video card. No one needs to have the best visuals possible. It's a luxury, not a necessity. No one is ethically or morally obligated to get consumers cheap high-end video cards.

I agree it is luxury goods.
Just saying it was cheaper in the past when it was an even bigger luxury given it was much much smaller market. At the moment, most of the gamers can't upgrade to the new generations due to absolutely insane prices. Luxury or not, the current market is ****ed up and it's because of shareholder interest.

 

[Pastuch]

Here's the part I don't get about jumping on AMD. Ok, they constrained supply to try to keep prices up, but this wasn't done in a vacuum. Nvidia has been massively jacking the prices every release for quite a few years. All AMD has done it to price theirs lower than Nvidia, but higher than previous generation to not leave any money on the table. Because of the brand loyalty, all that would happen to AMD, if they undercut Nvidia by a large margin, is make less money on exactly the same number of cards sold. Judging from all of the vitriol on here, I doubt the majority of Nvida buyers on here still wouldn't have touched and AMD card if it were half the price.

I own an RTX 3080 that I bought at launch and ordered a 7900xtx (non-reference because I’m not an *****, this applies to both vendors). I cancelled my order yesterday because the asking price (after waiting 60 days!) is $1700 cad, that’s just ridiculous and I’m not paying 50% more for minimal gains. This was AMDs chance to eat some marketshare but their focus is on keeping shareholders happy in the short term. I’m a wealthy guy that has owned 6 graphics cards from each vendor, this isn’t a cost issue, it’s a value for money issue. The last two cards I bought, 1080ti and RTX3080 were genuine performance per dollar improvements, the Rtx 4000 series and the 7000 series from AMD are ridiculously expensive. I’m 41 years old, my wifes about to turn 30, we’re going to go party in Tulum tonight and I’m going to spend money on my life instead of overpriced gpus. Their loss, not mine.

 

[Draconian]

We all got excited when crypto mining became obsolete, just knowing that we were finally going to see prices come down, but for the most part, they haven't.

Bitcoin is back on the upswing, up 39% in January.