Excess inventory: Hardware hangover expected to extend into 2019

[Shawn Knight]

Why it matters: Motherboard and video card makers will continue to experience ill effects from misfortunes in 2018 that led to excess inventory. Those hoping to score a deal out of the situation may be out of luck as at least some hardware makers could raise prices to maintain profitability.

The hardware hangover plaguing motherboard and graphics card makers is expected to spill over into the first half of 2019.

Industry sources tell DigiTimes that a combination of Intel’s processor supply shortage, a sustained chill in the cryptocurrency mining sector and lackluster buying at terminal markets amidst the trade dispute with China led to increased inventory levels at companies like Asus and Gigabyte in the third quarter. As such, revenue for the peak season fell below expectations.

Asus, for example, saw its third quarter net earnings drop 43 percent to $107.95 million. Gigabyte in the third quarter only brought in $4.27 million in profit after tax, the lowest level recorded since Q4 2008. Its motherboard shipments could dip below 12 million units this year, a better case scenario than the 10 million unit dip rumored earlier this year but still far from ideal.

Sources further note that enduring sluggish demand from the DIY market, Nvidia’s pricey new GPU platforms and poor growth momentum in China will result in dim revenue prospects for the fourth quarter.

As the issue stretches on, sources say Intel and Nvidia are likely to raise chip prices to maintain profitability.

Nvidia’s stock is still down following a massive drop in value late last week. As of writing, it’s down nearly 25 percent since closing at $202.39 on Thursday.

Permalink to story.

https://www.techspot.com/news/77495-hardware-hangover-expected-extend-2019.html

 

[BSim500]

"As the issue stretches on, sources say Intel and Nvidia are likely to raise chip prices to maintain profitability."

So the cure for Turing not selling well due to high prices... is to raise prices even more?

Edit : I also have little sympathy for motherboard manufacturers when they make an unecessary 50x variants per socket yet still over-skimp on the basics. Eg:-

- Most ASUS H81 and H110 boards had 6x rear USB sockets, and yet 6 out of 7 ASUS H310's have been dumbed down to just 4x rear ports. From someone coming from Haswell / Skylake, that's a platform downgrade.

- If you can put 30x useless LED's on a board, then you can certainly add one useful one (optical SPDIF).

- ROG STRIX B350-I GAMING is "Raven Ridge APU compatible" yet has no onboard video outputs at all... (VGA & DVI also need to die off, even on low-end boards).

- 2x2 Wi-Fi (should be 866Mbps) artifically crippled to 1x1 (433Mbps) on multiple AM4's.

Half this stuff is so intelligence insulting it's no wonder board manufacturers are running around like headless chickens...

 

[Suisam]

Maybe if RAM prices were not being deliberately inflated by all the big manufacturers(Hynix Samsung etc) and if Intel stopped charging stupid amounts of money for a CPU and Nvidia stopped price gouging people so badly (RTX series prices are just STUPID HIGH) people would be more willing to buy/build a new system.

I suspect a lot of people (including myself) are waiting for more reasonable price for their new hardware before deciding to give their left testicle for a RAM stick, a lung for a graphics card and so on.

Sadly all they are doing is worrying about their profit margins and not the fact that they are hurting the industry of which they rely on.

Cryptocurrencies didn't help the situation either. Manufacturers should have known Crypto's might be a temporary boom of hardware sales....

 

[TheBigT42]

Maybe if RAM prices were not being deliberately inflated by all the big manufacturers(Hynix Samsung etc) and if Intel stopped charging stupid amounts of money for a CPU and Nvidia stopped price gouging people so badly (RTX series prices are just STUPID HIGH) people would be more willing to buy/build a new system.

I suspect a lot of people (including myself) are waiting for more reasonable price for their new hardware before deciding to give their left testicle for a RAM stick, a lung for a graphics card and so on.

Sadly all they are doing is worrying about their profit margins and not the fact that they are hurting the industry of which they rely on.

Cryptocurrencies didn't help the situation either. Manufacturers should have known Crypto's might be a temporary boom of hardware sales....

Mostly I am waiting for my 4 year old i7 and GTX 970 to choke on something I want to play.
Like a lot of people I just don't have a reason to purchase now...

 

[Suisam]

Mostly I am waiting for my 4 year old i7 and GTX 970 to choke on something I want to play.
Like a lot of people I just don't have a reason to purchase now...

I know the feeling. I'm running a dual Xeon x5687 and a GTX 1080. Will not need to upgrade for a while even though my motherboard and CPU's are from the dark ages....

 

[p51d007]

My 4 year old pc & laptop run Photoshop CC fast enough, process raw files quick enough.
Unless Photoshop adds something that taxes my computers, I don't bother with a new one.
Gave up on games years ago. If it's fast enough for photoshop, it's as fast as I need it to be.
Best thing I did 3 years ago was to swap out the disk drive for an SSD.

 

[pawel04]

"As the issue stretches on, sources say Intel and Nvidia are likely to raise chip prices to maintain profitability."

So the cure for Turing not selling well due to high prices... is to raise prices even more?

I was about to reference that sentence as well.. This is contrary logic to that of which is taught in any economics 100 class and I honestly hope the stock of these companies falls another 25 percent.

Honestly, if the situation keeps going like this I'll be forced to move my gaming onto a console, something I never even remotely contemplated since my days on the N64 finished.

 

[kapital98]

"As the issue stretches on, sources say Intel and Nvidia are likely to raise chip prices to maintain profitability."

So the cure for Turing not selling well due to high prices... is to raise prices even more?

I was about to reference that sentence as well.. This is contrary logic to that of which is taught in any economics 100 class and I honestly hope the stock of these companies falls another 25 percent.

Honestly, if the situation keeps going like this I'll be forced to move my gaming onto a console, something I never even remotely contemplated since my days on the N64 finished.

It doesn't make sense in a competitive market. Assuming no change in the demand schedule, then a surplus of stock would result in an increase in supply. Thereby lowering the cost of the product and being good for the consumer.

However, this is not a competitive market. Both CPUs and GPUs are oligopolies (or, alternatively, you could say they are monopolistic competition). Whether they compete at competitive or non-competitive is an open question but one that I'd like to see evidence for.

Right now, I'd like to see why techspot thinks excess supply will cause an increase in prices. This doesn't seem backed up by any sound financial analysis. It seems to be the PR that Nvidia is pushing. PR that lines right up with them trying to shift blame for any failure to roll out new cards (which, with excess supply, they don't want to do to avoid lowering prices).

 

[Mister_K]

My 4 year old pc & laptop run Photoshop CC fast enough, process raw files quick enough.
Unless Photoshop adds something that taxes my computers, I don't bother with a new one.
Gave up on games years ago. If it's fast enough for photoshop, it's as fast as I need it to be.
Best thing I did 3 years ago was to swap out the disk drive for an SSD.

This is a good test, mostly. Now you start opening up Illustrator and Photoshop, working on few 4k files and master with **** ton of layers and you will start hitting that wall. Then just throw more RAM at it, it's really just that mostly.

Although my 1700 is having crazy stuttering skimming the timeline in Premiere, it's ridiculous and no idea how to fixit :/

 

[pawel04]

It doesn't make sense in a competitive market. Assuming no change in the demand schedule, then a surplus of stock would result in an increase in supply. Thereby lowering the cost of the product and being good for the consumer.

However, this is not a competitive market. Both CPUs and GPUs are oligopolies (or, alternatively, you could say they are monopolistic competition). Whether they compete at competitive or non-competitive is an open question but one that I'd like to see evidence for.

Very true, I always like to think of this as a competitive market but more often than not, forget the reality of things as they stand.. With AMD's recent pricing of the RX590 im afriad that they've abandoned challenging the only other major GPU player through price.

 

[Badelhas]

Maybe if RAM prices were not being deliberately inflated by all the big manufacturers(Hynix Samsung etc) and if Intel stopped charging stupid amounts of money for a CPU and Nvidia stopped price gouging people so badly (RTX series prices are just STUPID HIGH) people would be more willing to buy/build a new system.

I suspect a lot of people (including myself) are waiting for more reasonable price for their new hardware before deciding to give their left testicle for a RAM stick, a lung for a graphics card and so on.

Sadly all they are doing is worrying about their profit margins and not the fact that they are hurting the industry of which they rely on.

Cryptocurrencies didn't help the situation either. Manufacturers should have known Crypto's might be a temporary boom of hardware sales....

I totally agree with your statement. I am in a similar situation, holding on to my trusty 2500K @4.8Ghz until RAM prices come to a reasonable value. And yes, Intel and Nvidia are milking us so my next upgrade wont have components from those brands.

 

[erickmendes]

Any half-brained builder would know that now is not the best time to build a new system... DDR5 is just around the corner, Zen 3 is coming, and also NVidia will have to come with 2060/2050 someday...

 

[Razman]

I'm going to stay unupgraded for a long while, and from now on will just stay a gen or two behind current. Diminishing returns just aren't worth it.

 

[fktech]

So when will the prices drop? (Not stock prices either!)_

 

[ValterV]

We just need to wait for the relaunch of RTX, only this time around it will be without RTX. Makes sense?
So they can "offer" boards at reasonable prices and not piss off customers who jumped into the RTX farce ( I would be pissed anyways).

 

[NEALZ]

OEM logic: excessive demand for their products? Raise prices. Not enough demand? Still raise prices. Intel and Nvdia wants PC builders to pay for their mistakes, they became too greedy and protrized crypto miners over their main customer baser and are now stuck with excess inventory. Glad I built my ryzen 1600 system, it will last be a few good years and I won't have deal with this bullshit.

 

[TheBigT42]

I know the feeling. I'm running a dual Xeon x5687 and a GTX 1080. Will not need to upgrade for a while even though my motherboard and CPU's are from the dark ages....

The main thing that makes me want to upgrade is...I really want a NVMe drive has my boot. Current MB can't do it. For now I'll just have to deal my Samsung SATA SSD (First World Problems)

 

[m3tavision]

"As the issue stretches on, sources say Intel and Nvidia are likely to raise chip prices to maintain profitability."

So the cure for Turing not selling well due to high prices... is to raise prices even more?

Edit : I also have little sympathy for motherboard manufacturers when they make an unecessary 50x variants per socket yet still over-skimp on the basics. Eg:-

- Most ASUS H81 and H110 boards had 6x rear USB sockets, and yet 6 out of 7 ASUS H310's have been dumbed down to just 4x rear ports. From someone coming from Haswell / Skylake, that's a platform downgrade.

- If you can put 30x useless LED's on a board, then you can certainly add one useful one (optical SPDIF).

- ROG STRIX B350-I GAMING is "Raven Ridge APU compatible" yet has no onboard video outputs at all... (VGA & DVI also need to die off, even on low-end boards).

- 2x2 Wi-Fi (should be 866Mbps) artifically crippled to 1x1 (433Mbps) on multiple AM4's.

Half this stuff is so intelligence insulting it's no wonder board manufacturers are running around like headless chickens...

So much this^

And why not more smaller footprint motherboards..?

 

[Danny101]

Whatever happened to the 200% retail over wholesale rule? It's just going to cause people to find cheaper things to do. The main reason people buy these parts are for games and media, and neither have been all that compelling the past few years. The last time I bought a game that was made even close to the same year was in 2009 and that game was made in 2008. I never need the latest hardware, nor do I generally pay newly released prices. I did step out last year for an AMD Ryzen based system and even that was an upgrade from, yep, a 2009 based system. And that was an upgrade from a 2002 system. 1999 and 1994 prior to that. That's 3 systems in my first 8 years of experience and only 2 in the next 16. Barring it going dead and a few strategic upgrades it''ll be at least 10 before I'll need another one. So go ahead and charge whatever you want. Moore's law is drying up, there will be fewer buyers, and you could be facing bankruptcy.

 

[m3tavision]

Whatever happened to the 200% retail over wholesale rule? It's just going to cause people to find cheaper things to do. The main reason people buy these parts are for games and media, and neither have been all that compelling the past few years. The last time I bought a game that was made even close to the same year was in 2009 and that game was made in 2008. I never need the latest hardware, nor do I generally pay newly released prices. I did step out last year for an AMD Ryzen based system and even that was an upgrade from, yep, a 2009 based system. And that was an upgrade from a 2002 system. 1999 and 1994 prior to that. That's 3 systems in my first 8 years of experience and only 2 in the next 16. Barring it going dead and a few strategic upgrades it''ll be at least 10 before I'll need another one. So go ahead and charge whatever you want. Moore's law is drying up, there will be fewer buyers, and you could be facing bankruptcy.

Bro, it is not like internet surfing has gotten harder to do, so most really don't need, more computer. That is why cellphones can surf.

If you are only upgrading, or buying a new Computer every 5 years, then it means you are not playing the latest games at high levels, & that is ok with you.


Agreed an new 8-core ryzen will easily last 5+ years, before games start leveraging more than 8 cores efficiently. But by then, the new xbox will be more powerful than your 5 year old system.

It is all dependent on needs, & leap-frogging eol technologies.

 

[Danny101]

Bro, it is not like internet surfing has gotten harder to do, so most really don't need, more computer. That is why cellphones can surf.

If you are only upgrading, or buying a new Computer every 5 years, then it means you are not playing the latest games at high levels, & that is ok with you.


Agreed an new 8-core ryzen will easily last 5+ years, before games start leveraging more than 8 cores efficiently. But by then, the new xbox will be more powerful than your 5 year old system.

It is all dependent on needs, & leap-frogging eol technologies.

Exactly. The PC market has been said to be in declined for years. I will say that they are packing more on the internet pages that require more processing power than they use to, but not at the rate that games and programs need.

 

[m3tavision]

Exactly. The PC market has been said to be in declined for years. I will say that they are packing more on the internet pages that require more processing power than they use to, but not at the rate that games and programs need.

PC market declining?

Perhaps in terms of PC boxes. But not declining in use, or in ownership, or declining in capabilities, etc. Remember, the term "Personal Computer" applies to laptops/notebooks/etc. The reason traditional box PC are "declining" is because of technology and the ability to place a 5 year old max gaming rig, into a laptop today.

For people "on-the-go" this offers a whole new PC experience for them. Most traditional PC user's have homesteads w/same computer room for 10+ years. They are adults mostly and "go" to use the computer for their tasks, or entertainment. Traditional PC owners, are not transient types. (hence: "PC master race" complex some people have)


Admittingly, Games on a PC are far superior experience and those who choose laptops, they do so because they are attempting to compromise. But, MMORPG on a laptop is not the same as a MMORPG on a 38" wide-screen with a 5.1 surround speaker set up and a killer computer chair & desk.


Lastly, I agree^

8-core CPU are the new minimum for FPS gaming. Get one, there is no excuses to be had for the next 5 years. Buy a new GPU every other year and you have a no-nonsense gaming rig for the next 5+ years.