GPU tariff exemption expires December 31, possibly increasing graphics card prices

Daniel Sims

Posts: 748   +28
Staff
Why it matters: After the unprecedented market conditions throughout 2021 and 2022, graphics card prices seemed to fall back to Earth recently. However, tariff exemptions enacted earlier this year will expire at the end of the month, meaning 2023 could compound the price increases the latest GPUs introduced.

Graphics cards and other devices could face 25% import tariffs starting January 1, 2023, if the US Trade Representative's office (USTR) doesn't reinstate exceptions set to expire at the end of this year. The USTR so far hasn't indicated its decision on the matter.

The issue started when the Trump administration enacted tariffs on Chinese-made goods. In March, the USTR reinstated exemptions on hundreds of products, including printed circuit boards (PCBs), a definition under which devices like motherboards and GPUs fall. The decision followed the urging of manufacturers like Nvidia, Zotec, and HP, who cited the lack of non-Chinese GPU manufacturing.

The effect of the GPU tariff exemption was blunted by massive price inflation from crypto mining and supply chain shocks. Those prices only returned to normality in the last few weeks after the crypto crash, and Ethereum's switch to proof-of-stake effectively ended crypto mining.

Sources recently told industry veteran Kyle Bennett that the tariffs would return in January, indicating the USTR might not reinstate the exemptions. Going back to enforcing those tariffs could worsen the sizeable price hikes Nvidia's GeForce RTX 4000 series graphics cards introduced compared to their respective RTX 3000 predecessors.

A recent analysis from 3DCenter shows that, while the $1,600 flagship RTX 4090 delivers a price/performance improvement over its Ampere counterpart, the 3090, the 4080 is a worse deal than the 3080. Although we have a good idea of the 4070 Ti's specs, we can't judge it until we see its MSRP.

Nvidia CEO Jensen Huang defended the RTX 4000 prices by declaring, yet again, the death of Moore's Law. Regardless of the law's status, recent consumer hardware trends don't indicate the typical cost-per-transistor decrease. These higher costs largely stem from TSMC's expensive 4nm node process.

New tariffs likely won't send the market back into crypto-era prices, but they won't alleviate ongoing inflation. Vendor tricks like moving the end of the manufacturing process out of China won't help either because the expiring exemptions include unfinished PCBs.

Permalink to story.

 

human7

Posts: 150   +129
Doesn't TSMC do it's manufacturing in the Republic of China (Taiwan) instead of the People's Republic of China (China)? I'm a little confused why tariffs aimed at the PRoC would affect silicon manufactured in the ROC.
 

psycros

Posts: 4,546   +6,841
Doesn't TSMC do it's manufacturing in the Republic of China (Taiwan) instead of the People's Republic of China (China)? I'm a little confused why tariffs aimed at the PRoC would affect silicon manufactured in the ROC.

Exactly. This is misdirection by the big tech outfits that want to go back to the days of enjoying maximum profits from Chinese slave labor. Trump's pledge to tariff China just as heavily as it does the US is what's driven Intel, TSMC and others to start building fabs in the US. China is cancer and the manufacturing needs to be come back to the free world.
 

yRaz

Posts: 4,951   +6,394
Hmm, this could go either way. Biden administration would like to look good to get reelected or the government lets the exemption lapse for their constant need of more tax revenue....
 

neeyik

Posts: 2,406   +2,939
Staff member
Doesn't TSMC do it's manufacturing in the Republic of China (Taiwan) instead of the People's Republic of China (China)? I'm a little confused why tariffs aimed at the PRoC would affect silicon manufactured in the ROC.
The GPU is made in Taiwan, but the dies are packaged and stored in distribution centers in China, and the PCBs (along with the vast majority of the other components the boards house) are all made there too.
 

human7

Posts: 150   +129
The GPU is made in Taiwan, but the dies are packaged and stored in distribution centers in China, and the PCBs (along with the vast majority of the other components the boards house) are all made there too.
Thanks! I just read this article which helped to clear that up, too!
 

Watzupken

Posts: 756   +636
Exactly. This is misdirection by the big tech outfits that want to go back to the days of enjoying maximum profits from Chinese slave labor. Trump's pledge to tariff China just as heavily as it does the US is what's driven Intel, TSMC and others to start building fabs in the US. China is cancer and the manufacturing needs to be come back to the free world.
Objectively, every country went to China to produce their goods due to cost, which is why you can buy a product at a better price, companies can make more money. Moving the manufacturing back, you should expect quite a significant jump in prices. Given that inflation is already very high worldwide now, you will expect things to get more expensive when manufacturing moves back to the US or EU.

And I do feel that you are mislead to think you are living in a "free world" wherever you are living in. Are you really free?
 

Burty117

Posts: 4,676   +3,029
do feel that you are mislead to think you are living in a "free world" wherever you are living in. Are you really free?
I can, right now, open my bedroom window and shout "Borris Johnson looks like Winnie-the-Poo!" and absolutely nothing will happen. Do that in China on the other hand...

And we're definitely not completely free, I get that, certain limitations apply, but compared to China? Russia? North Korea?
 

godrilla

Posts: 623   +339
Objectively, every country went to China to produce their goods due to cost, which is why you can buy a product at a better price, companies can make more money. Moving the manufacturing back, you should expect quite a significant jump in prices. Given that inflation is already very high worldwide now, you will expect things to get more expensive when manufacturing moves back to the US or EU.

And I do feel that you are mislead to think you are living in a "free world" wherever you are living in. Are you really free?
Another perspective is that when there is a monopoly on manufacturing eventually goods will also cost more because of lack of competition in manufacturing. Also if your goods last 1/10 of the time due to poor quality control are you really saving money in the grand scheme of things?
Did you know that Ch!na pushes for Unions to push for the minimum wage to go up? So that when the business closes where do you think those lost manufacturing jobs go? Obviously the union Bosses get a cut. Rinse repeat. Inflation makes goods cost more which pushes for higher minimum wage again and again until well we are completely dependent on Ch!na for manufacturing. Western monopolies still think they control their faith even though they have trillions invested in Ch!na. Just look at Apple the eastern hemisphere policies are bleeding into the west!
 

takaozo

Posts: 501   +802
This translates into price+VAT+25% import tax?
If only for US I dont care, not a US resident :)
For EU should translate into price+19-24%VAT+ 25% import tax.
A 25% price increase in US and rest of the world at current prices and inflation would make the new GPU market real funny.
 

guillejp

Posts: 12   +8
So... the 4080, and projecting the 5080:

1200 MSRP: how much of the tax would nvidia absorb? Maybe increase price to 1300-1400?

What's in for the 5080 if you add inflation? 1500 msrp???

1500 aprox current street price > Going to 1600-1700??? 5080 at 2k?

Ok!
 

Geralt

Posts: 1,320   +2,149
This translates into price+VAT+25% import tax?
If only for US I dont care, not a US resident :)
For EU should translate into price+19-24%VAT+ 25% import tax.
A 25% price increase in US and rest of the world at current prices and inflation would make the new GPU market real funny.
You forgot Nvidia's greedflation 😝
 

takaozo

Posts: 501   +802
You forgot Nvidia's greedflation 😝
I didn't forgot that, it was included in "price"
evgagraph.png


So for a $1000 card like FE 4080 12GB......pardon 4070Ti, Nvidia get a margin of 65+5% since they are the AIB and the card cost is 30%.
That is a hell of business model.
 

neeyik

Posts: 2,406   +2,939
Staff member
So for a $1000 card like FE 4080 12GB......pardon 4070Ti, Nvidia get a margin of 65+5% since they are the AIB and the card cost is 30%.
The profit margin figures Jon Peddie is quoting are the ratios of reported net profits to revenue. For example, in their last two financial reports, it was 43% and 54% respectively. It's not a direct measure of how large a markup Nvidia is applying to individual graphics cards.
 

takaozo

Posts: 501   +802
The profit margin figures Jon Peddie is quoting are the ratios of reported net profits to revenue. For example, in their last two financial reports, it was 43% and 54% respectively. It's not a direct measure of how large a markup Nvidia is applying to individual graphics cards.
I'm not an account but I can do some basic math operations. The graph is with data until May 2022. From this we have to subtract Opex and Capex and find the real income. Let's admit it they had almost 3 years of good life. Now poor them got under 50%, where's my tissues, I need to drop a tear for them.

"What Is Profit Margin?
Profit margin is one of the commonly used profitability ratios to gauge the degree to which a company or a business activity makes money. It represents what percentage of sales has turned into profits. Simply put, the percentage figure indicates how many cents of profit the business has generated for each dollar of sale. For instance, if a business reports that it achieved a 35% profit margin during the last quarter, it means that it had a net income of $0.35 for each dollar of sales generated."
Source: Link

Also I'm not an English native but I have Internet search and translate.
 

toooooot

Posts: 1,824   +980
When the f**** will it all end!!!
Guys, if you look for a used 3000 gpu now, I suggest you look into
dell's alienware 3080 and 3090 cards. They are reference cards
with a very basic cooler.They sell like 20% cheaper than
all the other cards. And there seem to be plenty of those.