It looks like graphics card makers are going to have to brace themselves for a lean second quarter of the year. Reports from graphics card makers, via Taiwanese industry magazine DigiTimes, suggest that there are excessive inventories of graphics cards building up. This could lead to a 30 - 40 per cent drop in shipments in the current quarter.
The graphics card supply-demand mismatch needs addressing, so both graphics card makers and channel retailers would like to boost the demand for their wares with some price cuts, which would attract more buyers. However both GPU makers, AMD and Nvidia, "have instead focused on reducing their new GPU shipments to maintain profits and a balance between inventory and new shipments," reports DigiTimes.
The same industry sources cited the drop in demand of GPUs for Bitcoin mining as a cause of the graphics card oversupply. Manufacturers initially struggled with the high demand from this source, when BTC was all over the news, but miners have since moved to a different computing process to harvest their virtual currency – a process which no longer requires GPU grunt.
The impacts of the swing away from using GPUs to mine cryptocurrency were first noticed in April, says DigiTimes. Since that time the powerful cards which manufacturers had geared up to build more of have been piling up, as the gears of industry are slow to change.
This reminds me of the situation with SSDs two years ago. Rather than cut the price of its NAND to increase demand Toshiba decided to cut production to maintain prices but leave some production lines idle. With any number of competitors in a market and no sneaky collaboration this tactic doesn’t usually work in the longer term.