Among Nvidia’s third-party GPU manufacturers, EVGA is perhaps the most well-known. The brand is known for high quality RTX and GTX graphics cards with generous consumer guidelines, as well as power supplies, coolers and motherboards. However, the partnership between Nvidia and EVGA, which has lasted for over two decades, has now ended and EVGA will not only stop manufacturing Nvidia GPUs, it has no intention of ever making GPUs again. It’s also not a clean breakup.
In a statement to Gamers Nexus breaking the news, EVGA stated, “This is not a financial decision, it’s a fundamental decision.” EVGA has accused Nvidia of keeping partners informed about future products, slashing GPU prices without warning lower and limit the price of GPUs. According to an Nvidia employee who spoke to Gamers Nexus, Nvidia CEO Jensen Huang sometimes wonders, “Why are these guys like this? [EVGA and other Nvidia partners] Make money when they don’t do much?”
One of the main problems is that Nvidia sells its own Founder’s Edition models for significantly less than partner models. EVGA is reportedly losing hundreds of dollars on every RTX 3080, 3090, and 3090 Ti sold as it has to lower prices to stay competitive with Nvidia. However, this number only takes manufacturing into account.
Although EVGA says this isn’t a financial decision, finances certainly play a role. Jon Peddie Research found that gross margin for Nvidia has continued to grow year over year, while already low margin for GPU partner companies has fallen. In its 2022 estimate, Jon Peddie Research expects Nvidia to achieve roughly 65% gross margin for its entire business, while AIB partners will see just 5%. Declining margins are due to rising costs for production, R&D and marketing. Compensating for low margins on volume is no longer attractive, according to Jon Peddie Research.
However, Gamers Nexus was skeptical about EVGA’s story. In his report, host Steve Burke suggests that the company likely ordered too many GPUs during the crypto boom and may have been burned by the sudden drop in mining. Burke notes that something similar happened to its RTX 20-series GPUs when the company lost six figures.
EVGA CEO Andrew Han may also have personal reasons for ending the partnership. Gamers Nexus says Han, who’s in his 60s and has been CEO since EVGA’s inception in 2000, wants to spend more time with his family as he nears retirement and feels that Nvidia’s allegedly disrespectful attitude towards the trouble is no longer worth it.
EVGA is not going out of business just yet
Though 78% of EVGA’s revenue comes from its graphics business, the company says it will continue to operate its other ventures. The company’s next-biggest business is power supplies, and while it accounts for just 20% of EVGA’s revenue, it has four times the gross margin of its graphics business. However, losing the vast majority of its earnings is still problematic, though EVGA explicitly denies there will be any layoffs.
Han also denied that he would sell EVGA. The company appears to be in a healthy financial position. Additionally, the CEO didn’t want to tarnish EVGA’s reputation by selling it to another company that might only be interested in profit.
While EVGA could potentially work with AMD or Intel to keep its AIB GPUs business going, the company has made it clear that it won’t be making GPUs going forward. Gamers Nexus speculates that EVGA’s CEO may have personal reasons for not wanting to partner with Nvidia’s competitors, similar to his personal reasons for ending the partnership with Nvidia.
For existing EVGA GPUs, the company confirmed that it will honor warranties and RMAs while supplies last. However, supplies of RTX 30 series cards will run out by the end of the year, and it’s not certain how easy it will then be for EVGA to uphold its warranties, whether the company is willing to do so or not.