We’re sitting on the verge of Nvidia GTC, where it’s all but confirmed that the company will launch its next-gen RTX 4090 graphics card. The last time we were in this situation, almost exactly two years ago, Nvidia’s launch triggered the worst GPU shortage we’ve ever seen, and it’s fair if you’re nervous that we’re back in this situation might guess .
The RTX 4090 will almost certainly sell out when it launches, but you don’t have to get yours F5 Key ready to get a GPU. There were several factors that went into the GPU shortage, none of which apply this time. If you’ve been waiting for next-gen GPUs to pull the trigger, don’t get caught up in the launch hype – all indications are that the RTX 4090 won’t cause another GPU starvation.
Where demand meets supply
The biggest difference in this run is the lack of a pandemic for supply chains to deal with. We’re past the peak of cases earlier this year and while there was a brief spike a few months ago, it doesn’t look like we’re headed for another lockdown. That helps, but the main reason we won’t see a shortage is in the supply chain.
The chip shortage that eventually led to the GPU shortage has largely subsided. Supply chain issues have not been fully resolved, but there are many signs that there is an oversupply of chips and not enough demand for them. Nvidia hinted at this fact in its recent earnings call, saying that it has an “overstock” of RTX 30-series graphics cards and would start slashing prices to sell them. We are now seeing the effects of this.
The demand for PCs and therefore graphics cards has skyrocketed in 2020 and throughout 2021. Now that people are returning to the office, that demand is mostly gone — but the components designed to meet that demand remain. That’s why we’re seeing GPU prices crashing so quickly. For example, the RTX 3090 Ti, which launched in April for a list price of over $2,000, is now closer to $1,200.
Even with an unforeseen COVID spike, it’s unlikely the supply chain would be in the state of disrepair it was in 2020. Not only are companies now sitting on excess inventory, but they have already navigated the rocky waters of supply chain rebuilding during it worst of the pandemic.
While the pandemic certainly exacerbated the GPU shortage, it wasn’t the root cause. Nvidia’s problems in the previous generation started with Samsung. RTX 30-series graphics cards use Samsung’s 8nm node, and reports shortly after these cards were introduced said that Samsung had a higher error rate than expected.
In case you don’t know, Nvidia is “fabless,” meaning it doesn’t make the GPUs in its graphics cards itself. Instead, chipmakers like Samsung take care of manufacturing while Nvidia takes care of design. It was a risk going with Samsung in the previous generation, and Nvidia clearly doesn’t want to take the same risk this time.
Nvidia uses chip manufacturer TSMC for the RTX 4090 and presumably all RTX 40 series GPUs. TSMC was Nvidia’s partner up until the RTX 30 series, and while we’ve seen bottlenecks in the past, none of them were due to defective manufacturing. The return to TSMC will hopefully mean fewer defective chips, which is what started the GPU shortage in the first place.
The Fateful “Amalgamation”
Manufacturing issues caused the GPU shortage, but Krypto amplified it. Ethereum in particular has expanded it. Despite bitcoin stealing the limelight, during the scarcity the majority of GPU mining took place on the Ethereum blockchain – around 25% of all GPU sales during the scarcity went to Ethereum miners after an estimate.
But Ethereum is badly down at the moment, which is one reason GPU prices are falling so fast. That’s a good sign, but GPU prices have been impacted by crypto for the past four years, so a recovery in Ethereum could have spelled disaster. Thankfully, that’s no longer the case.
Ethereum has just undergone its long-awaited “merge” that will reduce the power requirements for the blockchain and eliminate mining entirely. Although the Ethereum group has been promising the postponement for quite some time, it has been constantly delayed. In all honesty, it didn’t seem like the “merger” would ever happen, leaving the fate of the forthcoming GPU supply up in the air.
Now that the hammer is down, it’s a lot easier to rely on upcoming GPU supplies. Even if there are shortages, another crypto boom is unlikely to prolong and exacerbate the shortages, which we saw in 2020 and briefly towards the end of 2017.
While it’s highly unlikely that we’ll see another GPU shortage on the scale seen in 2020, short-term bottlenecks are likely. Whenever a new generation of GPUs or CPUs is released, there is a brief period of a few weeks when they sell out everywhere and prices on the used market skyrocket. Typically, when supply stabilizes, prices fall quickly.
I expect we’ll see an exaggerated version of that with the RTX 4090. Given how big the cash cow GPUs have been over the past two years — one estimate says scalpers made $61.5 million from GPU sales in 2020 alone — I wouldn’t be surprised if the first GPU wave sold out immediately and would go to the used market at 2020 prices.
That should wear off quickly, though, so don’t get caught up in the launch hype. It’s usually not a good idea to buy a GPU the day it’s released anyway. The RTX 4090 isn’t going to cause another GPU starvation to the degree we just came from, so don’t worry too much if you’re buying one on launch day.