why are graphics cards so expensive?

The “needy” have a lot of questions about the video card market: what is happening, why their prices have increased by 2-3 times, but even four-year-old cards cannot be found on sale, what their cost generally depends on, why is it growing every year, will it happen, why are graphics cards so expensive? the collapse of prices? Spoiler no, it will only get worse. We will answer all questions in this article. 

To understand the magnitude of the problem, take a look at the Graphics Cards section. There are only GTX1050Ti left for entry-level gaming, and “plugs” for displaying images on the monitor, despite the colossal increase in prices. For example, the same 1050Ti four years ago cost half as much as today. Of course, this isn’t about DNS. A similar situation is observed in stores around the world. Even in the secondary market, video cards of the past and the generations before last have more than doubled in price. In fact, a number of reasons led to this situation.

Why Are Graphics Cards So Expensive?

Graphics Cards Demand has skyrocketed

New mining boom

This reason is on the surface everyone who reads the news knows about it.  Recently, Elon Musk added fuel to the fire by buying bitcoins, as a result, this crypt exceeded the bar of 50 thousand dollars apiece. Bitcoin drags along with it all the rest of the cryptocurrency, first of all – Etherium, which is perfectly mineable even on cards of previous generations.

Because of this, miners are buying up everything that can work, including in the secondary market. Many people remember a similar situation a few years ago then the freebie suddenly ended along with a sharp drop in the bitcoin rate. We are waiting for a repetition of the situation, but when exactly the collapse will occur, one can only guess, since the cryptocurrency is growing mainly due to the hype around it.

Recommended for you Best Graphic Card For Mining.

Gamers want to play, not what

The latest generation game consoles PS5 and Xbox Series X have been out of the store for six months now. They can only be found at exorbitant dealers. Due to the pandemic, demand for consoles has grown more than the company expected, and it has become more difficult to manufacture them. In addition, all trade went online, and their dealers, armed with bots and scripts, buy out entire warehouses of new products in seconds and resell them at 2-5 times more expensive. Ordinary buyers simply cannot compete with them, but they want to play. Moreover, at home during a pandemic, this is one of the few entertainment options available. 

As a result, both console players, PC gamers, and those who sat down to work at a remote location undertook to update their PCs. The situation was aggravated by the general shortage of equipment after the New Year’s sales. All this together turned into a sharp jump in iron prices in the first quarter of 2021.

Older Graphics cards are still relevant 

Not everyone needs ultra-graphics settings, not everyone wants to play new games. For example, on Steam, the most popular video cards are GTX1060 and 1050Ti, and the most popular games are CS: GO and DOTA2, which are not very demanding on video cards. The same 1060 four years ago opens the door to tens of thousands of games at high graphics settings, and only the latest novelties will run at low and medium ones, which is quite satisfactory for many players. 

Older Graphics cards are still relevant 

The old cards have their advantages as well. Drivers brought to mind make the system more stable, and the previous generations are still supported by the manufacturer – updates are released, optimization for new games is performed. The performance gap can be solved by overclocking, and the price on the secondary market until recently could not be compared with the store one.

For these reasons, gamers, not finding either PS5 or RTX3080 on the shelves, bought all the cards of previous generations in stores. Those who did not make it in time storm the message boards and buy up everything that can still be played, vying with the miners. Sellers, for joy, break the price 2-3 times. 

Guide How To Connect Two Graphics Cards In One Computer.

Shortage of Graphics card from manufacturars

Shortage of cards in production

In November 2020, AMD and Nvidia unveiled fresh graphics card lines. Of course, all the attention of the companies is paid to their production. The old lines of models remained only in warehouses, which quickly became empty in the face of increased demand. In such a situation, the companies took unprecedented measures. Nvidia has already resumed production of the GTX1050 Ti, a budget graphics card for gamers. Due to the small amount of video memory, miners are not very interested in it, so today it is easiest to find it on store shelves. 

Also released are fresh cards from the new line RTX 3060 and 3060 Ti. True, both were swept off the shelves in a matter of hours. In order to get at least something for the players, not the miners, the company will artificially reduce the performance of the RTX3060 in mining operations. And later, the company will release separate mining devices.

Lack of memory chips

Video cards are needed both in the console and on the PC. Graphics chips are different for different models, but the memory is either GDDR5 in the old models or GDDR6 in the new ones. The companies that manufacture memory chips can be counted on one finger. Due to the increased demand, they cannot cope with production and supply, respectively, the hands of video card manufacturers are tied. 

Covid

The pandemic affects everything: disrupts production chains, complicates logistics. A video card is an extremely complex engineering product. Every year, productivity growth requires more and more high-quality components and more complex solutions, which in itself leads to a continuous increase in the cost of the final product. Now the production of new chips has to be launched remotely, and this is a headache for manufacturers. The production of new products has not yet been debugged, the number of defects is high because quality control also takes place remotely. All this only aggravates the price situation. 

Economic reasons of world

New trade duties

From the beginning of 2021, new duties on imported products from China will begin to apply in the United States. Until 2021, computer hardware was an exception to these duties, but now that is about to change. Prices are expected to rise from 7 to 25% for video cards, motherboards, power supplies, hard drives, etc. The main offices of the main component manufacturers are located in the United States, and since January 1, the companies have inflated official prices.

Moreover, global prices are formed based on the situation in the domestic market, and their rise is spread evenly across the globe. To circumvent duties, companies can bring near-finished products to the United States and perform only final assembly and packaging on-site. Or you will have to transfer production from China to other countries. But it will take time to adapt, and until then, computer hardware will become more expensive.

Nobody regulates prices

Graphics cards high-tech products. They do not belong to basic necessities such as food and medicine, and therefore their prices are not regulated by states. Here, manufacturers and retailers can pursue whatever pricing policy they want.

In official online stores, cards are sold at the manufacturer’s recommended price, but they are sold out in the very first minutes. 

Nvidia is trying to convince stores to sell the cards at the recommended price in the early days after launch, but retailers quietly ignore the manufacturers’ admonitions. The same GeForce RTX 3060 should cost $ 330 \ € 330, but it is sold in stores 1.5-2 times more expensive. Of course, the company can end its partnership with the offending store. But in a situation where absolutely everyone is doing this, it will be madness and will only increase the shortage of equipment, and, therefore, its cost.

Check out Best Graphic Card For 3D Rendering And Modelling.

Global inflation and the dollar exchange rate

The gradual depreciation of money is going on all over the world.  Over the past decade, the dollar has been depreciating by an average of 2% per year, that is, in 5 years it loses 10% of its value. There is also an element of psychology because the average user updates the map every 2-3, or even 5 years. Roughly speaking, the top-end card in 2021 will cost 30% more than the top-end video card in 2016 due to inflation alone. In our country, both the general economic recession and the growth of the dollar/euro exchange rates in recent years make their contribution, because it is in these foreign currencies that vendors set the price.

Will graphics cards get cheaper in future?

Will graphics cards get cheaper in future?

Most likely, it will only get worse. Nvidia predicts a shortage of components for the boards until April. Retail considers the current recommended prices unrealistic, and because of the new duties, they are more likely to rise rather than fall. The United States is preparing to get out of the crisis caused by the pandemic and is sharply increasing orders for equipment. For manufacturers, deliveries to America are of the highest priority, therefore, cards to other countries will be supplied on a leftover basis. Now retailers buy video cards wherever they have to, demand exceeds supply by several times, and some stores even sell cards according to their passports – no more than one in hand, so as not to feed miners and resellers. 

But there is still hope. Vendors are expanding their model lines in favor of budget solutions and are planning to release specialized cards for miners. In addition, the cryptocurrency can suddenly collapse, and then the bulletin boards will overflow with used cards, which will reduce the demand and prices for new boards in stores. All this is a matter of time, however, how long it will take is a big question, to which no one has a clear answer yet.