NVIDIA Earned $5 Billion During a GPU "Shortage" Quarter and Expects to Do it Again in the Next One

[btarunr]

NVIDIA's recently published Q4-2020 + Fiscal Year 2021 results show that the alleged "GPU shortage" has had no bearing on the company's financials, with the company raking in $5 billion in revenue, in the quarter ending on January 31, 2021. In its outlook for the following quarter (Q1 FY 2022), the company expects to make another $5.30 billion (± 2%). To its credit, NVIDIA has been maintaining that the shortage of graphics cards in the retail market are a result of demand vastly outstripping supply; than a problem with the supply in and of itself (such as yields of the new 8 nm "Ampere" GPUs). The numbers show that NVIDIA's output of GPUs is fairly normal, and the problem lies with the retail supply-chain.

Crypto-currency mining and scalping are the two biggest problems affecting the availability of graphics cards in the retail market. Surging prices of crypto-currencies, coupled with the latest generation "Ampere" and RDNA2 graphics architectures having sufficient performance/Watt to mine crypto-currencies at viable scale, mean that crypto-miners are able to pick up inventory of graphics cards at wholesale; with very little making it down to retailers. Scalping is another major factor. Those with sophisticated online shopping tools are able to buy large quantities of graphics cards the moment they're available online, so they could re-sell or auction them at highly marked up prices, for profit. NVIDIA started to address the problem of miners by introducing measures that make their upcoming graphics cards artificially slower at mining, affecting the economics of using GPUs; while the problem of scalping remains at large.



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[hat]

" Surging prices of crypto-currencies, coupled with the latest generation "Ampere" and RDNA2 graphics architectures having sufficient performance/Watt to mine crypto-currencies at viable scale, mean that crypto-miners are able to pick up inventory of graphics cards at wholesale; with very little making it down to retailers."

I don't see how the cards being good at mining mean that miners are able to get inventory before it hits retailers. Nvidia and AMD selling huge shipments directly to miners, however, would be a good reason why retailers aren't getting any...

 

[BArms]

Of course, they're selling every single 3090 for $1500+ and 3080 for $699 + they can possibly make and at a >60% profit margin off gamers and probably a lot higher off miners who will happily pay scalping prices and then some for gauranteed larger shipments.

" Surging prices of crypto-currencies, coupled with the latest generation "Ampere" and RDNA2 graphics architectures having sufficient performance/Watt to mine crypto-currencies at viable scale, mean that crypto-miners are able to pick up inventory of graphics cards at wholesale; with very little making it down to retailers."

I don't see how the cards being good at mining mean that miners are able to get inventory before it hits retailers. Nvidia and AMD selling huge shipments directly to miners, however, would be a good reason why retailers aren't getting any...

It's overwhelmingly likely that the miner in that photo knows someone in the supply chain and either called in some favors or simply paid them a bribe to make some inventory take a detour. It wouldn't even have to be illegal per se, "before you tell Best Buy how many PNY cards they're getting next week, subtract 50 and i'll pay you $200 each more than BB will pay for them".

 

[Hyderz]

i was thinking the other day that retail store can buy up the gpu and start mining themselves.

 

[ratirt]

Of course, they're selling every single 3090 for $1500+ and 3080 for $699 + they can possibly make and at a >60% profit margin off gamers and probably a lot higher off miners who will happily pay scalping prices and then some for gauranteed larger shipments.

3090 for $1500? That would have been cheap. Same with the 3080 for $700
NV sells for profit and it doesnt matter who is going to buy the cards. What matters is how many will be sold. Miners buy in bulk all they can and never complain about drivers.
Gamers buy 1 card in general and complain about everything. (mostly drivers)
People who think that gaming is the largest market are blind. NV doesn't care about gamers but how many product they sell. Hopefully everything and nothing will be left, maximizing profit.

 

[Chomiq]

Of course, they're selling every single 3090 for $1500+ and 3080 for $699 + they can possibly make and at a >60% profit margin off gamers and probably a lot higher off miners who will happily pay scalping prices and then some for gauranteed larger shipments.



It's overwhelmingly likely that the miner in that photo knows someone in the supply chain and either called in some favors or simply paid them a bribe to make some inventory take a detour. It wouldn't even have to be illegal per se, "before you tell Best Buy how many PNY cards they're getting next week, subtract 50 and i'll pay you $200 each more than BB will pay for them".

You don't have to have anyone on the inside. You just need to open up a company and have enough cash to buy a truckload of gpus. Nobody will say no to hard cash. If you move enough inventory they'll even give you a discount.

 

[ratirt]

You don't have to have anyone on the inside. You just need to open up a company and have enough cash to buy a truckload of gpus. Nobody will say no to hard cash. If you move enough inventory they'll even give you a discount.

That is so obvious. It is hard for me to understand why people don't get it. False statements like NV would rather sell the graphics card to gamers than mining. As long as they sell it's great. No matter who purchases it. Mining buys in hundreds gamers buy 1 and keep on complaining.

 

[MicroUnC]

Another words - business as usual!

 

[AsRock]

That is so obvious. It is hard for me to understand why people don't get it. False statements like NV would rather sell the graphics card to gamers than mining. As long as they sell it's great. No matter who purchases it. Mining buys in hundreds gamers buy 1 and keep on complaining.

I'd say selling to miners would make them more money, as most going to want a GPU still and will wait. Miners on the other hand the bubble could burst any time.

Although it will not be soon enough, and i bet prices get bumped too.

 

[Sihastru]

AMD also had record earnings during the same GPU shortage quarter, so let's not pretend there's good guys and bad guys. If AMD, NVIDIA and their AIBs sell direct to mining farms, the warranties are waived, support is waived and so on. And not having your product go through the expensive retail chain is a very big plus. All that money that would be lost with warranties, support and the transit to the end consumer goes in the manufacturer's pockets. They all pretend to be your personal friend, they promise you that "next month things will get better", but they are not and it never does. Also, speaking of the "end consumer", that entity is a whiny entitled son'of'a... at least compared to the "mining farm" entity.

And it's really a WIN-WIN situation for them. If mining flops, and it will eventually (this is when that "next month things will get better" promise will come true after arduous efforts from their part), it's not like you're not going to buy GPUs anymore. You're already addicted and addicts need their fix. You are being lied to, and you know you are being lied to, but you're not going to ever do anything about it, other than complain in a forum somewhere, while lying to yourself that some of the liars are better then some of the other liars, because allegiance to companies that don't give a s#1t about you is doing wonders to your mental health.

"Stuff" flows like water, taking the path of least resistance. Less friction means more money. There's no shortage of anything, it's just a redistribution of goods and services.

 

[ExcuseMeWtf]

See, they have no incentive for this situation to end, they're gonna milk it for all they can while pretending to care about gamers.

 

[Caring1]

Nice work Ngreedia!!!

Settle pettle, no need to get your panties in a knot over best business practices.

 

[Legacy-ZA]

See, they have no incentive for this situation to end, they're gonna milk it for all they can while pretending to care about gamers.

Exactly, if they really cared, they would have nerfed it way more than just 50%, as in, completely.

 

[AsRock]

Exactly, if they really cared, they would have nerfed it way more than just 50%, as in, completely.

I don't believe it nerfs all kinds of coin, and just one of 3-4 of them ?.

 

[Bubster]

Like My man Gordon Gekko said in the Wall Street Movie (Greed is Good) Now it seems to be legal...

 

[Legacy-ZA]

I don't believe it nerfs all kinds of coin, and just one of 3-4 of them ?.

Exactly the issue. The problem isn't going to go away.

 

[epsx]

They should stop saying gaming company this company is a "shortage/cryptocurrency" company... they bullshitting around and selfish people make publicity for them.

 

[pavle]

The only problem is that people keep buying their cards in tall amounts. Can you imagine there are only 2 graphics card companies on this earth and none good?
Unbelievable - used to be 20, but I guess they weren't serious about their optimizations and their marketing.

 

[Aquinus]

Businesses are making a lot of money when all of their stock is selling like hotcakes? Shocker.

 

[r9]

Yeah no shit ... life is good when you can pull up prices out of you ass, AMD no different.
Not to mention graphics cards makers for example selling 3060 for $500 which if it wasn't for the shortage would have been $330 card you do simple math it's 50% more but their profit doesn't go 50%.
Example if it cost them $270 to make the card the profit would be $60 when selling for $330 but if you sell for $500 the profit is actually now $230.
So their profit went from $60 to $230 so that's almost 400% increase in profit basically selling one card like selling four cards in normal times.
So I don't see any reason for either AMD and NVIDIA go into price war anytime soon.

 

[newtekie1]

I don't see how the cards being good at mining mean that miners are able to get inventory before it hits retailers. Nvidia and AMD selling huge shipments directly to miners, however, would be a good reason why retailers aren't getting any...

Neither nVidia or AMD sell cards*, they sell GPUs. The AIBs sell cards, they are the ones selling to miners at wholesale before they hit retail channels. Don't get mad at AMD or nVidia, get made at the AIBs, like Gigabyte that was just caught selling cards to miners before the cards were even officially released.

*Yes nVidia sells FE cards, but it doesn't seem those are getting into the hands of miners.

 

[ThrashZone]

Hi,
Gigabyte finally found suckers to buy large quantities good for them, sure weren't on my radar.

 

[dragontamer5788]

" Surging prices of crypto-currencies, coupled with the latest generation "Ampere" and RDNA2 graphics architectures having sufficient performance/Watt to mine crypto-currencies at viable scale, mean that crypto-miners are able to pick up inventory of graphics cards at wholesale; with very little making it down to retailers."

I don't see how the cards being good at mining mean that miners are able to get inventory before it hits retailers. Nvidia and AMD selling huge shipments directly to miners, however, would be a good reason why retailers aren't getting any...

When miners are willing to pay above MSRP, its a shoe-in for factories to sell to miners instead of gamers. Standard free-market / auction situation: miners are willing to pay more, and gamers are not as willing to pay these high prices. So miners get the GPUs.

In a few months, I'm sure the various coins will crash again and these GPUs will be available cheap off of ebay.

 

[dirtyferret]

I haven't been this shocked by a headline since news broke the Pope was Catholic

 

[efikkan]

NVIDIA's recently published Q4-2020 + Fiscal Year 2021 results show that the alleged "GPU shortage" has had no bearing on the company's financials

Why is the shortage alleged?
Technically, there is a shortage whenever demand is higher than supply. Don't we have enough evidence to conclude this decisively?

Crypto-currency mining and scalping are the two biggest problems affecting the availability of graphics cards in the retail market. Surging prices of crypto-currencies, coupled with the latest generation "Ampere" and RDNA2 graphics architectures having sufficient performance/Watt to mine crypto-currencies at viable scale, mean that crypto-miners are able to pick up inventory of graphics cards at wholesale; with very little making it down to retailers

While it's certainly unfortunate that a portion of GPUs are wasted on pointless mining, especially when there is a shortage in the first place.
And while miners are buying thousands of GPUs, I have yet to see any evidence suggesting they are buying the majority (millions).
More correctly, mining is a contributing factor to the shortage, while the main factor is a steady increase in demand over the past years, further accelerated by extreme demand under Covid-19. So let's not blame everything on those pesky miners.
Availability was a large problem before this mining boom, and this mining boom will probably soon be over, but the shortages will probably linger for a while…

Of course, they're selling every single 3090 for $1500+ and 3080 for $699 + they can possibly make and at a >60% profit margin off gamers and probably a lot higher off miners who will happily pay scalping prices and then some for gauranteed larger shipments.

Who is making a 60% profit margin?

BTW, the profits of overpriced cards go to retailers and possibly wholesalers, not Nvidia and AMD.

AMD also had record earnings during the same GPU shortage quarter, so let's not pretend there's good guys and bad guys.

There is nothing bad about making profits by itself. But neither AMD nor Nvidia is benefiting from overpriced cards, those profits accumulate further down the chain.

If AMD, NVIDIA and their AIBs sell direct to mining farms, the warranties are waived, support is waived and so on.

Sure, but are there any evidence of this happening at scale?
I know there are some claims about Zotac doing it.