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Nvidia: Decreased Demand Means GPU Price Cuts

by George Mensah
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Nvidia is now experiencing an oversupply of GPUs due to falling demand for PC graphics cards.

Nvidia released(Opens in a new window) a preliminary earnings report on Monday to warn investors about a revenue shortfall. During the fiscal quarter from May to July, the company’s gaming-related revenues fell 44% sequentially and 33% year on year to $2 billion.

Nvidia’s total revenue for the quarter will be $6.7 billion, down from $8.1 billion expected. The company attributes the decline in sales to “lower sell-in of gaming products reflecting a reduction in channel partner sales, most likely due to macroeconomic headwinds.” In other words, retailers are halting orders for GPUs due to the ongoing economic downturn.

“In addition to lowering sell-in, the company implemented pricing programs with channel partners to reflect challenging market conditions that are expected to continue into the third quarter,” Nvidia said.

The drop in demand is a 180-degree turn from late 2020 and 2021, when the market experienced the worst GPU shortage in history, resulting in skyrocketing prices. The situation arose as a result of high demand from consumers and cryptocurrency miners, as well as chip manufacturing and supply chain issues during the COVID-19 pandemic.

However, in the months since, demand for GPUs has decreased while supplies of graphics cards have increased. According to Nvidia’s preliminary earnings report, retailers have overstocked GPUs and are having difficulty clearing the inventories. The company also stated that it will take a $1.3 billion charge “primarily for inventory and related reserves, based on revised future demand expectations.”

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In the earnings report, Nvidia CEO Jensen Huang stated, “Our gaming product sell-through projections declined significantly as the quarter progressed.” “Because we anticipate that the macroeconomic conditions affecting sell-through will persist, we worked with our gaming partners to adjust channel prices and inventory.”

The good news for consumers is that Nvidia’s GPU prices are starting to fall. EVGA, for example, has reduced the price of its RTX 3090 Ti graphics cards by $600 to $800(Opens in a new window).

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