> Groq probably realized that people buying 1-2 cards at a time, wasn't going to be profitable
Yep! And if would have bogged them down by slowing down R&D cycles and even fulfilling orders as they obviously are not placing orders the same size as Nvidia or AMD.
I wonder what this holds for SambaNova and other similar companies as well.
> Nvidia, as #1, no longer needs to compete and has stopped winning via low cost, high performance GPUs. This opened a giant opportunity for AMD GPUs to give those things to consumers and start winning against Nvidia.
> But instead AMD has just followed Nvidia into making slow, uncompetitive GPUs at high prices.
I am not really sure they could do that. If nvidia cards are cheaper to produce, then for AMD just ordering more cards can end in massive losses short term, and much less profit long term, as customers demand cheaper cards. Nvidia always could lower their prices as the updog, and hurting AMD really bad.
But yes, in retrospective, knowing that the demand for GPUs would remain ridiculously high for years, the best move for AMD was ordering and producing much much more cards. As the best move for us customers were jumping into crypto. (Not necessarily the best strategy.)
> Instead it looked like they were trying to maintain gamer goodwill by not increasing consumer card costs during the boom.
They've been selling mid-sized GPUs like the GTX 1080 at 800$ 8 years ago. A 300 mm2 GPU.
They have been rising and rising costs for a long time to milk as many dollars as they could.
People seem to forget even before the crypto craze the company had insane margins in their revenue. They weren't selling 800$ chips because those costed 600 or 500$ to produce...
Even the most expensive 4090 is hardly more than a 400$ chip, memories included to build.
> My goodness though, anyone with a brain knew the cards weren’t going to gamers. Was this not known to the average investor?
If it was so obvious, why did Nvidia never say it? This is a quote from a transcript, and seems representative of how they put it:
> ... I would say the large majority of the cryptocurrency demand [is for those] specialized products. There are still small miners that buy GeForces here and there, and that probably also increased the demand of GeForces.
While it may be true that everyone knew they were lying or being misleading, that isn't a very good defense.
Over the last decade there was often a major problem in GPU supply. Huge users like Amazon were presumably buying in bulk direct from manufacturers as custom runs so weren’t trying to buy them on the open market like everyone else.
Even other clouds had major problems getting them at some points.
> SO MANY gpus that are now going to be cheaper than sand
The market knew that the PoS merge was coming. I'd have expected the market to therefore have already factored the PoS transition into GPU prices. Why do you think GPU prices are tanking now?
> I was actually suprised to hear that high end cards are the ones where money is lost. Typically high end products are the ones with by far the biggest margins.
two things:
first, high-end cards are the ones that miners liked, so, partners really loaded up on orders of those cards. They sold a huge number of high-end cards relative to previous generations. And now the mining market has crashed, and they're stuck with a huge number of high-end cards (relative to actual sustainable demand) both at the vendor (NVIDIA) level and the partner (EVGA, et al) level. And miners are dumping their cards, so you have a huge number of high-end cards flowing back into the market too.
secondly, the card he cites as being "their highest-margin card" is a model that was a bad deal at launch and has seen virtually no price reduction since then. I have actually seen quite a few people commenting on just how little prices of that specific model have dropped, with the 3060 Ti and 3070 pushing downwards (and those are significantly faster than the base 3060). On the AMD side, you can now get a 6700XT (which again, significantly faster) for the same price, which is a performance bracket higher. It's an oddity of that specific model.
so, what he's saying is, an overpriced card that has seen no price reduction while much faster cards crash around it, has high margins - "no shit", as they say. Doesn't mean anybody is really buying it though.
the whole thing is very much "true, from a certain point of view"... like his "wow we're losing money!". Yeah, now that the GPU market is crashing you're losing money... and during those years, the company as a whole lost money because this CEO has been doing all sorts of zany business ventures that ended up in massive losses... the GPU division made money hand-over-fist for the last 2 years, and he's lost money hand-over-fist by trying to break into the enthusiast monitor market and enthusiast motherboards (both extremely support, warranty, and R&D intensive markets) and doing a ton of branding deals where he sticks EVGA logos on hdmi capture devices and pcie sound cards (in 2020, seriously) on products licensed from other vendors (who it turns out were skeezes and EVGA was on the hook for a ton of defective and falsely-marketed products).
he ran the company into the ground and is trying to shift blame to NVIDIA. Yeah, the board-partner thing is predatory, but partners don't really add significant value to the product anymore, and middlemen get squeezed out of business everywhere. Yeah, EVGA is in deep shit, and he's lying when he says they're not going to go under, the writing has been on the wall for months now. The GPU market crashing is almost certainly the last straw for EVGA and they won't be able to pivot to their remaining markets.
But like, he did make a ton of money on GPUs over the last 2 years, he just lost a ton of money on other stuff, and that's not NVIDIA's fault. Partners in general ordered way too much (and again, particularly the high-end stuff) trying to cash in, they make fucktons of margin on it during 2020-2021, and now they are lobbying NVIDIA to cover their downside and buy back all the chips they have left over. This is part of that push, and they know the public generally doesn't like NVIDIA, so it's worth a go.
And it's true that unless NVIDIA buys back the chips from EVGA, they probably go under. I imagine that's not a very pleasant conference room to be in during the negotiations. GN notes the extremely "personal" tenor of this guy's affront. If NVIDIA doesn't cave, his company goes under, and he's toast because EVGA is a pillar of the fucking community. Super tempting to try and go around the negotiations and take your case to the public, try and cash in on anti-NVIDIA sentiment (which is broad and intense), and try to appear to be the good guy.
Partners tried to pull this same stunt in 2018... they ran to tech media framing it as "NVIDIA is forcing us to buy obsolete chips if we want next-gen ones!" and if you read the details, what actually happened is partners wanted to cancel their contractually-agreed orders after mining tanked, and NVIDIA said no, if you do that it's over, we're not giving you 20-series chips if you break your contract on the previous batch.
I bet NVIDIA wishes they could cancel their contractually-agreed orders from TSMC too. That's not how it works unfortunately. But NVIDIA did knuckle under in 2018 and bought chips back from Gigabyte and perhaps other vendors, and now the board partners are hoping for a repeat. But that was 300k chips, which, while it's a lot, was tractable. The current overstock is like, millions of chips, all in the high end.
That's why both NVIDIA and AMD are launching top-first this generation... the lower chips would compete with those massively-overstocked 30-series cards. So, launch the high-end stuff over the top and let the 30-series inventory burn through.
>Also: Nvidia couldn't increase production quantity if they wanted, this isn't a money problem.
There is a problem with this logic. If there is no money problem why haven't they expanded production ahead of time? Well, probably because there is no money in expanding production, so yes it's a money problem.
If it takes 5 years to build a fab and there is no reason to build a fab since there is no money to be made then why would you build a fab in any situation, even if you are willing to wait 5 years? The answer is you don't build the fab and accept that there will be a shortage in the future. Since there are not enough GPUs that's what you will have to live with instead of complaining that there aren't enough GPUs.
> NVidia may have focused on the high end too much.
seems to me like they're making products available at all sorts of price points. i'm not an mba, but that strikes me as a good idea.
not making quite enough mid-level products is unfortunate, but since that was temporary, it wouldn't have made sense for them to invest in increased production.
(they should've abandoned the MSRP and just reverse auctioned inventory to the retailers, so that they could capture the value of their products, instead of letting folks selling on ebay get it.)
> They have a card for the machine learning crowd that costs $16,000
Of course. The multi billion dollar market is just too small for more than one company. Nvidia is just biding it’s time on ~20% market share until it can put the finishing moves on the other 9 major vendors.
Well, you know, except for the cards that they binned specifically so they could be sold as 'mining' cards. There's no such thing, these are all 3060 GPUs, the mining cards have a slightly different firmware that wasn't even able to do the one thing it was supposed to do.
> they told their investors that they were selling GPUs to gamers, while in fact selling most of them to miners
I don't think nvidia even did this, they marketed to gamers and reported the correct number of sales. What people do with the card once its sold is not up to nvidia its not information that an investor can reasonable assume nvidia will report on.
If I invest in a steel mine they market their steel to car manufactures and report the correct number of sales. If they also happen to sell to gun manufactures I can't then sue said company for not reporting that.
> This just seems like a feeble gesture at appeasing gamers.
Color me cynical, but this seems like a strong gesture at increasing margins on GPU computing by upselling using cryptocurrency and gamers as PR pawns/scapegoats
if Nvidia is selling more cards than they can produce/distribute at desired target prices they should produce more cards and improve their distribution networks..
Neither me, _Understated_ or you know exactly why nvidia did what they did. What we do know, is that ultimately they answer to their shareholders and they have to show profit. Their motivations for why they do the things they do, can usually be boiled down to: "because it makes us more money".
Nvidia probably doesn't care where the graphic cards go, miners or gamers, as they still make the same amount of money.
> is this done to increase sales volume or just nvidia’s profit?
What if it’s neither? Nvidia tried increasing production of 1070s and 1080s three years ago to meet bitcoin demand, and it bit them hard when the bitcoin bubble suddenly popped. They got stuck with an oversupply of cards right when Turing was launching, it ate into sales and the stock dropped in half overnight. Meanwhile their customer base of gamers were pissed because they couldn’t get gaming cards. What if they’re just hedging against another bubble popping, and trying to avoid getting killed by it, again?
Yep! You explained it better than me!
> Groq probably realized that people buying 1-2 cards at a time, wasn't going to be profitable
Yep! And if would have bogged them down by slowing down R&D cycles and even fulfilling orders as they obviously are not placing orders the same size as Nvidia or AMD.
I wonder what this holds for SambaNova and other similar companies as well.
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