Why Are Graphics Cards So Expensive

Why Are Graphics Cards So Expensive? (10 Crucial Reasons)

Once upon a time, gamers were scared of getting shot with a sniper from long range. But now, they fear the cost of buying a graphics card. An amalgamation of constituents have pushed the gaming card prices to the stratosphere. There is no indication when they will fall down to the Earth any time soon. Take a look at the prices as of Oct 2021 last year by data collected in 3D Center.

Graphics Card retail price trend as of Oct 2021
Graphics Card retail price trend as of Oct 2021

Do note that this date arrives from Europe, but other regions have seen similar trends. . If anything, graphics cards in North America are a bit more expensive. The price of GPUs are also varied. While high-end GPUs like the RTX 3080 are still obscenely expensive, mid-range offerings like the 3060 can seem almost sane even if it is well above the price of MSRP. 

The GPU shortage, which began in early 2020 as the COVID-19 pandemic sent millions and millions into lockdowns. This led holed-up gaming enthusiasts (with more time to spare) to consider overdue upgrades, which tightened supply. Next, there was an abrupt increase in cryptocurrency values throughout 2020 and 2021 and still in 2022. Since GPUs are essential to mine many cryptocurrencies, gaming hardware often ended up in mining rigs where their video outputs would go unused. On top of all of that, the ongoing semiconductor shortage had already constrained supply, so powerful video cards quickly became rare and expensive.

Top 10 Reasons Why Graphics Cards Are So Expensive

So how on Earth a card which cost $550 last year ends up costing twice the year later and to some extent even on the secondary market? In order to attempt answering such questions in this article, we first have to dive into geopolitics, cryptocurrency, pandemic, a bit of history, and even places darker and scarier where light does not shine. Okay, that last bit was an exaggeration. Now let us dive right into the core of the matter and make sense of this mess.

1. Ongoing Global Chip Shortage

Ongoing Global Chip Shortage

So why are GPUs so goddamn expensive? Let us refer to the economy, my comrade. Supply, demand, and the allocation of resources are the 3 primary influences. They determine the availability of products and how expensive it is, albeit evolving with what the general audience has access to the picture. We are currently amid a global chip scarcity which has the potential of continuing indefinitely. It goes without saying that semiconductor chips are used in everything starting from your very computers, and smartphones to the airplanes you may travel so often. The hands of the manufacturer are tied and are bound to limit their production due to the shortage. With a limited number of chips to go around, it evidently prolongs the production of graphics cards in turn yields fewer GPUs released every day. Moreover, due to COVID-19 and shipping problems, there hasn’t been enough supply of semiconductor chips to meet demand. Those who are fortunate enough to buy a gaming card are paying double or triple the MSRP as demand has skyrocketed to the moon whereas supply is low. 

This does not only impact the production of graphics cards, but other sectors, as well, including phones, laptops, gaming consoles, and more as practically speaking, anything electronic will require a chip. This is one of the major reasons why graphics cards have been so expensive as of late.

2. Covid-19 Pandemic

Graphics Card Business on Covid 19 Pandemic
Graphics Card Business on Covid 19 Pandemic

The rise of the global COVID-19 pandemic compelled everyone to hide under their shelters and maintain isolation. Governments have conducted strict lockdowns for every province and region. So, mankind has to work remotely from home through the use of home desktops and laptops. This is why there is an increased demand for personal electronics substantially. Furthermore, people are left with more time for creativity as there is no need for commuting. Many took to gaming to connect with their friends in order to relieve some fear of mortality that the pandemic was causing. More people are jumping into streaming and Twitch day by day and this has led to many building their dream PC or gaming rig. The whole world found itself needing more GPUs as the market is hungrier for them than ever. Whether it’s for work or for entertainment, an abundance of people are seeking to buy electronic devices like computers, smartphones, or tablets which in turn has drastically increased the demand for graphics cards, which is why graphics cards are so expensive at this time. There are many businesses which have let their workers work from home too as it helps to cut down and save on cost. And even when some lockdowns are lifted, the vast majority of people choose to work from home. Even as production resumed on PCs and laptops, there was still a chip shortage to contend with. Another cause is due to supply chains which we will talk about next.

3. Supply Chain

Supply of Graphics Card
Supply of Graphics Card

Almost all the towns and cities in the world have implemented lockdown restrictions, which in turn has severely limited the production as well as the amount of imports and exports that can traverse through the area. In such trivials times, graphics cards (GPUs) are considered a luxury item when compared to other, more essential goods like food or water (Behold Graphics Card!). Even though many factories have reopened and may start producing both chips and graphics, it will take a long time to fulfill the necessary quota. Also, many other goods had to halt production, even things like water and food. Therefore, now in the early stages from the return of lockdown, there is more emphasis to meet the demands to supply essential goods and prioritized shipping of these goods. As a consequence, fewer gaming cards are shipped. This also posed a problem when different countries went back into lockdown when others were opening. As a result, even if a shipment of graphics cards did leave one country, there was no assurance that they would have entered another country and even if they did, the majority of these shipments would be quarantined. As you can see, supply cannot fulfill the end’s meet of public demand yielding an increase in graphics card prices. 

4. Increased Demand

The demand for Graphics Card

We have previously addressed this somewhat that the shortage and inflating cost of graphics cards is a rapid increase in demand. Now we will talk in-depth. The basic principle of the economy states that when demand is higher than supply, the price increases. Due to the global shortage of semiconductors, a vital component in creating the fancy, luxurious item known as graphics cards, we are experiencing this abrupt hike in price.

However, there are specific issues with Nvidia and AMD. The uprising demand for electronics in the last couple of years has far outpaced the production of semiconductors. This caused bottlenecks for too many products to even mention, and as you may have guessed it, notably among them are graphics cards. Furthermore, the surge in demand for electronics has proven detrimental as just about anything such as laptops, smartphones, cars, smart refrigerators requires semiconductors. Do you know that in 2021 the State of the U.S? The Semiconductor Industry Association (SIA) reported that semiconductors are “The foundation of modern life.” Even before the pandemic the drought, and rise in demand had already threatened to outstrip production. Moreover, due to the rise in demand, many companies make semiconductors because their fabrication is extremely expensive and consumes ample time.

5. Increased Spending on Goods

Increased Spending on Goods
Increased Spending on Goods

As many people were unable to leave their homes, it has led many to shop at online vendors for buying their desired products. Many online retailers keep their factories out of the country. They have to ship these products to the country where orders were placed for delivery. Consequently, it has made shipping problems even worse since there were few ships in operation, albeit with even fewer dock workers to process and unload shipping cargo. This tends to cause traffic congestion at ports inevitably delaying goods. As a matter of fact, these graphics cards also get stuck in the mess. At portside, a ship full of graphics cards has to wait its turn before it can dock at port. Earlier we mentioned that online shopping has drastically increased during the pandemic. So this essentially means a lot of ships can be observed at the ports to deliver said goods. The problem is that without sufficient manpower to process and unload containers from those ships, many need to wait longer hours for their turn. This delay can even extend to days. In many cases, there were weeks of delay with ships anchoring off the coast. It has made the shortage of graphics cards even worse since they were unable to hand off the products and get them to suppliers in a timely fashion. And even when more workers have attended, the problem had already escalated to the point that a bottleneck had formed at various ports as workers can only process so many ships in a day strictly speaking. Not only that but there is a lack of truck drivers available there to pick up these containers and deliver them to the appropriate locations. The docks had to wait for space to clear in order to process more ships when these areas were opened for more containers.

The entire problem happening at ports arose due to an increased spending for online goods combined with a lack of labor to support the increase. This further impacted how slowly graphics cards could reach their suppliers and get in the hands of buyers. As a result, since supply was unable to meet demand, the price of GPUs has increased.

6. Cryptocurrency Miners

Cryptocurrency Miners
Cryptocurrency Miners

Now we shall specifically address the graphics cards that are not in the room. What we have discussed so far about the increase in demand essentially revolves around semiconductors which is that shortage of semiconductors have made the production of GPUs not only slower but very expensive. While that is true, there is another major reason why the costs of graphics cards have shot up to the sky. The reason being cryptocurrency mining.

In the midst of a global semiconductor shortage where there is a humongous boom in the market of cryptocurrency, the very name of graphics cards became a very attractive asset. To put this matter into perspective, many tech firms reported that  about 25% of all graphic cards sold in the first quarter of 2021 went directly at the hands of cryptocurrency miners. As a result, graphics cards became so hard to find, that even older generations of graphics cards were sold out. Or if not, their prices equally skyrocketed. Do note that mining cryptocurrency requires very high processing power, huge time, and energy. For many cryptocurrencies, proof of work is public which means that miners race to produce the correct hash first to receive payment. This is the reason why high-end GPUs suich as Nvidia’s GeForce RTX 30 series or AMD Radeon RX 6000 are not only the fastest but the most powerful graphics card in the planet that can mine effectively with several proofs of work puzzles and race to the finish line. This evidently makes them ideal for cryptocurrency miners.

7. US Tariffs

US Tariffs
US Tariffs

Tariffs are a means to make it troublesome for a business to sell its products in another country. The aim here is to encourage consumers into buying their products from their own country instead of from overseas. However,  consumers still end up buying foreign goods anyway, and that too at higher prices. And even graphics card prices have reached the moon, there is no stopping for streamers looking to upgrade their rig and other gaming enthusiasts to shove dollars upon dollars for their desired gaming PC packing a top-tier graphics card. China is in charge of producing many of the chips that a GPU makes use of. Hence, they also produce graphics cards. During Trump’s tenure as the US President, many new tariffs were imposed from overseas on a weekly basis. You should know that the Trump Administration had placed a 25% tax on all Chinese electronic products that utilized Chinese-produced chips. So on top of the asking price for graphics cards imported from China, an additional 25% tax was also set. Therefore, this substantially extra cost evidently passed along to US consumers at means of exponentially higher prices. So right off the bat, graphics cards became more and more expensive due to a tax placed on the goods. Since gamers and other PC users have specific graphics card brands that they enjoy using for years. They’re likely to hesitate when switching to a brand they have not previously used when their preference has proven their capabilities over the years. It is no surprise that they end up choosing to pay for the same brand with a high buying price, mitigating any risk by purchasing a new graphics card from another manufacturer. 

Pay heed that the Biden Administration has not yet lifted off the tariff imposed on goods involving Chinese chips in electronics. As such, graphics cards manufactured in China will remain expensive for a long duration.

8. Better Specs

Better Specs
Better Specs

It goes without saying that next-generation GPUs are utilizing state of art designs with advanced materials. These are not rich in quality but quite difficult to develop when compared to graphics cards from the last generation because of higher manufacturing costs. Looking at video game’s graphics from 10 years ago, we will observe a stark contrast in the present day. These next-gen cards from NVIDIA and AMD are pushing the boundaries of computer graphics in a big way. These cards are making history by breaking The border between computer-generated graphics and reality is collapsing day by day. They are particularly designed for superb graphical prowess at historically large resolutions such as 4k Ultra High Definition with machine learning AI cutting techs such as DLSS and FSR. Buyers are buying these graphics cards even at high costs because they will benefit from them for a span of four to five years or more. This caliber of groundbreaking performance does not come without cost. This is why these new GPUs with enriched materials and tech cost severely more than their predecessor as the cost of manufacturing is also greater.

9. Scalpers

Scalpers
Scalpers

What are scalpers? These are individuals who would buy certain products in large quantities and later sell them at overwhelmingly high prices. When there is an abundance of money on the table left for gaming enthusiasts and miners, scalpers being able to hoard stock full of new GPUs will definitely charge ridiculous prices. This is because they are reliant on the fact that buyers will not get the product anywhere else, not at retail stores nor at Newegg or other online sites. They will have no choice and without a shroud hesitation, they would buy through scalpers. Thus, scalpers have found notorious success hoarding piles of graphics cards through the global epidemic. In addition, scalping is not illegal in the USA. In countries where it is illegal, scalping is very hard to expose. 

10. Brand

The last factor why gaming cards are expensive also depends on branding as it can influence the cost as well. As you are probably aware, there is a diverse variety of graphics card that you can select on the market. However, there are 3 or 4 brands which are widely renowned and often stand out for gamers and other PC users alike. These brands are very much aware of their reputation and know what’s at stake. They are assured that buyers will stick to their products. In the case of graphics cards, this is double true. Because of this, these brands put a higher price tag than brands which are lesser-known. Brands acknowledge that buyers will surely buy their products as they have built a firm reputation over the years for providing top-notch electronic goods.

Moving On

These are our top 10 reasons why graphics are so expensive. It’s pretty clear that because of their complex design while also having higher manufacturer costs of graphics cards, the shortage of supply of semiconductors and chips carried along with the Covid-19 pandemic has made the situation dire and unpleasant. As a result, the price of gaming cards are soaring through the sky. So, is there nothing that can be done? Let us look at some ways you can get your hands on graphics cards. 

Buy Prebuilt Gaming Desktops

This is a very viable option. As per the aforementioned shortage of supply and more demand, it is scarce to get yourself a shiny new RTX card. However, the odds are better at securing a prebuilt PC with the graphics card installed. Now, this may not sound good for everyone. But hey, you are evidently paying less for the entire gaming rig. And even if you aren’t too keen on using the entire system, you can just take out the new graphics card and put it in your own system. In other words, you can simply buy them solely for the GPUs if other components such as the motherboard, processor, SSD, and RAM may not be of interest to you. 

Conversely, if your ailing old system is in desperate need of a major upgrade and the very thought of having to purchase a GPU at the full price of building a new PC disgusts you, then this is a great option.

Get a Gaming Laptop

Gaming laptops have developed and come far across the years. These laptops come complete with everything you need to start gaming straight away. In 2022, gaming laptops are more powerful than they ever existed. And better yet they are also portable. If you do wish to game in different rooms in your house, or simply play while on vacation somewhere else, all you really need to pack in is the charger, rather than multiple peripherals.

You will also acquire faster screens for competitive and precision play. Traditional laptops throughout the years have offered only 60hz refresh rate. Today’s gaming laptops offer 144Hz screens as standard. There are premium offerings with  260Hz or 360Hz options as well. This can make a huge difference to your gaming experience, deducting tens of milliseconds off of your reaction time and giving you an important edge at what’s happening before your opponents on slower monitors.

Try Your Luck at Lotteries

Newegg sells premium products and often graphics cards where users are allowed to enter a lottery. Here, you have the opportunity to buy those products as well as a GPU at their original (MSRP) price. While that is certainly great and all but because of immense demand, rest assured that thousands of people can enter lotteries every day for these products. This does leave your chances slim. Other communities like the StockDrops server on Discord and plugins like Distill and Hot stock tend to help consumers know when products come back into stock.

Preventive Measures

  • Intel’s Arc Alchemist GPU

There is a glimpse of hope as there is a new competitor entering the fray which will fight toe-to-toe with the cutting edge graphics cards. Intel has publicly announced that it will announce its first line-up of GPUs named as “Arc Alchemist”. We are hopeful that it can mitigate the shortage of graphics cards. Even though another company stepping up to compete against both Nvidia and AMD can seem a short-term solution, there would be a competition for who can keep the prices down. 

  • Anti-Scalping Movement

The House of Representatives (US) has initiated a bill to make the use of bots illegal in order to purchase goods online. These bots cause scarcity and resell them at a profit. This is a good course of action to address a looming threat where taking legal repercussions could surely slow the scalping trend.

When Will Prices Go Down? When Will This Misery End?

Pandemic, drought, trade wars, unprecedented cryptocurrency boom, a global shortage in semiconductors, and a demand for electronics that even 10 years ago would have sounded like science fiction, all have added to the graphics card shortage we find ourselves in today.

Just when will this trend end? Is there any light at the end of the tunnel?

To answer your heart throbbing question — if you happen to be Nvidia’s CEO by the name of Jenson Huang, that light is still a pretty far way off. In November 2021 Mr. Huang said, “I think that through the next year (2022), demand is going to far exceed supply. We don’t have any magic bullets in navigating the supply chain.”

The Bottom Line

It is hard to find a reasonably priced graphics card right now. The crypto miners have snatched up most of the high-end cards with 4 GB or more of RAM, and the scalpers continue to snag any high-end cards that come into stock. Along with the global chip shortage and the pandemic, there just aren’t enough of these things to go around.

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