AMD admits undersupply to keep prices high

[BFG10K]

AMD admits to restraining chip supply to keep higher CPU and GPU prices

If you haven't noticed, the tech industry is suffering a significant contraction. Executives are panicking as they try to pinch pennies with layoffs and other measures to...

www.techspot.com

While not technically price fixing, it's still a collusion cartel operating at its finest. If you keep buying at these prices, none of your complaining is valid.

STOP BUYING GRAPHICS CARDS AT THESE PRICES!

That'll force them to drop pricing, or otherwise their consumer GPU division will fold.

 

[maddie]

Welcome to crazy land.

The weird thing is that the R&D + advertising costs will now have to be shared between fewer sold cards, driving up their breakeven cost.

 

[maddie]

We have posters here telling us that surely, surely, AMD is losing money with a $260 RX6600 XT and now the CEO tells us that they have been keeping sales low to preserve their high margins.

Reconciling.

 

[gdansk]

Doesn't seem to be working in CPUs where Intel has forced them to drop prices. And introduce new parts at the old MSRPs.
In GPU land I can see why they might want to limit supply. 6000 series have been better value on the low end for many months now. Will reducing prices further even help sales much? At this point all that remains are buyers who are holding out for Nvidia's low end 40xx with 30xx performance at the same price.

 

[Indus]

Don't buy them at their peak price, buy them when they're trying to get rid of supply.

 

[Ajay]

Well, RDNA3 just isn’t selling well anyway. AMD has decided to to keep margins up rather than increasing market share. Apparently, investors favor the former. And here we are. Same with Nvidia - though I suspect that there is more NV inventory (including used) that’s out there because NV cards we used more heavily by miners.

 

[BFG10K]

We have posters here telling us that surely, surely, AMD is losing money with a $260 RX6600 XT and now the CEO tells us that they have been keeping sales low to preserve their high margins.

Not to mention, how much of the "R&D costs are going up" and "foundries have no more capacity" claims were lies?

Obviously they're both contributors, but there's absolutely no doubt another reason is maintaining fat margins miners gave them.

 

[BoomerD]

As much as it sucks for those looking to buy, there's really nothing ILLEGAL about it. OPEC has controlled oil and gas prices this way for...50 years. (those of us old enough will remember the Arab oil embargo in 1973 and the lasting effects of it.)

 

[Leeea]

Completely legal and deeply disappointing.

I get that it is risk reduction, but shame on AMD.

 

[maddie]

As much as it sucks for those looking to buy, there's really nothing ILLEGAL about it. OPEC has controlled oil and gas prices this way for...50 years. (those of us old enough will remember the Arab oil embargo in 1973 and the lasting effects of it.)

OPEC also doesn't want the price to rise too much (a depression = collapsing demand &/or competitive alternative energy sources), Can we say the same here as to anything keeping these pirates somewhat honest?

It really looks like a buyers revolt is the only solution.

Something like "Do you really think that Wall street investors are your lifeline? OK. Try living without us."

 

[BoomerD]

OPEC also doesn't want the price to rise too much (a depression = collapsing demand &/or competitive alternative energy sources), Can we say the same here as to anything keeping these pirates somewhat honest?

It really looks like a buyers revolt is the only solution.

Something like "Do you really think that Wall street investors are your lifeline? OK. Try living without us."

I don't think AMD or nVidia execs are stupid...if they drive the prices TOO high, people will start buying from the used market...which will drive those prices higher...but still be cheaper than new.

 

[igor_kavinski]

Still, the price cut on the ARC A750 is proof that once Intel gets its GPU act together, they will bring balance to this market. AMD/Nvidia can't ignore ARC/Battlemage forever. Even a single card sold means lost sales for AMD/Nvidia so they will be forced to be competitive and lower their prices to sweeten the pot for buyers.

 

[Indus]

Completely legal and deeply disappointing.

I get that it is risk reduction, but shame on AMD.

I know people like to upgrade every generation or every other generation like I did prior to 2012, but after that I decided to wait with my money. From GTX 660, I got over 100% fps increase with a GTX1080.

Not that concerned over ray tracing, I just want my FPS and something that actually gives value for dollar. So now I'm waiting on something that'll give me a 100% fps increase over GTX 1080ti at 1440p.

Currently the 80 series are just crap value for money, so I'll most likely be waiting for the 4070 or 5070 or maybe jump to AMD when it gives double the 1080Ti!

 

[maddie]

I don't think AMD or nVidia execs are stupid...if they drive the prices TOO high, people will start buying from the used market...which will drive those prices higher...but still be cheaper than new.

Isn't this always the case. The used price always trends with the new price. There is always a % of the market that buys used. All that happens with higher prices is less buy new as fewer can afford the cards with whatever disposable income they have, as we see happening now.

They might even be calculating that the higher the new price, the smaller the price delta between new & used as an increased % of buyers will shift towards the used market, dis-proportionally raising prices there and reducing the new/old discount.

 

[maddie]

Completely legal and deeply disappointing.

I get that it is risk reduction, but shame on AMD.

It seems the only company that's not able to do this is Intel. As the article said, Nvidia admitted to such behavior last year.

Bad thought. Do these companies have to be on the edge and facing ruin , to make them consumer friendly instead of Wall St friendly?

 

[darkswordsman17]

Did they do similar articles for those other situations they cite or is this another "we'll blame AMD because it sells, despite Nvidia and others doing the exact same thing"? Plus, uh, basically every single company in every single market has been doing that for a year or two now. And we were told it was "inflation" when it clearly was actually just greed to keep the idiot investors happy.

 

[Dribble]

Not to mention, how much of the "R&D costs are going up" and "foundries have no more capacity" claims were lies?

Obviously they're both contributors, but there's absolutely no doubt another reason is maintaining fat margins miners gave them.

You know that the huge graphics cards prices didn't actually benefit Nvidia or AMD other than they could sell every card they could make because the margin was added by the resellers not the gpu maker.

As for what AMD said, saying they are "artificially limiting" sounds better than the truth which is they simply can't make any more gpu's without eating into the more important cpu business. It was the same for the previous gen.

 

[jpiniero]

If you actually read the transcript, she is clearly talking about PCs/CPUs only and probably only the OEM channel.

But that's not good clickbait, now is it? Intel's actually been accused of overshipping recently.

 

[lobz]

Wow, reading this thread was like an enhanced trip through la la land. Thanks @jpiniero for the first sober comment.

When forum readers can't fathom what inventory/channel management is and why is it crucial for a company, that's no biggie, but Cal Jeffrey from Techspot should really have a clue before publishing such nonsense, accompanied with a thumbnail saying 'wtf?'.

 

[maddie]

If you actually read the transcript, she is clearly talking about PCs/CPUs only and probably only the OEM channel.

But that's not good clickbait, now is it? Intel's actually been accused of overshipping recently.

What is a PC? Does a PC have a GPU? Did Nvidia, a pure GPU company say the same last year, as the article claimed?

I have an almost impossible time accepting anything you write for quite some time, as your one line definitive statements, without any supporting data, always is as follows

High prices are justified. High prices are here to stay. TSMC price hikes prevents prices from ever falling again. TSMC is fully booked. Moore's Law is really, really, dead (where did I hear that being pushed? I forgot). Wafer costs are X Y Z, and always higher than any other source. Ditto for design costs

Finally. You claimed, in multiple posts, that AMD is not making any money on these cheaper reduced price Zen 3 CPUs. This present claim that it's not GPUs and only CPUs she meant. OK, let's accept this. Explain then your no margin claim for present Zen3 prices.

I have a nasty suspicion.

 

[coercitiv]

Let's look at relevant parts from the transcript. Make of them what you will, I'm still on the fence.

Lisa Su makes the following remark in the opening:

Gaming graphics revenue declined year over year as we further reduced desktop GPU downstream channel inventory. Channel sell-through of our Radeon RX GPUs increased sequentially, and we launched our high-end Radeon 7900 series GPUs to strong demand based on the performance of our new RDNA 3 architecture and 5-nanometer chiplet design.

and the the following remarks while answering questions:

On the other side, our client and gaming businesses, we believe, will decline. We have made good progress. When we look at the PC markets in the second half of the year of 2022, we were really trying to rebalance inventory, and I think we made progress exiting Q4. We're still expecting to ship below consumption in the first quarter and then sort of go from there. Our product portfolio is strong. We think there's an opportunity for growth as we go into the second half of the year. But we think overall for the year, client will decline just given the TAM.

And then on the gaming segment, again, we're coming off of a very strong 2022. And so, console demand has been actually quite strong. And given where we are in the cycle, we would expect gaming to be down on a year-over-year basis.

We do believe the first quarter is the bottom for our PC market -- for our PC business, and we'll see some growth in the second quarter and then a seasonally higher second half. In terms of the under shipment, I mean, I think we undershipped in Q3, we undershipped in Q4. We will undership, to a lesser extent, in Q1. So I think you can infer that from our guidance single-digit down. And then, we'll be back to a more normal environment. Now, just as a reminder though, the first half is not usually a -- the first half is usually a seasonally weak client time anyways.

So we would expect more lift in the second half, not so much in the second quarter.

 

[Heartbreaker]

Let's look at relevant parts from the transcript. Make of them what you will, I'm still on the fence.

Quoting the part that lead to clickbait:
"we were really trying to rebalance inventory, and I think we made progress exiting Q4. We're still expecting to ship below consumption in the first quarter and then sort of go from there. "

IMO, this is a nothing burger. Just sensible business trying to match supply to demand. When the channel is overstuffed, you back off on supply.

 

[Ajay]

Damn, I feel like a dope…

 

[DisEnchantment]

I would say it is prudent to keep inventory in check to avoid getting stuck with a lot of parts and can't ship new products. With margins extremely thin shipping a lot of parts is a not always great.
Last time they had too much inventory it almost killed them during the crypto boom.

 

[Indus]

Damn, Ifeel like a dope…

Did you buy a 2080ti, then a 3090 and now a 4090?