Sudden Drop in Cryptocurrency Prices Hurts Graphics DRAM Market in 3Q21, Says TrendForce

[AleksandarK]

The stay-at-home economy remains robust due to the ongoing COVID-19 pandemic, so the sales of gaming products such as game consoles and the demand for related components are being kept at a decent level, according to TrendForce's latest investigations. However, the values of cryptocurrencies have plummeted in the past two months because of active interventions from many governments, with the graphics DRAM market entering into a bearish turn in 3Q21 as a result. While graphics DRAM prices in the spot market will likely show the most severe fluctuations, contract prices of graphics DRAM are expected to increase by 10-15% QoQ in 3Q21 since DRAM suppliers still prioritize the production of server DRAM over other product categories, and the vast majority of graphics DRAM supply is still cornered by major purchasers.

It should be pointed out that, given the highly volatile nature of the graphics DRAM market, it is relatively normal for graphics DRAM prices to reverse course or undergo a more drastic fluctuation compared with other mainstream DRAM products. As such, should the cryptocurrency market remain bearish, and manufacturers of smartphones or PCs reduce their upcoming production volumes in light of the ongoing pandemic and component supply issues, graphics DRAM prices are unlikely to experience further increase in 4Q21. Instead, TrendForce expects prices in 4Q21 to largely hold flat compared to the third quarter.



Sudden drop in ETH prices led to plummeting GDDR5 and GDDR6 spot prices
Recent observations on the spot trading of graphics DRAM products indicate that the changes in this market closely correlate to the changes in the value of ether (ETH) because graphics cards are the crucial tool for processing the mining algorithm of this cryptocurrency. ETH prices fell by more than 50% within a two-month span as a result of the latest measures enacted by regulatory agencies around the world to suppress the speculation of cryptocurrencies. Accordingly, cryptocurrency miners' and investors' interest in ETH has also diminished significantly. The plunging demand from cryptocurrency miners also means that a substantial number of graphics cards are being pushed into the second-hand market. TrendForce's investigation shows that spot prices of graphics cards have fallen by about 20-60% over the past month or more. The differences in the magnitude of decline depends on brand and technology generation. Furthermore, the across-the-board decline in spot prices of graphics cards has also severely constrained the spot demand for graphics DRAM.

According to TrendForce's understanding, even though spot prices are still higher than contract prices for GDDR6 chips, the difference is rapidly shrinking. This, in turn, will have an adverse effect on the general price trend of GDDR6 chips in the future. The trading is even more subdued for GDDR5 chips that are used in the earlier generations of graphics cards. Spot prices are now actually about 20% lower than contract prices for GDDR5 chips. The difference here indicates that there is a glut of older graphics cards, and the GDDR5 chips that are embedded in them are no longer in high demand.

Contract prices of graphics DRAM are expected to increase by nearly 15% for 3Q21 as graphics DRAM suppliers' fulfillment rate remains relatively low
Regarding the contract market for graphics DRAM, the sell-side has considerable leverage in price negotiations as these suppliers prioritize the production of server DRAM ahead of other product categories. In the current ecosystem of discrete graphics cards, graphics DRAM buyers such as Nvidia are still opting for a business model based on bundle sales (that is, graphics card manufacturers that purchase Nvidia GPUs must also purchase graphics DRAM from Nvidia). Given that Nvidia and AMD have cornered the vast majority of graphics DRAM supply, notebook OEMs and small- and medium-sized manufacturers of computer components (such as motherboards) will find it difficult to procure sufficient graphics DRAM, while DRAM suppliers' fulfillment rate for graphics DRAM chips remains relatively low. These aforementioned factors are responsible for not only the nearly 15% QoQ hike in the overall contract prices of graphics DRAM for 3Q21 (which is slightly higher than the corresponding price hikes in mainstream PC and server DRAM products for 3Q21), but also why spot prices of GDDR6 chips are about 10-15% higher than contract prices.

On the whole, prices in the graphics DRAM spot market, which is an extremely responsive market, have already begun to reflect the weakening demand from the end-product segment, particularly for graphics cards used in cryptocurrency mining. As the supply of second-hand graphics card increases, some graphics card manufacturers may thus kick off promotional price cuts to boost sales. In addition, buyers in the spot market may also begin anticipating even lower prices, and this anticipation will likely either lead to a massive decline in their graphics card demand or result in these buyers adopting a speculative attitude regarding graphics DRAM. TrendForce therefore believes that the gap between spot prices and contract prices of GDDR6 chips will begin to narrow in 3Q21.

View at TechPowerUp Main Site

 

[Dammeron]

No no no... What hurts every market related to GPUs are the cards' obnoxious prices.

Cards don't sell that well cause miners don't wanna buy them anymore? Well, retailers, why don't You lower prices so normal users can start buying them? If GPUs sell well, the GDDR will also follow.

 

[Vya Domus]

No no no... What hurts every market related to GPUs are the cards' obnoxious prices.

Cards don't sell that well cause miners don't wanna buy them anymore? Well, retailers, why don't You lower prices so normal users can start buying them? If GPUs sell well, the GDDR will also follow.

Why would they ? The cards still sell, even though the situations improved slightly most cards are still out of stock most of the time. This means someone is buying them.

 

[Chomiq]

You just can't win, miners want your GPU's - prices sky rocket. Miners don't want your GPU's - prices on DRAM go up.

 

[R0H1T]

You just can't win, miners want your GPU's - prices sky rocket. Miners don't want your GPU's - prices on DRAM go up.

Graphics DRAM ~ which we don't directly deal with, I doubt there's gonna be any major cost increase/decrease for the manufacturers though! Since AMD/Nvidia & now Intel buy so much that unless it's well in excess of 10-20% either side they'll probably just absorb it in the short term, that of course doesn't mean your GPU prices will go down much if at all

 

[Chomiq]

Graphics DRAM ~ which we don't directly deal with, I doubt there's gonna be any major cost increase/decrease for the manufacturers though! Since AMD/Nvidia & now Intel buy so much that unless it's well in excess of 10-20% either side they'll probably just absorb it in the short term, that of course doesn't mean your GPU prices will go down much if at all

AMD already stated that the pricing for 6600XT is result of DRAM price increase. They're not absorbing a thing.

 

[Vayra86]

You just can't win, miners want your GPU's - prices sky rocket. Miners don't want your GPU's - prices on DRAM go up.

The DRAM House always wins...

Luckily its nearly fall and then shortly after Christmas shopping spree, so I have no worries about being able to buy a GPU anytime soon. I'm actually dead certain I won't need to worry

 

[R0H1T]

AMD already stated that the pricing for 6600XT is result of DRAM price increase.

Did they? Must've missed that, was it after the official reveal or something?

 

[Chomiq]

Did they? Must've missed that, was it after the official reveal or something?

I seem to recall Gordon from PCWorld mentioning this in one of the live stream after launch.

It was Steve:

3:38

also

6:50
They're also marketing it as "high-refresh rate 1080p" card.

 

[Chrispy_]

Trendforce does spout some absolute nonsense; Where are these "sudden drops" they are talking about. If you ignore the brief spike for three weeks in May, Etherium (the primary Cryptocurrency for GPU mining) is about where it has been for four months now.

Note that the graph isn't zero-axis and swings of +/- 20% are par for the course with crypto, so ignoring the freak bull market spike in May, Etherium has been at around $2200 for a while now with a slow upward trend.

 

[trog100]

Trendforce does spout some absolute nonsense; Where are these "sudden drops" they are talking about. If you ignore the brief spike for three weeks in May, Etherium (the primary Cryptocurrency for GPU mining) is about where it has been for four months now.

View attachment 210922

Note that the graph isn't zero-axis and swings of +/- 20% are par for the course with crypto, so ignoring the freak bull market spike in May, Etherium has been at around $2200 for a while now with a slow upward trend.

ebay gpu prices have dropped dramatically over the last few weeks.. this basically means miners are prepared to pay less for them.. the price drop still dosnt come anywhere near what some would consider reasonable retail prices.. for gamers the price is still high..

at the peak a 3080 card was fetching up to £2200 on UK bay.. you can now buy one for for around £1300 quid.. a big drop but not big enough to affect retail prices..

trog

 

[Tsukiyomi91]

those who are holding out and not buying GPUs that are 2-5 times over MSRP; kudos to you.

 

[Metroid]

funny, manufactures charging 500% more for gpus was simply accepted by the media and the media imposed that to people/idiots which I believed was paid by the same manufactures to the media to spread the headlines, now they are blaming "where are the idiots gone, we want them to keep buying our gpus 5x more msrp", so now is hurting them hehehehehehehehehheheheehheheheheheheheeeeeeeeeeeeeeeeeeeeeeeeehehhehe, those people gotta be joking ehhe

I wonder what those trolls manufactures will say once the crypto market crashes and they will have to compete with second hand gpu sellers ehhe in order to sell because even at msrp they will not sell for a long time, why pay 700 usd for a 3080 while you will be able to buy for 350 usd or lower ehhe on ebay hehe

those who are holding out and not buying GPUs that are 2-5 times over MSRP; kudos to you.

Need to boycott it, let the idiots buy, I believe the people with more sense than money is 100000000x greater than the number of people with more money than sense meaning --> idiots.

 

[ThrashZone]

Hi,
Yeah it's easy to pass on these 30 series silly prices
I got lots of practice passing on 20 series, passed on them because of all the early deaths but it was still pretty tough now ezpz to pass but I would like to get at least one I'm gpu starved after all this time.

 

[Chrispy_]

ebay gpu prices have dropped dramatically over the last few weeks.. this basically means miners are prepared to pay less for them.. the price drop still dosnt come anywhere near what some would consider reasonable retail prices.. for gamers the price is still high..

at the peak a 3080 card was fetching up to £2200 on UK bay.. you can now buy one for for around £1300 quid.. a big drop but not big enough to affect retail prices..

trog

ETH's move to proof-of-stake around the end of 2021 means that any GPUs purchased for mining only have ~150 days to break even against their purchase cost and right now for a 3080 there's about $5-6 a day profit, meaning that a 3080 is only worth about $1000 to a miner now, plus whatever they can sell it for on the used market when ETH mining is dead and the used market is oversaturated with all the old mining cards.

 

[windwhirl]

those who are holding out and not buying GPUs that are 2-5 times over MSRP; kudos to you.

I doubt many people can justify not just spending, but rather WASTING that amount of money. At least in the cases where they already have a still-usable GPU.

 

[mechtech]

Ya if companies aren't on the road to meet their expectations it wouldn't surprise me that would raise their prices even more, while already making record profits.

They do it because they can. If no one bought anything and they were paying a warehouse to store all their products, then they would lower their price.

Eager buyers enable high prices...................

 

[Arkz]

ETH's move to proof-of-stake around the end of 2021 means that any GPUs purchased for mining only have ~150 days to break even against their purchase cost and right now for a 3080 there's about $5-6 a day profit, meaning that a 3080 is only worth about $1000 to a miner now, plus whatever they can sell it for on the used market when ETH mining is dead and the used market is oversaturated with all the old mining cards.

ETH isn't the only crypto though, they'll just move on to Ravencoin or even ETC.


Also in article:
Sudden drop in ETH prices

You mean like 2 and a half months ago? It's been going up recently.

 

[NotHereMan]

Need to boycott it, let the idiots buy, I believe the people with more sense than money is 100000000x greater than the number of people with more money than sense meaning --> idiots.

If I understood that correctly, that would mean most people save their money. Personal finance forums make it sound like saving money is a rarity, while 70% of the population lives check to check. I still question as to how people are struggling during the pandemic are still able to afford inflated prices for hardware, stuff they don't need.

 

[dragontamer5788]

If I understood that correctly, that would mean most people save their money. Personal finance forums make it sound like saving money is a rarity, while 70% of the population lives check to check. I still question as to how people are struggling during the pandemic are still able to afford inflated prices for hardware, stuff they don't need.

Personal Saving Rate

Graph and download economic data for Personal Saving Rate (PSAVERT) from Jan 1959 to Feb 2024 about savings, personal, rate, and USA.

fred.stlouisfed.org

Most people saved money during COVID19 / Pandemic. There are exceptions: hospitality and airlines lost tons of money. But most people in fact saved more money during the pandemic.

Even businesses who closed down spent more money (if they survived). A lot of businesses used the COVID19 shutdown as an opportunity to remodel their businesses physically: using more wood / raw materials than ever before.

 

[R-T-B]

Trendforce does spout some absolute nonsense; Where are these "sudden drops" they are talking about. If you ignore the brief spike for three weeks in May, Etherium (the primary Cryptocurrency for GPU mining) is about where it has been for four months now.

View attachment 210922

Note that the graph isn't zero-axis and swings of +/- 20% are par for the course with crypto, so ignoring the freak bull market spike in May, Etherium has been at around $2200 for a while now with a slow upward trend.

They are probably speaking to the massive drop a few months back.

 

[watzupken]

Trendforce indeed is going with the trend. When they see the sector doing well, they project a growth. But when that don't happen, they revise it. So to be honest, I don't see how meaningful is their analysis/ projection. It is basically news that we already know.

 

[Metroid]

If I understood that correctly, that would mean most people save their money. Personal finance forums make it sound like saving money is a rarity, while 70% of the population lives check to check. I still question as to how people are struggling during the pandemic are still able to afford inflated prices for hardware, stuff they don't need.

Yes, I guess the media spreading fake news laid out by gpu manufactures makes many people to spend money they dont have and I saw today they are still spreading news that chip shortage will continue, that is pure bs, manipulative news is what is driving people into debt because paying 5x the msrp is insanity, by the way not only gpus, the manipulative news have seen how well it worked out with gpus now they are trying to do with other things.

 

[R0H1T]

I believe the people with more sense than money is 100000000x greater than the number of people with more money than sense

I tend to disagree, that's at best 1000x ~ remember even the best people (with sense) can be idiots at times with money! Which is to say that even sensible people can do silly things like impulsive (expensive) purchases from time to time, does that put them in the second category

 

[Metroid]

I tend to disagree, that's at best 1000x ~ remember even the best people (with sense) can be idiots at times with money! Which is to say that even sensible people can do silly things like impulsive (expensive) purchases from time to time, does that put them in the second category

1000 to 1? I believe the number is much higher than that, my point was that only idiots would pay 5x the msrp. I don't know anybody that paid 5x the msrp and I know too many people, all of them are holding for second hand gpus after this crypto market crashes. I bought 2 x evga 3080 ultra for 1000 usd each in january, yes was higher than msrp but not much, msrp of that version was around 880 usd, and it was worth because the 3xxx series were just released, if I had t buy now, I would not.