When Will Graphics Cards Be Back in Stock?

If you’ve been looking to get a new PC or upgrade your old one, you are probably keenly aware that the prices of graphic cards (GPU) and processors (CPU) in the last two years have been through the roof. During that time, it was easier and more affordable to perform minor hardware upgrades like RAM and SSD, but those couldn’t match a GPU or CPU refresh in terms of gaming or heavy workload performance.

The price rise happened due to the graphic card shortage caused by the global shortage of microchips. Therefore, demand outweighed the supply, and the price went up naturally. So, when will graphic cards be back in stock? Let’s find out.

When Can We Expect Things to Normalize? 

The good news is we are finally making some progress. According to 3DCenter, a site that follows average graphics card prices in Central Europe, there was a steady decrease in prices from the beginning of the year. At the same time, Nvidia expects to continue facing supply problems until the end of 2022, with the situation improving in 2023. 

The problem with microchips affects many industries. One of them is the automotive industry, in which many manufacturers have had to scale down their production. There are no quick and easy solutions to the current microchip supply problem, and it will take time to sort out the issue for good.

It Only Takes One Pebble To Start an Avalanche

The root cause of the GPU shortage is the microchip shortage. The whole ordeal is a combination of the pandemic, supply issues, and bad luck that nobody anticipated. 

When the pandemic first hit, one of the largest buyers of microchips, the automotive industry, canceled its orders, expecting decreased demand. In response, the microchip factories downsized their production accordingly. 

The rest of the world didn’t fare any better. Factories had to stop or downsize their production, large transport hubs were closed, and transportation of goods and materials almost came to a halt at a time when the demand for goods and commodities started to rise. We still haven't recovered from the pandemic's effects on both production and user demand, especially in the consumer electronics sector.

During the beginning of the pandemic, the PC industry market grew 14.8% due to work and learning activities shifting from offices and classrooms to living rooms and bedrooms. Increased consumer demand for graphics cards (among other things) led to a renewed demand for microchips that the manufacturers couldn’t deliver. This led to a general lack of GPU availability and hiked up the prices of available graphics cards.

A Wrench in the Gears

As mentioned before, the automotive industry canceled its microchip orders, and the microchip industry downsized production just when PC sales began to rise. When AMD and Nvidia started ordering new microchips, the factories couldn’t obtain the required silicon on time. 

Since these orders have to be made months in advance, you can imagine how production downsizing, combined with shipping delays and general chip shortages, affected the process. Consumer demand was rising, and the industry was struggling to deliver, leading to demand outweighing the supply, which in turn caused the GPU prices to skyrocket.

It wasn’t just the PC manufacturing sector that experienced this problem. Consumer demand rose on all levels. Even the car manufacturers realized their mistake and are now struggling to obtain enough microchips to meet customer demand. 

Same as GPU prices, the rising demand for transportation when there aren’t enough shipping containers to go around led to an increase in transportation costs. This not only increased travel costs but also affected every industry that ships products worldwide (think - pretty much every industry, especially in the tech sector).

We, as a world, are still struggling with logistical issues that won’t be sorted out by time alone. We’ll need to invest in new technology and facilities to accommodate the new reality,  but all of that won’t happen overnight.

Bad Things Come in Threes

An old superstition says that if two unfortunate events happen in a short time, a third is very likely to happen, too. In addition to increased demand being ill-suited to downsized production capacities, several accidents caused additional microchip production delays, furthering the GPU shortage on the market.

In 2021 a severe cold snap hit Texas, with the temperature reaching 0F (-18C), prompting the president to declare a state of emergency. That was a well-known fact; a lesser-known one is that Texas is a major semiconductor manufacturing center, holding more facilities than any other state in the US. 

Due to the weather impacting power and water supply, several semiconductor factories had to be temporarily closed. The impact wasn’t significant, but it certainly didn’t help with the already lousy supply situation, leading to further dwindling of the already poor graphics card stock.

In March of 2021, a fire broke out in Renesas microchip manufacturing plant in Nara, Japan, putting 11 manufacturing units out of action, and contaminating the cleanroom where the units are stored. Chip manufacturing had to stop until the units were replaced and the room was dust-free again. 

It wasn’t just the chip manufacturing plants that were affected. Fire struck a factory that produces vital parts for microchip manufacturing machines. It makes components for etching circuits that are used for creating computer chips. This recent event happened in January 2022 in a factory owned by ASML Holding, and it will hamper current factory expansions, and no doubt affect microchip production. 

If any of these accidents happened without a pandemic, the effects would be manageable, but that wasn’t the case. Each accident further delayed microchip production, thus prolonging the GPU shortage.

Weathering the Storm

You may be wondering why the manufacturers don’t simply build more factories to meet the increased demand. Firstly, building new microchip factories is very expensive and requires time. Secondly, remember that the demand surge happened due to a pandemic that, by all accounts, seems to finally be slowing down.

Manufacturers don’t want to spend money building new factories to meet the demand, only for that demand to be gone just as those factories start working. This is also known as a bullwhip effect and refers to demand distortion that increases the further it goes up the supply chain.

Let’s explain it better with an example. Say the forecast predicts the next few weeks will be rainy. People will start buying more umbrellas, leading to a sudden spike in demand and causing retailers to order more. Upon seeing the increase in demand, the regional supplier forecasts demand growth and orders more than usual from the manufacturer to meet the rising demand. 

The manufacturer, seeing an increase in interest for their goods, expands their business to meet the rise in demand. The problem? The weather changes and more sunny days lead to consumer demand for umbrellas dropping significantly and the entire supply chain being left with surplus umbrellas that no one wants.

The bullwhip effect is what worries microchip and GPU manufacturers, too. They believe that there won’t be as much demand for their goods after the pandemic, which will lead to overstacking and GPU prices dropping below the manufacturer's suggested retail price (MSRP). This, of course, is good for the consumer but not for the manufacturers.

That said, factories are being built as we speak,  but they won’t be finished anytime soon. Intel and Samsung are making new ones in the US to help diversify their suppliers since most are currently in Asia. 

TSMC, a company based in Taiwan, is the world’s largest microchip producer. It holds 54% of the market and produces 92% of the world's most advanced chips. If we factor in everything we’ve already talked about, plus the infamous “trade war” between US and China, along with their shared interest in chip production in Taiwan, you can see why this is a potential problem for manufacturers of consumer electronics.

When Will Graphics Cards Become More Widely Available?

Graphics cards are available even now, but the prices are still well above the MSRP. It doesn’t help that scalpers buy out whole GPU stocks of popular cards to resell them for a considerable profit. It may look bleak, but graphic card stocks have been on the rise since the begging of this year. 

So what has changed? Why are graphics cards back in stock now and starting to come down in price? 

For some reason, the demand has lessened this year. Is it because people are going back to the office, so there is no longer a need for new hardware, or perhaps because crypto miners have stopped buying cards as much? Maybe people are simply sick of the inflated prices and ready to wait it out until better times.

The truth is, we just don’t know. But whatever the reason is, we are glad that the prices are dropping and will hopefully normalize by the end of the year. As stocks improve, we can perhaps finally start buying cards at MSRP.