Suppose you are a gamer, a creative, or a professional in the IT industry. In that case, you understand that completing any task without any or sufficient graphic processing units or GPUs is difficult.
However, upgrading to achieve your desired speed and convenience is a challenge, given how expensive GPUs are. Why are GPUs so costly anyway? Here is what I found!
Why Are GPUs So Expensive?
GPUs are expensive because more people are using gadgets when there is a global chip shortage. Generally, this shortage happened because the increased demand for GPUs coincided with the COVID-19 pandemic, which disrupted production and shipping. GPUs keep getting upgrades, and scalpers often purchase next-gen GPUs in bulk to sell at a higher price.
If you are interested in learning more about the global chip shortage and how the COVID-19 pandemic caused the price inflation of GPUs, keep on reading!
1. Demands For Chips Are Higher Than The Supply
Currently, the demand for GPUs is greater than the supply.
So, while there are many reasons for the glaring gap between demand and supply, the biggest culprit is the global chip shortage.
That said, the modern age has reached a point where manufacturers have trouble keeping up with the market demands, mainly because semiconductor chips are used in everything.
Therefore, while the graphic cards market is not the only one reeling from the shortage, it is among those that have drastically increased its prices.
2. People Are Purchasing Personal Electronics More Than Ever
2020 and the onset of the COVID-19 pandemic saw a significant rise in gadget purchases, with laptops and desktops among the hottest selling items in the market.
That said, all these items use semiconductor chips, which means a considerable percentage of chips that could have been used to make GPUs were diverted to manufacturing gadgets.
Additionally, the large-scale use of Zoom and other video conferencing tools introduced a need to upgrade computers through GPUs.
Moreover, with the global chip shortage still ongoing, it is only natural that GPU prices are at an all-time high.
3. COVID-19 Interrupted GPU Production
When COVID-19 started, all but the most essential services were disrupted indefinitely, including GPU production.
Several months later, as the world tried to get back to normal, GPU manufacturers had to deal with a severe backlog and increased expenses, specifically in GPU parts.
Moreover, new policies had to be established for the safety of the workers, which further limited the production capacity of manufacturers.
Therefore, as GPUs started to roll out into the market again, manufacturers had to make up for the limited supply by increasing the cost of each GPU.
4. GPUs Are Affected By Shipping Congestions
COVID-19’s effects on GPU production and distribution are far-reaching, just as with other commodities in the technology industry.
Also, most manufacturers resumed production and shipping at around the same time, creating traffic congestion in ports all over the world.
Even today, congestion can still cause significant delays in GPU distribution, resulting in lower market supplies and higher prices.
5. Import Fees Are High
Regardless of where in the world you live, import fees will play a significant role in the selling price of goods in your country, and GPUs are no exception.
As GPUs enter a country, tariffs are imposed, and further mark-ups happen as the GPUs are finally shipped to distributors.
As you can imagine, covering all those fees makes GPUs expensive.
6. Scalpers Are Taking Advantage Of The Global Chip Shortage
GPUs are some of the hottest commodities today, and scalpers know that.
That said, to profit from the high demand for GPUs, scalpers buy GPUs in bulk and sell them at a higher price.
Moreover, several countries have no laws and precautions against scalping, and this often leads to supplies becoming limited to scalpers who place a staggering mark-up on GPUs.
7. Next-Gen Cards Are In The Market
Demands for GPUs are not solely focused on quantity.
On top of that, producers are pressured to create higher-quality GPUs to support more advanced technologies in several sectors.
However, higher-quality GPUs necessitate teams of experts and top-grade materials. Depending on the GPU’s specs, the GPU can be difficult and time-consuming to make.
Combined, all these factors make new GPUs costly to produce and, therefore, more expensive to buy.
8. There Is A Surge In Cryptominers
Cryptominers are on the rise, and they have specific graphic requirements for their set-ups. Generally, the better the GPUs they get, the better they can mine.
Moreover, cryptominers often have the funds and the connections to get the best GPUs the market offers, leaving the vast majority of GPU consumers scrambling for supplies.
Additionally, even with restrictions designed to offset this development, cryptominers continue to impact the current prices of GPUs.
9. GPUs Can Deteriorate Fast
Just like other goods, the more you use a GPU, the faster it deteriorates. Currently, there are a lot of professions and individual endeavors that require continuous GPU usage.
Moreover, GPUs are being replaced faster than ever before. That said, repeat purchases are driving up the demand for GPUs, justifying GPU price hikes.
10. Branded GPUs Cost More
Consumers often rely on brand names to determine the quality of their GPUs. For example, depending on which brands you patronize, the GPUs can cost less or more.
Additionally, branded GPUs often come with warranties and other valuable perks that will make you feel more secure in your purchase.
However, the guarantees with your branded GPU have a price, and it is usually high.
11. Consumers Often Need More Than One GPU
Depending on what you are using the GPUs for, you may need more than one.
That said, such is the case with multi-monitor gaming, which requires two GPUs to be used simultaneously.
Moreover, additional cards can give you higher resolutions and frame rates, allowing you to take advantage of 4K Displays and newer technologies.
Naturally, the more GPUs you buy, the higher the cost of your purchase.
GPUs are getting more expensive due to the global chip shortage, which can last indefinitely.
Also, COVID-19 has staggered GPU productions since 2020, right when demands for smartphones, laptops, and desktops experienced a sudden surge.
Moreover, this created a lot of competition for semiconductor chips and further limited the production of GPUs.
Therefore, with supplies being lower than the demand, the price of GPUs increased accordingly.