Remember the good old days when you could get a high-performing GPU for under 500 bucks? Happy times! However, if we talk about the current GPU market situation, we can’t even think about getting a high-end GPU if we can’t afford to spend well over half a grand. Doesn’t matter if you go for NVIDIA or AMD!
The story was quite different, only five to six years back. So what changed? What caused this crazy rise in GPU prices? Let’s find out!
Here I’ll discuss some of the reasons behind this market boom. Some factors would be quite obvious but I’m sure some would be real shockers for you. So hold tight to find out what’s pushing these GPUs out of our range.
1. Little to no competition in the market
Let me ask you how many graphics cards have you heard of. You probably only think of NVIDIA or AMD, right? And why would you know any other as these two sharks have been all over the market for a long time?
Even between these two, AMD has been falling short in competition lately. Especially if we go back to the mid-2010s and early 2020s, we’ll find the reason why the prices skyrocketed. Well, in 2016, NVIDIA came up with their Pascal-based GeForce 10-series graphics cards. And this time, they increased the prices as they were already facing fierce competition from AMD’s RX 300 series cards.
After that launch, AMD couldn’t handle the pressure and failed to give a worthy battle with its RX Vega, in 2017. This historic win for NVIDIA made them confident that they were the only bull in the market. Confident in their market position, they launched RTX 2080 Ti with a handsome price label of 1,299$ in 2018. Although it offered a worse price-to-performance ratio than its predecessor, AMD couldn’t fight back as it didn’t have any cards to compete in the high-end market and leaned more towards mid-range GPUs.
Two years later, NVIDIA stood its ground with the latest Ampere-based RTX 30 series cards and the most expensive model of this family was the RTX 3090, priced at a whopping 1499$. And this wasn’t the end, last year they dropped another bomb with the launch of an even more powerful RTX 3090 Ti for 2000$. Although now we can say AMD is back in the game with its Radeon RX 6000 GPU. Still, NVIDIA sits at the top in the performance game.
2. Shortage of chips in the global market
Do you know anything about economics? Ever heard of the law of supply and demand? Well, it has a lot to do with price fluctuations in the market. Currently, we’re going through a global chip shortage that is not expected to end soon. And as semiconductor chips are used in almost everything from your table desktop to the planes flying around in the skies. All the manufacturers have to limit their production because of this shortage. And that includes the GPU manufacturing firms too!
As a result, only a bunch of lucky people can get their hands on these cards as soon as they’re launched. And it doesn’t come cheap!
3. Cryptocurrency mining
When covid-19 hit the world, there was an upward increase in the popularity of cryptocurrency. This was when crypto mining was introduced. This new trend played a significant role in the price hikes of GPUs.
But how? See, all the miners need a high-quality GPU and software to mine various coins like Ethereum, dogecoin, etc. So, they’re always on the lookout for a faster GPU.
However, the year 2022 was quite bearish for the crypto market. So the miners have backed down on their hunt for the latest GPUs. But we can’t say how long this bear market will last. And if we see a bullish trend again, it will disrupt the demand and supply harmony in no time.
Considering this issue, NVIDIA has even come up with LHR graphics cards that cut the mining hash rate to half. So miners always steer clear from these GPUs. But the problem is much bigger and only LHR cards won’t solve it.
4. Scalpers reselling hardware for high profits
We can’t give all the credit to crypto miners for these abrupt price hikes. Scalpers have also played a great role in the current market disruption. Never heard of scalping? Well, this selling technique got quite popular during the Covid-19 outbreak. What scalpers do is keep a hawk eye on any products that are in demand and buy them in bulk. And when there’s a shortage in the market, they start to sell their stored products for higher prices. This causes an unnatural increase in the prices of GPUs.
What’s even crazier is that in some regions of the world, scalping is considered a legal practice. Maddening! Isn’t it? Even in the US, there aren’t any federal laws that prohibit such kind of activity. However, in a few states, some laws discourage such practices.
The only we can deal with the scalpers is to flush the market with a high supply of GPUs. but we’re out of luck here! As this is not possible because of the semiconductor shortage, I mentioned before.
5. The Covid-19 pandemic and worldwide inflation
I know we’re all past that horrific pandemic year. But we can’t deny, it made a great impact on how people’s lifestyles. It played a significant role in changing the mindset of people about how they choose to work. I know many people who used to work a 9-5 office job and now they prefer working from home. As more and more people shift towards remote jobs, there’s an increased demand for personal electronics. Another reason for high GPU prices is that there has never been such high demand in the market before.
Covid-19 also proved havoc for the global supply chains. And now that Covid is gone, issues like the Russia-Ukraine war disrupt the global shipping of GPUs. Because of these supply chain disruptions, people living in different parts of the world can’t get their hands on the cards they need. So they’re left with no choice but to import them from foreign markets, facing a handsome fare on the import duties.
6. Enhanced performance and specs
Today’s modern GPUs are nothing like the ones from the early 2010s. They feature the best of the best design and are manufactured by advanced processes with high-end materials. All in all, they’re far better than the older generations. And due to high manufacturing costs, prices went up to the skies.
GPU companies have now started to think out of the box and they’re not only focusing on improving frame rates anymore. They’re working on newer technologies like ray tracing, and FSR (DLSS) to offer the best gaming experience at higher graphics like QHD or 4K. Moreover, the durability of the latest GPUs is way higher than their counterparts from even a few years ago.
But you can’t expect all these improvements without a cost now, can you? Although this high-cost factor doesn’t hurt that much as we get a top-notch performance in return, right?
7. US Tariffs on imports
During Trump’s tenure, new tariffs were imposed on imported products. Worst of all we faced a 25% increase in tariffs on products imported from China, and that included the graphics cards. And these extra costs are always bad news for consumers.
That wasn’t all! Because of these new taxes, there’s a significant drop in imports from China. So the carriers have to transfer half-filled ships from China which isn’t very cost-effective. And when fewer products are shipped-out, the loss is compensated by increasing the prices of the shipped products.
And guess who’s gonna suffer all the blows? Us!
Now you’re aware of all the reasons behind the sky-high GPU prices. And we can’t hope that these prices will come down any time soon. As long as there is a high demand and a low supply, graphics cards aren’t getting any cheaper. And as you already know, this low supply problem can’t get solved because of the global chip shortage. So I guess, we all would have to make our peace with fate.
I hope this guide has helped you find your answer to why GPUs are getting so expensive. And I’m sure, now that you understand the reason behind high prices, you can easily find the best value GPU for yourself. And while you’re in the market looking for your right GPU, be sure to stay away from scalpers. Happy GPU hunting!
Muhammad Allayhan, a gaming and PC hardware virtuoso, breathes life into pixelated worlds. A legendary overclocker, he unlocks hidden power in gaming rigs. Navigating from 8-bit realms to today’s masterpieces, Muhammad’s words immerse readers in an ever-evolving digital odyssey. Join him as he reveals the secrets of gaming’s cutting edge.