When important components become scarce: CPUs, GPUs
igorslab.de
igorslab.de
> The big brands that are ultimately at stake (Sony, Microsoft, NVIDIA, AMD) all talk about “demand exceeding supply”. Oh, really? [New paragraph.] It is a rather evasive explanation, without any communication about the actual state of their supply and production lines…
The dark secret? Not only is demand GREATER THAN supply, but supply is — wait for it! — LESS THAN demand! OMG, they've been covering this up the whole time! And not only that, current events and world affairs are contributing to this situation! When will the sheeple wake up?!
It wouldn’t make sense for Nvidia to produce less than the demand on purpose because that results in less money. If we take the view of companies want to maximize profit, it would make sense that they’d try to fulfill demand. Another big problem is scalpers and websites not doing enough to stop it. They create an artificial scarcity so they can make a quick buck. Sure, a PS5 isn’t “essential” like toilet paper is, but it’s still a dick thing to do.
That’s good in theory but in practice you have complex sales channel configurations and contractual agreements. If Best Buy is selling your GPU at $400 because that’s the agreed upon MSRP, they’re going to be pretty unhappy if they’re out of stock and suddenly you decide to increase MSRP to $800 after they’ve sold out because then they’ve made even less money.
So your job now is to figure out what the scalp price will be in the future before there’s any demand.
Additionally, please factor in your pissed off customers who paid you $800 for launch day delivery for the price to potentially drop to $400 a few months after. What’s the cost of that brand damage?
Scalpers have numbers (if demand and supply are close, they have an artificial power to restrict it) and power (the OEMs have to tread a delicate line with many constituencies that scalpers don’t since you “blame” scalpers but that doesn’t hurt anyone’s actual reputation).
For all we know scalpers are part of the business plan. NVidia gets record sales numbers and press articles about how the GPU is sold out. All the OEMs offer preferential access to buy the GPUs giving them better margins, getting rid of inventory, and no reputation risk beyond at worst some marginal grumbling that they’re not doing enough to stop scalpers. The only ones getting screwed are early adopters who are eager to pay higher prices.
It’s the perfect way to segment the market by price sensitivity without paying for it or running afoul of any laws if it’s being done intentionally.
What Nvidia could do is sell a special "doctors without border's edition" version of their graphics card, that is 500$ more expensive, and the extra money is donated.
That way, the extra money goes to charity instead of the scalpers, and nobody can really complain about it, because what do you hate charity?
Otherwise I'd rather just wait for supply to become available and donate the $500 outright.
I think AMD/NVIDIA are stupid (in a capitalistic sense) for selling their products well below market price, and leaving money on the table for scalpers to collect.
If the street price of the scalped cards is higher than the DWB edition, then you would not be able to deduct anything.
If simple makes more money these companies can do simple. Every company has a small group of people who can make things happen quickly (which is a couple of months in a big corporation). A price change from $400 -> $800 is going to get their attention.
It seems to me more likely that the reason for a slow response response is that the governments of the world seem to hate change and will likely penalise companies for responding quickly to extreme market signals. The safe way to do it is to release a 'new' product at a vastly inflated price. Basically that is just working around cognitive biases but it works.
The point about scalpers being part of the business plan gave me a few moments of thought; thanks for that.
Just to be clear, you cannot contractually obligate a vendor to sell your product at the MSRP. (Or any other price.) That's the whole reason the term is "manufacturer's suggested retail price".
Of course they are. Back in ye olde days when GPU mining for bitcoin was still possible (basically, FPGAs were not widespread and ASICs not even on the horizon), the amount of people who bought out all usable GPUs and resold them on ebay was massive. It was almost impossible to get anything for months unless you were willing to pay many multiples the ordinary worth.
In concert and other event tickets it's even worse. Some tickets have been known to sell at 20x markups, Rammstein concerts or Wacken tickets are usually outsold in a matter of hours and end up on ebay the day after.
Now, a much worse situation is for critical health products, like what happened with masks and hydroalcoholic gel during the start of Covid. Not surprising that the governments intervened and made scalping of that illegal, and relaxed some rules on their fabrication.
(But on the other hand the governments did some "scalping" themselves for the medical workers, by not only requisitioning masks, but also making propaganda about how masks weren't effective!)
The "market" is more than just the price of goods sold, it's always also the environment. Events have to at least show some level of affordability for the common man or public backlash occurs.
Hardly anyone would go to a soccer match if the starting price for the ticket was in the four-digit range, any band that dared to put up scalper-market prices as base prices would be flamed to death as "elitist" by the media and the fans alike. I mean, people are already claiming that Wacken has gone too elite and Rammstein sold out to the rich.
Also, politics would intervene because many venues have been built entirely or largely with taxpayer money or the operation is supported by taxpayer money (tax credits, public transport, public parking).
- they can keep the price of an individual ticket relatively cheap
- fairness is preserved
- they probably would still get more money than now, while scalping would be basically infeasible
That's because there's built-in scarcity by virtue of physical limitations of a venue.
If your stadium only holds 15,000 people, but your city has 11 million or more like, say, the Dallas-Fort Worth metroplex, you can easily find 15,000 metalheads. Probably an order of magnitude more.
People keep talking about "artificial scarcity" with these GPUs, but its not artificial. The foundries that make these are running at max capacity 24/7. They are trying to get these cards into the hands of the people that want them, there's just simply not enough foundries and capacity available.
There isn't some grand conspiracy in this case. In this case, this is the effect of increasing consolidation of the computer industry as a whole.
Look back the 1980s at the amount of hard disk manufacturers. There were easily 10+ companies... Western Digital, Seagate, Connon, Maxtor, Quantum, etc. Now what are there? Three? Seagate, Toshiba, and Western Digital?
Since companies have at least admitted there isn't going to be a lot of supply (some after reality actually hit them but at least they eventually said it) but still while dodging actually admitting it's simply because of the reasons in the article, hence the article.
I think it's a valid point and certainly not conspiratorial or what's wrong with humanity even if it wasn't.
> With the exception of the current RTX 3000 (Samsung), all market launches of the year 2020 rely on the 7-nm chips from TSMC. ARM-SoC manufacturers such as Qualcomm also use 7 nm and have only recently moved capacity from Samsung to TSMC. TSMC is currently pretty much alone in the market with this technology and the production lines are therefore working at full capacity. A sudden increase in production is therefore not possible.
> A special insulating film, the so-called ABF substrate (Ajinomoto Build-up Film), which is indispensable for etching chips in 7 and 5 nm, has also become increasingly scarce and scarce in recent months. The prices for this film are said to have risen by 40% and the waiting time is said to have increased to up to 4 months.
The company behind it Ajinomoto has for the last century since its existence built a business in food products: seasoning, oils, beverages, dairy products and chemicals. ABF came about through internal innovation. There's a really good (perhaps unintentionally funny) video of it here:
https://players.brightcove.net/6050660078001/default_default...
7:19-7:41 is another funny scene.
> Other components make things even more complicated: The small additional chips (controller, supervisor, etc.) from ST Micro, NXP or Infineon are also missing due to another deficiency: silicon wafers with 8 inch diameter. Many products then suffer from this, such as PC power supplies, but also consoles of the PS5 and Xbox series X and the graphics cards. Flash memory and DRAMs, on the other hand, do not seem to be in real short supply [...]
This isn't quite accurate; ABF is used to make the chip package for high-thermal transfer, high-speed flip chip packages:
https://www.ajinomoto.com/innovation/action/buildupfilm
It doesn't seem to have a role in any specific manufacturing node; it's just essential to the best way of packaging high-end chips.
If you want to duplicate TSMC, you'd need a huge amount of money. TSMC is valued at around US$500 billion. Anyone not already a major fab operator would probably fail. They'd have to go through several generations of fabs to catch up. Meanwhile, TSMC is moving forward. China is trying to catch up.
There's never been an industry like this before, where it costs half a trillion dollars to be a player. Not just to be #1, but to even be in the game.
Each node shrink has come at incredible costs and there does not look to be any path towards decreasing those costs.
Eventually, there's simply going to be no ability to shrink. After all, we have a lower limit of single atoms. They have a radius of around 0.06 -> 0.5 nm. That's not terribly far from the current state-of-the-art processes of 7nm. Further, I doubt we'll ever get to that level in the first place without some really clever engineering. The issue to solve is electromagnetic radiation will induce currents in surrounding conductive material.
I really don't know where the industry ends up going when we hit that brick wall. Different materials? More exotic CPU designs?
Who knows.
Once the node shrinking stops, that's when you are likely to see R&D funds go away from manufacturing processing and towards chip and architecture design. Because that's the only place you'll see improvements is a more well designed chip.
Container shipping, aircraft manufacturing, maybe tesla.
Container shipping has hundreds of players. Anyone who can afford a container ship can play.
There are lots of little car companies. China has a huge number of car makers.
So we are told by the FED and that there is no inflation and one of the justifications to keep rates low. If this is not inflation then what is?
Because inflation/cpi is measured using a basket of goods. pc parts being inflated by 25% doesn't mean there's 25% inflation overall. That said, the the money printing/ZIRP did cause inflation, it's just that it was mostly in assets, rather than in consumer goods hence why the cpi hasn't budged much.
1. Basket of goods doesn't include investment goods. Economists have some fancy schmancy reason for it (basically you get your money back when you sell), but I don't buy it.
increasing monetary mass dilutes the purchasing power of the dollar. No one would argue that inflation doesn't increases the price of financial instruments - everyone correct returns for cpi. But we're correcting the returns with a metric that denies that those instruments can have inflation.
Meanwhile, what have we seen in the past 20 years? Price of housing (not included in the cpi) and financial markets have seen great returns. This despite the '08 financial crisis.
2. Printing money isn't the only thing that affects the price of goods. The cost of producing them does as well. Inflation is hidden by the dismantling of industry.
Well what have we done over the past 30 years? We've outsourced everything to countries that exploit slave labor. So if (as an example) the dollar is half as good, but the price of labor goes from 50% to 10% of the purchasing price, most of the inflation is now masked. Does the CPI track that my 1.1X more expensive sweater was made with slave labor? Or does it just track that the hourly cost of a handyman (local labor) has stagnated?
Meanwhile things that cannot be off-shored have become expensive. My house. My education. My health care.
3. Hidden inflation. It is universally agreed that appliances made today are of piss poor quality. They're poorly made, with cheaper parts, and thinner sheet metal. How do you track that properly?
Food packages have become smaller (rounding down when doing unit conversions is an easy freebie). A 125 g. bag of chips is a 110g. bag of chips.
The reason the basket of goods is focussed on consumer goods is because the price level of concern (where it is used, there are many other price indexes used for other purposes) is the cost of living, not cost of investing. Hence, the Consumer Price Index, the main inflation index monetary policy is concerned with. (There are also broad and industry-specific Producer Price Indexes, which are used for other purposes.)
The cost of investing wouldn't be measured by asset prices, but interest rates (inverted: low interest rates are a high cost of buying future money directly, which also drives up the cost of speculative instruments which may be redeemable for money in the future.) And, yes, the cost of investing is deliberately high currently, there is no secret or conspiracy about that. It's the overt policy.
> Price of housing (not included in the cpi)
Cost of housing is included in the CPI (both actual and imputed rent are part of the calculation.) It's a major component of the overall CPI. [0]
[0] https://arbor.com/blog/how-does-rent-factor-into-the-consume....
What's that? Do you mean the Fed (short for “Federal Reserve”)
> that there is no inflation
The Fed doesn't produce inflation measures, it consumes them. It's the Bureau of Labor Statistics that produces the data indicating (e.g.) a 1.2% (not “no”) annual inflation by the main headline price index from Nov. 2019 through Nov. 2020.
> If this is not inflation then what is?
It is inflation in narrow specific markets; narrow markets often have rates of inflation very different than the broad aggregate measures. Relative prices of different goods are not fixed. Fed policy response primarily to broad price indexes, not any of the specific narrow markets you point to.
It isn't just CPUs and GPUs though. The cooler I want won't be in stock until July per the manufacturer. I had to get lucky to get the PSU I wanted. People are employing crazy techniques to get each piece of their machine, not just the critical components.
Scalpers are magnifying the issue. The scalping problem will be solved eventually when supply catches up, but the longer that takes, the more stock the scalpers will obtain, thus prolonging the time window scalping will be profitable.
I didn't know what I signed up for last month when I decided to do a build but I sure as hell wasn't expecting this. I only need the GPU now so at least the end is in sight.
ECC memory was also in a bad state then, so I suffer with non-ECC memory. So far, that is also treating me well. Can't worry about bit flips you don't know about! (taps forehead)
I haven't heard of a lot of problems with power supplies causing bad memory; usually the memory itself is just bad. RMA that stuff and re-roll.
I have a massive Steam backlog, so I'm not too frustrated.
Surprisingly, it works pretty well... A few burned out GPUs and motherboards over two decades seems like a good risk/reward ratio.
> A few burned out GPUs and motherboards over two decades seems like a good risk/reward ratio.
I'd rather keep my old equipment in working order to resell or donate.
Do you they have per-country quotas?
E.G.
mid-November AMD confirms all the parts will exist and opens pre-orders; I enter for the CPU and GPU I want.
Based on how many weeks go by unfulfilled I get that many spots in the drawing.
A new batch clears customs in my country. Sequential drawings are run until the requested parts are depleted.
I am sent a token from AMD that I can use at a retailer to buy the indicated stuff
Not that I would want this of course, but I'd also want free bubble gum and the gum companies... they're there to make money. Why not chip makers? I don't see auctioning systems popping up, I see people in in queues for a GPU, "out of stock" pages, and purchase quantity limits being imposed.
They could change out of that cycle now that it's actually scarce... but most of these chip manufacturers are too big to be flexible like that.
That would be the same also with absurd prices right? (See brand clothing, brand phones, brand mice, etc.) It's not as if production increases when prices increase.
Even if they're sold out there will still be preorders and people will preorder the best value.
I have been complaining about wirth s law for years now, and the environment requires the industry to adapt.
You cannot add features and features and get each user a new chip every 2 year.
Except we can.
Video games continue to get more graphical enhancements: and people continue to want to buy stronger GPUs (Raytracing, VRS, etc. etc.) so that its possible for them to see these improved graphics.
Be it high-framerates for esports, or 4k graphics, or virtual reality, or raytracing. Video gamers have always pushed for better-and-better.
There's nothing wrong with being excited for these new features. It probably sucks to reprogram these engines every few years to take advantage of these features... but that's a job lol.
There are plenty of video-game developers who don't care much about the latest-and-greatest graphics. Instead, they build a "retro" look and try to compete on gameplay alone. That's also good and fine (and I usually tend to buy these games instead).
But I don't think there's anything wrong with someone out there being excited for say... Minecraft Raytracing. https://www.youtube.com/watch?v=-_4QaWbntUQ
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I mean, they're games. They're supposed to innovate and excite us in new ways. They're entertainment. Some developers choose the graphical route, others choose gameplay. Nothing wrong with that.
I would argue most of the "IP" is really just forced API incompatibilities so that most software only works on their devices and anything that isn't is irrelevant to reverse engineering but it doesn't matter, there's surprisingly little money to be made manufacturing things that work well and shocking amount to be made shoving things that barely work down everyone's throats.
They definitely won't be head-to-head with M1, but they're probably your best bet for a high-performance ARM linux laptop.
From March 2020: "The Surface Pro X Should Scare Apple" [1]. The headline looks pretty amusing in hindsight. Apple entering this market will likely validate Windows-on-ARM as a strategy. Microsoft made a pretty strategic blunder by not working to make sure a Chrome port could be available on the first generation, but it was available on the second generation Windows-ARM laptops.
[1] https://onezero.medium.com/the-surface-pro-x-should-scare-ap...
> Unless the circumstances change and indicate otherwise, I think the Apple Silicon [Linux] port will be a serious waste of community time, talents, and resources. It's better to spend time on a platform where vendor support and documentation exists... However, the conclusion assumes that a serious competitor of Apple Silicon will eventually emerge and more supportive to the community, but it won't necessarily happen. I'm somewhat afraid that biting the bullet and reverse engineering the Apple Silicon could be the only way to have a high-performance Linux desktop on ARM - I hope not.
Will there ever be a serious and more community friendly competitor to Apple Silicon in the next five years? And if so, who is it going to be?
Obviously they won't have the latest Zen 3 Ryzens or 3000 series Nvidia GPUs, but they are solid office & light development machines.
I did find this piece:
https://www.prnewswire.com/news-releases/covid-19-causes-maj...