NVIDIA and AMD add-in-board manufacturers including Gigabyte, MSI and TUL are expecting their shipments to drop by as much as 40% in April according to a report by DigiTimes. All of these Taiwan based manufacturers have established their forecasts based on the assumption that cryptocurrency mining demand is going to continue to fall. Keeping in mind the fact that there is usually a bureaucratic delay associated with such assumptions, and the fact that the crypto market just started rebounding, it remains to be seen how accurate these predictions are going to be.
AIBs expect NVIDIA and AMD graphics card mining demand to reduce by 40%, impact to Total Available Market (TAM) could be even higher
The sources DigiTimes talked to stated that channel distributors and larger mining farm operators have already started to cut orders for graphics cards and mining motherboards. The fall in supply started in early April and has continued from there on and can be attributed to the mining market remaining in a bear run for a few months at a stretch. Keep in mind, however, that forecasts are usually a lagging indicator to the arrival of new information and the fact that the cryptocurrency market started rebounding a week or so ago means these forecasts may no longer apply.
Another point of note is that some mining operations have stopped purchasing graphics cards and are actually trying to unload their inventory in anticipation of China's Bitmain in the third quarter of 2018. If that is the case then even if the market continues to rebound further, graphics card manufacturers may not see a major revival of demand - which is excellent news for gamers. The ROI of Vitamins ethereum miners is significantly higher then what graphics cards can provide and waiting for them is the logical choice to make for many of these mining operations.
This, of course, has further reaching implications than just a fall in demand. Due to the high ROI offered by mining, graphics card manufacturers were able to sustain insanely high margins of up to 50% with prices following a supranatural trend.
With the fall from grace of graphics card as the darling of the cryptocurrency mining world, while the demand will fall 40%, the demographic will change even more materially. From rich cryptocurrency miners willing to pay 3-4x the MSRP, we will go back to gamers being the primary audience and with it a shrink in the Total Available Market for AIBs.
To put it simply the high end of the market segment has started declining, and the channel distributors will be forced to go back into sales promotion mode for gamers. This means that we will converge towards the old margins of roughly 20-25% for AIBs IF Bitmain does indeed release its ethereum miner as promised and/or the cryptocurrency market continues to stay in its present ditch. Gigabyte posted record shipments of 4.5 million graphic cards in 2017, up one million in a year, with profits from the shipments doubling to over $67.37 million, it's a similar story for MSI and TUL.
