Nvidia says it built too many GPUs — expect sales while it works on something `new`

PC sales abruptly tanked this quarter, so Nvidia, like Intel, is suddenly under the gun. What are you going to do about the billions of dollars of growth that just went up in smoke, investors tend to ask! But while that’s an annoying situation for Nvidia during today’s Q2 earnings, it’s an intriguing one for gamers like you and me — because Nvidia tried to placate those investors by revealing that exciting things may be on the way.

First: discounts! Nvidia CEO Jensen Huang confirmed what we’ve suspected for months: Nvidia actually built too many gaming GPUs and is now being forced to sell them for less money. “We found ourselves with excess inventory,” says Huang. “Our strategy is to sell-in well below the current sell-through levels in the marketplace to give the channel an opportunity to correct.”

“We’ve implemented programs with our partners to price-position the product in the channel in preparation for our next generation,” he also said on the call.

Here’s what that sounds like to me: In order to sell as many RTX 3000 graphics cards and chips as it can before the RTX 4000 series begins to arrive this fall, it’s cutting prices — to distributors anyhow.

That doesn’t necessarily mean you’ll see a too-good-to-be-true price on a graphics card or gaming laptop right away, because the final price is up to partners and retailers — but those parties have their own incentives to clear shelves, even if they disguise them as sales rather than across-the-board price cuts. Either way, the trend we’re seeing is absolutely down, with some cards once again appearing at MSRP after years of commanding 2-3x their price on eBay.

Nvidia is also trying to signal that the current-gen Ampere GPUs will live alongside next-gen ones — Huang says current-gen GPUs will “be layered on top” of the “exciting next generation” of chips. He also hinted that there might be a place for extra GPUs in cloud data centers: “we hear quite broadly that GPU supply is in shortage in the cloud.” So Nvidia may have other options than simply clearing inventory of its GPUs by pricing them low.

Second, CFO Collette Kress intriguingly suggested that Nvidia may have something entirely different up its sleeves to improve its gaming revenue. Nvidia has “a new segment of the market that we plan to reach with our gaming technology,” she said on the call.

Your guess is as good as mine. My mind immediately goes to how AMD seems to uniquely be powering a new generation of high-performance handheld gaming PCs, years after Nvidia mostly gave up on that idea (though it did become the Nintendo Switch). But that might be because the last post I wrote for The Verge was about one of those handheld consoles. It could just as easily be a gaming-focused take on the metaverse, for all I know.

Nvidia repeatedly insisted during today’s Q2 2022 earnings call that gaming demand hasn’t actually fallen off a cliff despite the sudden drop in revenue, pointing out that GeForce sell-through is still up 70 percent since before the pandemic.

This news is republished from another source. You can check the original article here

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