Nvidia made too many GPUs, expect discounts ahead of RTX 40 launch

The semi-conductor shortage that has been in play over the last two years has started to ease up but the market for PC components and PCs in general, it isn’t exactly thriving.

Case in point – Nvidia.

While certain areas of Nvidia’s business are thriving – such as in its data centre business where revenue was up 61 percent compared to a year ago – the gaming side of the business isn’t great.

The hardware manufacturer reports that gaming revenue was down 33 percent compared to a year ago and 44 percent lower compared to last quarter.

“These decreases were primarily attributable to lower sell-in of Gaming products, reflecting reduced channel partner sales due to macroeconomic headwinds. In addition to reducing sell-in, we implemented pricing programs with channel partners to address challenging market conditions that are expected to persist into the third quarter,” Nvidia’s chief financial officer, Colette Kress, wrote in a statement.

The so-called crypto winter has also hit Nvidia although the firm isn’t sure how badly the sector’s loses impact it.

“Our GPUs are capable of cryptocurrency mining, though we have limited visibility into how much this impacts our overall GPU demand,” said Kress. “As noted last quarter, we had expected cryptocurrency mining to make a diminishing contribution to Gaming demand. We are unable to accurately quantify the extent to which reduced cryptocurrency mining contributed to the decline in Gaming demand.”

So what is Nvidia going to do about this? Well for one it wants to move more product and quickly.

According to The Verge, Nvidia chief executive officer Jensen Huang has a plan.

“Our strategy is to sell-in well below the current sell-through levels in the marketplace to give the channel an opportunity to correct,” Huang said.

Essentially, Nvidia is going to discount its products in a bid to stoke sales from its channel partners. The hope here is that the lower sell-in price will push partners to have sales to get rid of excess inventory.

Will this be enough to bring Nvidia’s gaming revenue back up to par? That could be a stretch.

Data from the IDC shows that shipments of PCs are down 15.3 percent year-on-year. This is the second consecutive quarter where a decline was recorded following two years of incredible growth.

“Consumer demand for PCs has weakened in the near term and is at risk of perishing in the long term as consumers become more cautious about their spending and once again grow accustomed to computing across device types such as phones and tablets. Meanwhile, commercial demand has been more robust although it has also declined as businesses delay purchases,” wrote research manager for IDC’s mobile device trackers, Jitesh Ubrani.

With all of this having been said, keep an eye on local PC stores as there could potentially be some discounts on Nvidia GPUs on the way. We know that the firm is readying its RTX 40 series GPUs but given how expensive new GPUs are at launch, if you can find an RTX 30 series GPU at a decent price, you might want to take it.


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