Why Is There a Shortage of Graphics Cards?
This article aims to answer the question, “why is there a shortage of graphics cards? Why is it so hard to find graphics cards?” – everybody wants to know, “why are graphics cards so expensive?”
For a while, it has been difficult to buy a graphics card. Whenever demand is greater than the supply, a shortage follows until production can catch up – this is currently the case with graphics cards.
What Factors Are Affecting the Demand for Graphics Cards?
Shortages are driven by higher demand for a smaller supply. So it is important to understand what is driving the demand. With graphics cards, it began with the pandemic in 2020.
The pandemic has led to a greater number of people buying more electronic products. People have drastically changed their lives, and the amount of time spent on computers and using technology has increased dramatically in a very short period.
Gamers are always looking to update their graphics cards, but so are cryptocurrency miners, especially as cryptos have been incredibly active in the last year. Companies that offer online services are working quickly to increase their capacity and what they can offer customers.
All of this has created unprecedented demand in a very short time.
What Factors Are Affecting the Supply?
It is important to look at the chip makers to understand the supply side of the graphics card shortage. There are very few chip makers, including TSMC, Intel, Samsung, and a couple of others.
In other words, the market of suppliers is consolidated. These companies have been working on an expansion, but they haven’t been able to ramp up production fast enough to keep up with the demand.
Despite their efforts, Intel and TSMC expect shortages to continue this year and possibly extend into 2023. In addition, these companies rely on suppliers for parts – these suppliers rely on other suppliers, all the way down to the raw materials used to make chips.
So the supply side is unable to meet demand because they can’t expand fast enough, their suppliers can’t expand fast enough, and on top of this, transportation is slow.
So, Is it Just Supply and Demand?
In essence, the issue is one of supply and demand, but there is more to it. First of all, this industry is known for minimising excess production.
Because they have always functioned by producing what is needed, when the pandemic hit and demand jumped, they simply didn’t have the inventory to keep up. If companies had had excess product, they could have gotten around slow freight times and continued to deliver.
However, this wasn’t possible, and more or less, everything that could go wrong went wrong – COVID-19 is an unprecedented event, and nobody could have prepared for it.
Businesses have operated with supply chain risk management as a theme for the last ten years, but this type of event was not conceivable. It created somewhat of a perfect storm and these manufacturers have been trying to catch up ever since.
The Problem with Meeting Current Demand
The issue isn’t as simple as increasing capacity to meet demand – chipmakers are rapidly increasing their production capacity – but as they’re also waiting on companies that produce specific components, this is having little effect.
The issue for these companies becomes a matter of whether or not the demand will still be there once they have increased supply capacity. Chipmakers are working seven days a week, 24 hours a day, and they can pre-sell anything they plan to make today.
Smart companies know that there could be trouble ahead if they over-expand to meet this sudden, unexpected demand. If the demand falls off, they could be left holding products, paying employees and suppliers, and not having enough sales.
This is called phantom demand, which is present in a snapshot, but dissipates when the supplies become steady. Companies need to be responsible by not overdoing their build capacity. The impact of overproduction can be a significant problem in a different way.
What Are the Possible Solutions?
The long-term solution to the graphics card shortage is to give it time for suppliers to increase their capacity. However, one possible solution in the short term is to revive old graphics cards.
The reality is that an old graphics card is better than no graphics card. This is difficult for technology companies that build their brand on being cutting edge, but it is vital to make sure that people can have a graphics card of some kind.
Companies are taking a very cautious approach because they need to balance demand with holding onto their reputations.
When Will The Shortage Of Graphics Cards End?
The question that everyone is asking is, “When will the shortage of graphics cards end?” There has not yet been a definitive answer, but the companies that produce chips — TSMC, AMD, and Intel — have the most information.
Intel believes that it will take a couple of years to build its capacity so that it’s able to meet demand. TSMC has told investors that they expect the shortages to last into 2022.
AMD suggests that it takes 18 to 24 months or longer to open a new plant. All three agree that if they can have enough patience to get to where the demand slows and the capacities rise, the shortages will no longer be an issue.
The pandemic swept across the world and changed the way people live their lives. In a short period, unprecedented numbers of people turned to electronics and technology for their work, social lives, and education.
The demand for graphics cards increased faster than the handful of chipmakers could keep up with, which led to this shortage.
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