Wednesday June 20, 2018

NVIDIA Swamped with Extra Inventory

An anonymous writer at Seeking Alpha says that Chalie at SemiAccurate says that someone told him that NVIDIA is holding back its next-gen GPUs due to a massive overstocking inventory problem. And you can take that to the banks's bank's bank.

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Too Much of It - Nvidia has overestimated pent-up gaming demand and underestimated the impact of declining mining demand.

How badly have they miscalculated? - Enough to have to agree to take back 300k GPUs from a 'top 3' Taiwan OEM. This is quite notable news as Nvidia usually exerts massive influence over its partners and can be quite ruthless with allocations of new GPUs if partners step out of line. The fact that this partner returned these GPUs says a lot about the current state of supply in the channel. The report also cites Nvidia aggressively buying GDDR5 as evidence that they now have an excess stock of lower-end GPUs that need to be made into boards as well as other insiders/sources citing an inventory buildup.

When you factor in manufacturing lead times at TSM and the current supply on hand, Nvidia really has no choice but to wait if they want to avoid expensive price protection payouts.