The companies and individuals who sought to make coin by proving transactions bought every AIB they could get, which started a bidding war in the channel. AIBs doubled in price in some occasions. But what goes up….
Three things conspired to crash the market.
The first was the population swelled; the number of miners quadrupled and continued to grow. It wasn’t just big firms in China mining; gamers with high-powered AIBs in their PCs left their machines on and turned them over to a mining pool when they weren’t gaming. The result was supply exceeding demand, and all the miners got less hits and, therefore, less ROI.
At the same time, the transaction value of Ethereum dropped, further reducing the ROI for the miners.
And then the developers of Ethereum announced they were going to change the proof-of-work algorithm so that it did not favor (or require) a GPU with fast local memory. That meant ASICs could be developed, as they were for Bitcoin, and would be less expensive and potentially more efficient.
However, neither AMD nor Nvidia recognized those changes in time and placed new production orders for GPU chips, hoping to alleviate the shortage and criticism about the prices—which they (AMD and Nvidia) did not benefit from, as all the profits were made in the channel.
And then demand stopped, leaving the channel full. No one wanted AMD’s or Nvidia’s new AIBs, of which they now had too many. Just bad luck, bad timing—it happens. And it killed AMD’s and Nvidia’s Q3, the quarter that is traditionally up for those companies.
Q3 2018 went down as worst third quarter for add-in boards in over 10 years
The add-in board market decreased in Q3'18 from last quarter, while Nvidia gained market share. Over $2.5 billion dollars of AIBs shipped in the quarter.
Quarter-to-quarter, graphics board shipments decreased 19.2% and decreased 36.1% year-to-year.
The market shares for the desktop discrete GPU suppliers shifted in the quarter. Nvidia increased market share from last quarter, as well as market share year-to-year.
GPU Supplier Market share this quarter Market share last quarter Market share last year
AMD |
25.7% |
36.1% |
27.2% |
Nvidia |
74.3% |
63.9% |
72.8% |
Total |
100% |
100% |
100% |
Market share changes quarter-to-quarter and year-to-year.
“The third quarter is normally the strongest from the previous quarter. This quarter it was down -19.2% from the last quarter,” said Dr. Jon Peddie, president of JPR. “That is below the 10-year average of 14.9% and was caused by too much inventory in the channel due to a misjudgment on the strength of the crypto-mining demand.”
Since 1981, 2,083 million AIBs have been shipped, and for the year, $4.4 billion of AIBs have been sold.
And it’s going to be a rough couple of quarters for AMD and Nvidia as the channel bleeds off its excessive inventory. This comes at a bad time for Nvidia, as they just launched the most powerful and interesting GPU they’ve ever made. But it’s expensive and specialized, and so the gamers aren’t snapping it up. However, it is extremely attractive to the game developers.
A year from now, we won’t be discussing this. Quarter-to-quarter reports are something invented by stock brokers and don’t have much meaning in the real world unless your bonus is tied to the share price.