News AMD, Intel, and Nvidia Reportedly Slash Orders with TSMC

[InvalidError]

I don't believe that to be the case as CPU's are much more affordable than GPU's right now. You have the same situation between AMD and Intel, yet pricing for CPU's is a lot more reasonable.

"A lot more reasonable" where AMD launches its r5 at $230+ with nothing current-gen below and Intel's newest i5 also starts at ~$230 instead of $160 which doesn't even get you an i3 anymore.

Also, the minimum price for a decent motherboard has gone up from ~$80 to ~$140, most of which within the last five years.

 

[watzupken]

The problem is that current gen of CPUs and GPUs are really not that attractively priced. There are performance increases, but you are really paying extras for it, i.e. performance per $ is pretty much stagnant.

In any case, I think this is the start of the fab pains because they have expanded really fast over the last couple of years on some skewed projection that demand will never come down. And here we are at the point where that demand bubble burst. While I understand that demand for electronic chips is increasing, the growth rate of all the fabs was too fast. And here we are not even talking about those mega fabs that they are building in US and other parts of the West. If demand increase 2x over time, I am not even sure all these fabs will be 100% utilized.

 

[bit_user]

This is interesting news, for sure. At the same time, I don't like this.

It's really good news, except for the degree of the cuts. The "good" part is that it means the Great Chip Shortage will finally be a thing of the past! This should flow through to a lot of tech products that either had supply problems or struggled with pricing due to scalpers in the parts market.

Specially AMD. What they need to do is not cut back their orders, but just build things that are enticing to buy. Go back to the under-$300 market and you will make the wafers count.

They're in the sub-$300 market! Don't be a chiplet snob. For CPUs that size, monolithic makes more sense. Hence, most of their entry-level are APUs. The current Newegg price for an 8-core 5700G is $178. If you prefer chiplets, the 5700X will cost you $19 more.

That said, even the 5800X has been selling at sub-$300 street prices, for a while (currently, $237).

"A lot more reasonable" where AMD launches its r5 at $230+ with nothing current-gen below

You just need to wait until the Phoenix Point APUs launch. Those will feature Zen 4 + RDNA3 on TSMC N4.

 

[hannibal]

If they focused on making lower cost, high value products we the consumer will literally make excuses to buy their products. When they raise prices and price gouge, we'll stop buying. Too many MBAs with little understanding of their customers running the show.

Don´t worry!
We will get 4030 soon at $450 and 4050 at $550 so soon we have cheap GPUs! maybe after the summer these value GPUs are in the market!

 

[JamesJones44]

People aren't whipping out their wallets to replace items to net a relatively low gain for a relatively high price

More like governments aren’t handing out stimmy checks to income ranges that don’t need them anymore.

 

[tamalero]

Ironic how companies shot themselves in the foot and then they cause a cascade effect that can cause a recession.

New cards come up, priced stupidly high.. nobody buys in masse or buys in masse the card they did not expect...

defects left and right or other issues gets exposed.. less people buy..
Scalpers still run around... while there is sabotage to keep older cards priced high and newer ones even higher to force clearances of old stuff.

Then people buy even less and then they wonder "why are we selling too few?" XD

 

[russell_john]

I wonder if none of the big US automakers use TSMC for car chips. I have seen a number of reports of cutbacks for TSMC/GloFo/foundries, and yet all of the automakers say supply constraints still affect them. I know there is a lot of time between getting orders & actually producing the required output, so cutbacks now might be due to expected order reductions for future output. So I guess TSMC probably doesn't do a lot of chips for the auto industry as they have higher-end nodes, but I'd curious where the real supply constraints are right now.

The real problem is automotive manufacturers are still stuck on 10 year or older nodes basically 28nm and 40nm which are from 2011 and 2008 respectively. The large IC foundries like TSMC have sold off their older lines and moved to the much more profitable 10nm, 7nm and 5nm. Automotive could move over to those nodes too but they are kind of lazy and would rather use cheaper already proven technology to save on R&D and design costs ..... The ICs used in automotive aren't really all that high tech for instance most use OBD-II for their main computer and those are from 1996 for cripes sakes .... EOBD the European manufacturer equivalent is from 2001. Think about what a new computer in 1996 or 2001 brought to the table .... not very much compared to today

 

[russell_john]

Ironic how companies shot themselves in the foot and then they cause a cascade effect that can cause a recession.

New cards come up, priced stupidly high.. nobody buys in masse or buys in masse the card they did not expect...

defects left and right or other issues gets exposed.. less people buy..
Scalpers still run around... while there is sabotage to keep older cards priced high and newer ones even higher to force clearances of old stuff.

Then people buy even less and then they wonder "why are we selling too few?" XD

Some of that is the fault of TSMC who have raised their prices 20% over the last two years and will raise them another 9% come Sunday January 1 .... So a GPU chip that cost $100 in 2020 costs $120 now and will cost $130.80 in a couple of days and that cost is simply passed on to the consumer .... Nvidia and AMD know this was coming and already priced in the increase before they brought out their latest generation.

Both AMD and Nvidia have their professional lines to fall back on and even in this economy Cloud Computing is expected to increase from $500 billion this year to $600 billion in 2023 and the Profit margins for Pro products is considerably higher than the slim margins for consumer products which is also the reason consumer manufacturing moved over to China while Industrial manufacturing with it's higher margin largely stayed put. The US is still the largest Industrial Manufacturer in the world and actually owns the IP that TSMC uses for their highest end products and a lot of CNC and robotics IPs. There isn't much money in manufacturing consumer devices but their is money in manufacturing the CNC and robotics devices that make consumer products as well as in manufacturing heavy equipment and farming equipment

 

[bit_user]

Ironic how companies shot themselves in the foot and then they cause a cascade effect that can cause a recession.

GPUs did not cause a recession.

New cards come up, priced stupidly high.. nobody buys in masse or buys in masse the card they did not expect...

It's not even clear they "shot themselves in the foot", because the RTX 4090 indeed seems to be selling rather well. The reason they would slash future production targets is that they expect to sell fewer GPUs across the entire range, but potentially what it could mean is that they see demand clustering more towards the lower end of the scale, and those GPU dies are smaller.

It's also not clear what you'd have them do instead. I gather you want them to sell the same GPUs for less $$$, but what if they actually can't? If you want GPUs that perform like the RTX 4090 and 4080, they need to be a certain size and we know that new manufacturing nodes are more expensive. That puts them in a certain ballpark on pricing, which limits sales. Lots of people would love it if they sold these at cost or even a loss, but that would be devastating for them.

So, about the only thing they could've done differently is to make the 4080 be the top product. That would've put them at risk of losing the performance crown, but we only know in hindsight that AMD couldn't match it. They couldn't have known that, at the time.

 

[atomicWAR]

Don´t worry!
We will get 4030 soon at $450 and 4050 at $550 so soon we have cheap GPUs! maybe after the summer these value GPUs are in the market!

God I hope that was sarcasm because 500+ dollar entey level gpus will kill the pc gaming market.

 

[bit_user]

Some of that is the fault of TSMC who have raised their prices 20% over the last two years and will raise them another 9% come Sunday January 1 ....

Their input prices have gone up, though. Not only that, but you have issues like Taiwan's unprecedented drough, causing them to have to bring in water, and helium has been in critically short supply after something happened in Feb. 2022 (I'll let you guess where most of the industrial helium comes from). We've also read about substrate and wafer shortages, which means those prices go up. I'm not trying to say TSMC is an angel, but it's not 100% profiteering on their end.

the Profit margins for Pro products is considerably higher than the slim margins for consumer products which is also the reason consumer manufacturing moved over to China while Industrial manufacturing with it's higher margin largely stayed put.

Your analysis is flawed. Plenty of consumer products have cushy margins, if we take Apple as an example. Meanwhile, the list prices for industrial products might be high, but we all know those prices are negotiable.

What tends to get outsourced first is the highest-volume, most labor-intensive manufacturing. Textiles are a perfect example of this. Then, countries try to move up the value chain, but it becomes harder to move manufacturing that's more specialized and the value of doing so is less. That limits the "push" and "pull" factors for moving specialized manufacturing. And if we're talking about heavy industrial & farming equipment, like in some of your examples, non-trivial shipping costs would also affect the calculus.

 

[umeng2002_2]

What's that I hear? The worlds smallest violin playing.

 

[InvalidError]

You just need to wait until the Phoenix Point APUs launch. Those will feature Zen 4 + RDNA3 on TSMC N4.

Can't say I would be particularly enthusiastic at the idea of spending $500+ on a CPU+AM5 MoBo+DDR5 RAM just to get decent entry-level graphics that would be covered at $150-200 if the GPU market was still somewhat competitive when my i5-11400 is not even two years old and more than enough for me in all other aspects. Up north in Canada, the A380 is just about the only option available new under $400.

 

[umeng2002_2]

nVidia and AMD are pricing their new stuff to make you want to buy their old stock of last gen.

 

[InvalidError]

nVidia and AMD are pricing their new stuff to make you want to buy their old stock of last gen.

The way AMD explicitly said the RX7900XXX was designed and priced to compete against the RTX4080 at $1000 might be an FTC violation: the FTC requires that products be priced based on their merit on the market, not based on the competitors' then-not-yet-released products. There is a possible price-fixing liability there. The fact that so many models remained available through the launch period to present further emphasizes that these things are priced beyond what much of the market will bear.

 

[Endymio]

FTC requires that products be priced based on their merit on the market

The FTC requires no such thing. It bars two or more firms from acting in concert to set prices, but single-firm pricing rules are essentially unlimited when they don't result in monopoly ... and, even in the case where monopoly results, the only restrictions are that pricing be set by some sort of "business justification", which the courts have ruled is a quite wide avenue to drive down.

 

[JamesJones44]

The FTC requires no such thing. It bars two or more firms from acting in concert to set prices, but single-firm pricing rules are essentially unlimited when they don't result in monopoly ... and, even in the case where monopoly results, the only restrictions are that pricing be set by some sort of "business justification", which the courts have ruled is a quite wide avenue to drive down.

Sadly this is the correct answer. For it to be price fixing like as the previous post suggests, both parties would have to be involved in setting the prices (aka working together).

 

[mindbreaker]

This is interesting news, for sure. At the same time, I don't like this. Specially AMD. What they need to do is not cut back their orders, but just build things that are enticing to buy. Go back to the under-$300 market and you will make the wafers count. People doesn't want to buy stupid expensive products at times of recession, but they do buy things which are accessible and won't put you in debt to do so. Well, what do I know. They hold their own sales projection data based on whatever cloud they're standing on top of, far disconnected from us.



Maybe that one is a freebie? Like a promotional sample of the services? XD

Regards.

High-end should still do well. The rich are insulated from economic downturns, generally. There are over 1 million people earning $1m/year in the US. If they want a new computer or a new videocard, they buy it.

Crypto miners...that is a different story.

 

[mindbreaker]

I will make it easy on you kids. Cereal is over $7 a box and eggs are too. Who is buying chips? and I don't mean potato

I bought a 16 core 32 thread chip and the rest of the components for a new chess beast. It is the processed foods, fine cuts of beef, and yes, eggs, salmon too, that are absurdly high. I eat mostly fresh stuff. I still get produce reasonable, I get sirloin tip for $4/lb, so no biggie. Eggs and salmon hurts, oh and canned chicken. Just been getting Costco rotisserie birds for $5 instead.
People around me bought their own chickens for eggs. Not that desperate yet. I figure all the birds will be replaced who had to be culled in not too long. These birds grow fast. And, I don't like the racket the birds make. They also attract dogs into my yard, and I don't want dead cats. I do eat a lot of jarred pimento peppers. Going to have to start growing those. I got some seeds somewhere. I am getting stiffed on cat food. That has gone up $6 a bag. And I have 18 cats. Well, 15 are mine, I guess the neighbors stopped feeding theirs or feed them lousy food. Too bad those culled chickens could not be turned into cat food.

 

[-Fran-]

It's really good news, except for the degree of the cuts. The "good" part is that it means the Great Chip Shortage will finally be a thing of the past! This should flow through to a lot of tech products that either had supply problems or struggled with pricing due to scalpers in the parts market.

It is not. The context is they're dropping waffer orders, so that means TSMC will have to hold the bag for a while. If all of them don't max capacity at TSMC, it means they won't be contracting for more waffers in the next cycle and TSMC was looking to expand as well. This could put a span on those plans and that's what I'm not liking about this news.

They're in the sub-$300 market! Don't be a chiplet snob. For CPUs that size, monolithic makes more sense. Hence, most of their entry-level are APUs. The current Newegg price for an 8-core 5700G is $178. If you prefer chiplets, the 5700X will cost you $19 more.

That said, even the 5800X has been selling at sub-$300 street prices, for a while (currently, $237).

It has nothing to do with being a "chiplet snob". AMD can most definitely produce products for the sub-$300 range in chiplets and/or monolithic, but they don't want to because they want higher margins. They can absolutely service that market if they all wanted to, but they aren't because of margins. That is what is bothering me. Also, comparing the Ry5000 series to the new stuff is apples to oranges as the waffer cost is very different. I don't have details, but at least the rumour mill says it's several thousands of difference between 7nm and 4/5nm. With time, 7nm has become cheaper as well due to higher yields and such.

AMD could perfectly move their waffer allocation from chiplets aimed for Navi31 to Navi33 or even Navi32, for example. On the CPU side may be harder, since they're using the same Zen dies for all of the line up, but maybe accelerating Phoenix could be good? The laptop market could definitely use a new APU.

Regards.

 

[Energy96]

Slashing production yet I have not seen a single 4090 FE for retail sale a single time since it launched. Even at launch they were never actually available to non-bots. Yea, I signed up ages ago for the “preferred access” thing also and nothing. I don’t understand why they can’t just let people place orders and fill them as they build them. This whole thing just seems wrong, almost like they are in bed with the scalper cartels. I want to build a new high end PC but if I can’t get the video card I want it’s a non-starter. The whole thing is infuriating.

 

[InvalidError]

Slashing production yet I have not seen a single 4090 FE for retail sale a single time since it launched.

A while ago, Nvidia announced that it was moving wafers from consumer GPUs to Hopper and AD100.

Nvidia can afford telling gamers to go screw themselves when it can make $10 000+ 820sqmm AD100 and Hopper datacenter cards instead of $1600 ones using 620sqmm dies. That is 4-5X as much income per wafer. The forfeiture of consumer sales is well worth the increase in datacenter sales which it can then use as an excuse to jack up prices on artificially limited supply of consumer parts some more.

 

[Energy96]

Well maybe Intel, Samsung, Gigabyte, Asus, etc should put some pressure on Nvidia. I’m sure I’m not the only one by far that isn’t buying new PC hardware because I can’t get a video card. Lack of video cards hurts the whole industry.

 

[ohio_buckeye]

Someone above talked about motherboards costing more. I definitely feel that’s true. In my am4 system I’ve got a b350 board that I paid about 80 for. For a b650 at microcenter the cheapest I’ve seen there is 159. The cpus aren’t all terribly priced. They need to get value options out but I understand they want to make more.

Unfortunately I think we are going to see rtx 4060 cards around 500-550. I recently got a 3080 for 600 which was a good deal but I’ve been seeing things claiming a 4070 ti will be about 799. If that’s correct then what are the prices of a 4070 and 4060ti. For those just getting into the market are we really going to say a 4050 class card is 400 or more? It wasn’t that long ago you could get a decent board cpu and ram for about 200, and say a 1050ti for 150.

The way gpu prices are going it makes me consider waiting until a new generation of gpus are releasing and then buying on a sale of the previous higher end cards.

As far as the availability of cards you are definitely needing to look more and compromise to get a gpu you want. Then it comes down to how much you want to pay. Like on my card I bought it from someone on eBay. But the guy had pulled it from a cyberpower pc and claimed the card is basically new. However I was able to sell my old card for over 300. So if you do have an older gpu when you upgrade, selling it can help pay for the new one.

 

[Endymio]

... which [NVidia] can then use as an excuse to jack up prices on artificially limited supply [some] more."

Where does this silliness come from? I'm not pointing a finger at you directly, as this is an incredibly wide misconception. In a free market, companies don't "need excuses" to raise prices; they can set them at whatever level they wish. Any intelligent company sets them at the point that maximizes profits, which is not the highest possible price. Calculating the optimal price through determining inflection points on the sales curve is one of the canonical problems of any business calculus class.