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

[InvalidError]

You mean 15 years ago, when a million-dollar house could be bought for $400K, and when mainstream GPUs were made in fabs that cost millions, not billions?

The overall cost of chips is still going down despite inflation: you can get 32GB of DDR5 today for about the same price as 16GB of mid-high end DDR3 10 years ago. Until two years ago, i5s were pretty much flat at $170 since the original's launch despite the i5-10400 being 3-4X as fast.

As for housing, the prices are going up because hedge funds are out-bidding each other and hogging the market at alarming rates. Once the hedge fund war ends and hedge funds try to find buyers and renters to monetize their assets, they may discover that their turf war priced themselves out of the market.

The main reason prices are going up at stupid rates now is unchecked greed from all sides ruining everything for normal people.

 

[Endymio]

The overall cost of chips is still going down despite inflation:

According to their IEDM presentation, TSMC's N3E in the most cost-efficient implementation (FinFlex 2-1) sees only an 11% reduction in cost per transistor over N5. The other N3E implementations are either flat or negative. That's for logic (SRAM is worse). Inflation-adjusted, ALL implementations show higher per-transistor costs. If one assumes any increase in transistor counts whatsoever, the next generation of chips will see price hikes even heftier than this generation.

As for housing, the prices are going up because hedge funds are out-bidding each other and hogging the market

Housing prices have increased markedly and continually every decade since the Great Depression, long before hedge funds were in "bidding wars" for homes.

The main reason prices are going up at stupid rates now is unchecked greed from all sides ruining everything for normal people.

Ah, the "unchecked greed" trope; it can explain everything. Forget those pesky attempts to understand monetary policy or the effects thereof.

If you wish to understand why inflation jumped from 1% to 8%+, despite people being no more greedy today than they were a few years ago, just look at the below chart, which shows the total amount of US money in existence (courtesy: Federal Reserve FRED: M1 supply):

Jan 2020: $3.99 trillion
Jan 2021: $6.71 trillion
Jan 2022: $20.58 trillion

Over 80% of all dollars in existence were printed since 2020. As Milton Friedmann says, "inflation is, always and everywhere, an effect of monetary policy".

 

[InvalidError]

Over 80% of all dollars in existence were printed since 2020. As Milton Friedmann says, "inflation is, always and everywhere, an effect of monetary policy".

Why does the government need to 'print' money like there is no tomorrow? Because all of the wealth is being hoarded by the top-1% and the only way short of a monetary revolution is for the governments to inject more money at the bottom.

 

[bit_user]

If you wish to understand why inflation jumped from 1% to 8%+, despite people being no more greedy today than they were a few years ago, just look at the below chart, which shows the total amount of US money in existence (courtesy: Federal Reserve FRED: M1 supply):

Jan 2020: $3.99 trillion
Jan 2021: $6.71 trillion
Jan 2022: $20.58 trillion

Over 80% of all dollars in existence were printed since 2020. As Milton Friedmann says, "inflation is, always and everywhere, an effect of monetary policy".

I wouldn't argue that pandemic-related relief and stimulus had no effect on inflation, but we're seeing world-wide inflation (even in countries that did no such stimulus), and it seems to have a lot more to do with supply-chain disruptions and energy costs.

I think you like that explanation more for ideological reasons, then due to any empirical evidence that it's actually the dominant factor.

Why does the government need to 'print' money like there is no tomorrow?

They were worried about the economy cratering, because of the pandemic. That's the main reason. However, you're right that if the tax policy were more fair, then there wouldn't have been a need to "print" so much.

BTW, a lot of the "printing" was in the form of quantitative easing - not the classical notion of printing money to make up for budget shortfalls.

 

[SemiChemE]

If you wish to understand why inflation jumped from 1% to 8%+, despite people being no more greedy today than they were a few years ago, just look at the below chart, which shows the total amount of US money in existence (courtesy: Federal Reserve FRED: M1 supply):

Jan 2020: $3.99 trillion
Jan 2021: $6.71 trillion
Jan 2022: $20.58 trillion

Over 80% of all dollars in existence were printed since 2020. As Milton Friedmann says, "inflation is, always and everywhere, an effect of monetary policy".

Actually, the largest portion of that jump (about $11.2T) can be attributed to a change in accounting that was implemented in May 2020. Basically, "savings deposits", which were previously excluded from M1 were pulled in. This money existed previously, but is now being counted differently. So, a more accurate picture of the money supply comes from M2, which included these savings deposits both before and after the change:

Jan 2020: $15.4 trillion
Jan 2021: $19.4 trillion
Jan 2022: $21.5 trillion

Thus "only" $6.1 trillion or 28% have been printed since 2020.

See: https://collabfund.com/blog/the-fed-isnt-printing-as-much-money-as-you-think/

 

[vanadiel007]

"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.

But that's still nothing compared to video card pricing. My comparison was not between current and previous generation CPU's, but a comparison between current GPU and CPU pricing. A video card these days makes up +50% of the total cost of an average build, unless you use previous generation card.

 

[bit_user]

But that's still nothing compared to video card pricing. My comparison was not between current and previous generation CPU's, but a comparison between current GPU and CPU pricing. A video card these days makes up +50% of the total cost of an average build, unless you use previous generation card.

A CPU is just a couple chips + packaging. And you're comparing that with chip(s) + packaging + VRM + cooling solution + memory + PCB & connectors?

Try adding a high-end heatsink + cheap mini-ITX board + equivalent amount of DRAM to the CPU side of the equation, and it should balance out much better.

 

[vanadiel007]

A CPU is just a couple chips + packaging. And you're comparing that with chip(s) + packaging + VRM + cooling solution + memory + PCB & connectors?

Try adding a high-end heatsink + cheap mini-ITX board + equivalent amount of DRAM to the CPU side of the equation, and it should balance out much better.

I am simply saying there used to be a time when a video card cost way less in comparison to the other parts of a machine. For the price of the current generation mid range card at $1,500, you can purchase 3 x PS5 machines. Each PS5 contains a video solution. If they can make that complete machine for $500, I don't see how $1,500 for a video card is a justified price.

 

[-Fran-]

I am simply saying there used to be a time when a video card cost way less in comparison to the other parts of a machine. For the price of the current generation mid range card at $1,500, you can purchase 3 x PS5 machines. Each PS5 contains a video solution. If they can make that complete machine for $500, I don't see how $1,500 for a video card is a justified price.

There's more to the actual street price of things than the perceived BOM. There's also R&D, distribution and subsidies (selling at cost or under BOM with future returns via other means).

Not saying I don't disagree on principle with you, I'd like GPUs to go down in price, but we just don't know the exact margin per 4090 nVidia is getting out of that $1600 price tag for the FE (for example) or the AIBs for the special versions and so on. I can say, looking at the earning reports, they're over 30% at least, which is huge. That's Capitalism for you: you sell at the maximum price you think someone is willing to pay for what you're selling; it has nothing to do (necessarily) with what it costs to be made.

Regards.

 

[InvalidError]

looking at the earning reports, they're over 30% at least, which is huge. That's Capitalism for you: you sell at the maximum price you think someone is willing to pay for what you're selling; it has nothing to do (necessarily) with what it costs to be made.

Capitalism was based on the premise of healthy competition swooping in to steal market share when companies get too greedy. The impossibly high profit margins are only possible because Nvidia is effectively a monopoly - it can charge whatever it wants and you will pay whatever the cost since you have practically no viable alternatives if you need CUDA, RT or anything else that is effectively exclusive to Nvidia and responsible for Nvidia still increasing its market share at AMD's expense despite horrid pricing.

 

[-Fran-]

Capitalism was based on the premise of healthy competition swooping in to steal market share when companies get too greedy. The impossibly high profit margins are only possible because Nvidia is effectively a monopoly - it can charge whatever it wants and you will pay whatever the cost since you have practically no viable alternatives if you need CUDA, RT or anything else that is effectively exclusive to Nvidia and responsible for Nvidia still increasing its market share at AMD's expense despite horrid pricing.

Hm... I don't disagree overall, but I wonder how much of the CUDA dependency is because nVidia just played its cards right and OCL never really picking up as a competing open standard for compute. Not eve DirectCompute picked up the slack, or at least I'm not aware of it being used anywhere seriously. I believer Intel's computing API (openAPI?) is also used more than OCL which is bananas.

Anyway, as long as AMD and Intel have ~>10% marketshare, nVidia is not a monopoly under law, as I understand it. Same with Intel and its CPUs.

This is the important quote to understand:
"An unlawful monopoly exists when one firm controls the market for a product or service, and it has obtained that market power, not because its product or service is superior to others, but by suppressing competition with anticompetitive conduct."

https://www.justice.gov/atr/antitrust-laws-and-you

At this point in time, nVidia isn't controlling the market in a way you could argue is "nefarious". We're all salty about it, but it's still lawful xD

Regards.

 

[bit_user]

For the price of the current generation mid range card at $1,500, you can purchase 3 x PS5 machines. Each PS5 contains a video solution. If they can make that complete machine for $500, I don't see how $1,500 for a video card is a justified price.

Consoles are extremely low margin. They're sometimes even sold at a loss, at launch.

And if you want PS5-equivalent graphics, that's probably just below a RX 6700. Current street price on those is only $350.

In fact, perhaps it's closer to a RX 6600 XT, which is starting at about $290.

 

[bit_user]

This is the important quote to understand:
"An unlawful monopoly exists when one firm controls the market for a product or service, and it has obtained that market power, not because its product or service is superior to others, but by suppressing competition with anticompetitive conduct."

https://www.justice.gov/atr/antitrust-laws-and-you

There are still restrictions on companies with an extremely dominant market share, even if they didn't get there by unlawful means.

 

[-Fran-]

There are still restrictions on companies with an extremely dominant market share, even if they didn't get there by unlawful means.

That's the relevant quote from the page, pertinent to the discussion.

Regards.

 

[InvalidError]

Not eve DirectCompute picked up the slack, or at least I'm not aware of it being used anywhere seriously. I believer Intel's computing API (openAPI?) is also used more than OCL which is bananas.

DirectCompute being proprietary to Microsoft and Microsoft having a ~0% share of high-performance computing, it shouldn't surprise anyone that it is getting ~0% traction in 'serious' stuff.

There are still restrictions on companies with an extremely dominant market share, even if they didn't get there by unlawful means.

And then you have oligopolies where multiple "competitors" magically end up providing almost exactly the same thing for almost exactly the same price at almost exactly the same time despite being supposed to independently set prices.

 

[Endymio]

The impossibly high profit margins are only possible because Nvidia is effectively a monopoly - it can charge whatever it wants and you will pay

You keep repeating this mistruth. NVidia's net margins are, depending on when you define the period, between 11 and 25%, which is healthy, but in no way outrageous. Their margins are highest in its datacenter segment, not gaming, but even if we assume a 20% margin in gaming, and the cost of the GPU a full 50% the retail price of an AIB, that means that, if NVidia eliminated its profit entirely, the price of these cards would only drop 10%. And you'd STILL be complaining just as loudly about "greedy companies" taking advantage of you.

Graphics card prices are skyrocketing because it's getting far harder and more expensive to increase performance with each new generation, period. Misguided attacks on "capitalistic greed" are responsible for more human misery in the modern era than any other false belief. Why keep perpetuating them?

 

[Deleted member 14196]

Jensen?

 

[InvalidError]

You keep repeating this mistruth. NVidia's net margins are, depending on when you define the period, between 11 and 25%, which is healthy, but in no way outrageous.

25% net is absolutely insane. No competitive industry can get anywhere near that, only oligopolies or worse can.

 

[Endymio]

25% net is absolutely insane. No competitive industry can get anywhere near that, only oligopolies or worse can.

The perfume and cosmetics industry -- one with literally tens of thousands of competitors -- has firms with net margins well in excess of 100%. And according to Forbes, the average net margin for accounting, bookkeeping, and tax preparation firms is 20%, with the most profitable players in this sector topping 30%.

Oh, and you're still ignoring the elephant in the room. Even if NVidia dropped its profit margin to zero, a $2000 RTX 4090 would still sell for over $1800. Not exactly a huge difference.

 

[InvalidError]

The perfume and cosmetics industry -- one with literally tens of thousands of competitors -- has firms with net margins well in excess of 100%.

Much of the cosmetic industry is selling literally transformed crap. Try selling anything that comes too close to resembling their best-sellers though, see how long it takes for them to sue your ass off. Also, most of the cosmetic industry is just 2-3 megacorps owning 100 different brands in each country, same with most other categories of luxury goods.

 

[Endymio]

Much of the cosmetic industry is selling literally transformed crap.

So your position is 100%+ margins are fine if you're "selling crap", but for products that human life literally depends upon -- such as high-end graphics cards -- no company should be allowed more than a 5% margin?

Also, you never responded to my point about the highly competitive accounting, bookkeeping, and tax preparation sector having net margins that can top 30%.

 

[InvalidError]

So your position is 100%+ margins are fine if you're "selling crap", but for products that human life literally depends upon -- such as high-end graphics cards -- no company should be allowed more than a 5% margin?

Also, you never responded to my point about the highly competitive accounting, bookkeeping, and tax preparation sector having net margins that can top 30%.

In a HEALTHY COMPETITIVE MARKET, net profit is 10-15%. Below 10%, there are too many other possible and likely safer investments to consider. Above 15%, the market should be able to accommodate a new competitor unless you are making competition effectively impossible by patenting every trivial little thing like everyone in big tech is doing to nuke new competitors with a patent minefield.

Cosmetics, fancy clothes and other pure luxury stuff is a whole other kettle of fish where it is all brand make-believe. The single biggest expense is marketing, often followed by litigation for brand protection of your otherwise worthless stuff. The "value" has no basis in reality other than people being dumb enough to pay a fortune for whale constipation - the classic source of 'musk' used as the foundation of many perfumes.

As for the financial sector, most of what I've seen from my parents' retirement savings is banks and brokers screwing small investors to save their own bottom line by exploiting legal loopholes to get out of guaranteed return rates. Not too hard to make 20% margins from legally robbing people.

 

[Endymio]

In a HEALTHY COMPETITIVE MARKET, net profit is 10-15%.

So your position is that 15% is healthy, but 20% is such a violation of the GamerZ Bill of Rights that you lie awake at night, seething in outrage? If you define unhealthy as "more than I prefer to pay", you'll find it everywhere.

Rather than a simplistic generalization, let's look at the actual factors here. In a market for bulk commodities, some firms may thrive on margins as low as 2-3%. At the other end of the spectrum -- luxury goods with negative elasticities of demands -- gross margins of several thousand percent are common, and firms have essentially zero expenses beyond marketing. NVidia is in the middle.

Throughout most of NVidia's existence, its margins were below 15%, (sometimes even negative), up until around early 2017. What happened then? Those GPUs became valuable to people besides gamers. Suddenly NVidia had a unique product ... and margins blossomed. And then? High profits attract competition: AMD ramped up R&D, Intel re-entered the GPU market, and at least 3 Chinese startups are attempting to do as well. That is the very definition of healthy competition.

As for the financial sector, most of what I've seen from my parents' retirement savings is banks and brokers screwing small investors to save their own bottom line by exploiting legal loopholes to get out of guaranteed return rates.

Ah, perhaps you'd care to share one such case, where a bank guaranteed a return rate, then used a "legal loophole" to screw someone out of it? Or would you prefer to stick to vague generalities?

 

[vanadiel007]

Consoles are extremely low margin. They're sometimes even sold at a loss, at launch.

And if you want PS5-equivalent graphics, that's probably just below a RX 6700. Current street price on those is only $350.

In fact, perhaps it's closer to a RX 6600 XT, which is starting at about $290.

So the price of 3 x RX 6600 XT + 3 x RAM + 3 x CPU + 3 x motherboard + 3 x case + 3 x R&D + 3 x packaging + 3 x times etc = 1 x RTX 4080

Something seems off to me...

 

[bit_user]

Above 15%, the market should be able to accommodate a new competitor unless you are making competition effectively impossible by patenting every trivial little thing like everyone in big tech is doing to nuke new competitors with a patent minefield.

The natural hurdles to enter the GPU market are not to be underestimated, as we've been reminded by Intel's stumbles.

People talk simplistically about "drivers", but the GPU software stack must implement not only some of the most complex APIs in common use, but with exquisite efficiency and using sophisticated scheduling, resource allocation, and power management schemes. Not to mention that the shaders of every AAA-title basically have to be profiled and re-optimized by the GPU makers, to try and eke out a little extra performance.