Why are GPUs so Expensive: Understanding if the Cost Is Justified 

Why are GPUs so expensive is a question on the mind of every gamer, overclocker and general user looking to upgrade their computer hardware into a more stellar, and powerful machine. The right card can be a great support and an overall booster to your CPU hardware, but consumers are often confused by the high price tags on the new GPUs.

Read on to learn more about the different factors that affect your GPU card’s prices and the detailed reasoning behind each of them in this complete article!

GPUs Price Breakdown and Explanation

GPU price changes primarily relate to the law of supply and demand. To understand why graphics cards are still expensive, we need to look at several other factors that influence the overall price changes.

If there is one thing that is very clear to every PC user, it is the fact that graphic cards are a crucial part of their machine. Suppose you boil it down to the basics. In that case, the factors that influence the quality of your gaming experience are the amount of RAM space available on your computer and the quality of graphics your computer can handle.

Supposing that one of these requirements is not up to the required standard, your computer is going to hang during the process of playing the game, and it can hinder your gaming experience considerably.

However, the problem with buying a pre-made PC or even building your own machine is that the price of graphic cards is relatively high, limiting a general consumer’s options. This is not a new change as these cards’ prices have always been relatively high, but in recent years, these prices have risen even higher.

While the average cost for a new graphic card can be anywhere between $150 to $600, some pieces can go as high as $1000. This can sometimes be the bane of the entire PC budget, especially for the everyday guy, which makes people reluctant to upgrade.

– Global Chip Shortage in the Global Market

The chip’s shortage in the global market is one of the main reasons that has helped hike the price of graphic cards. There are hardly enough semiconductor chips in supply to meet the excessive demand for the required cards. Since there are not enough chips to satisfy the increasing demand, their shortage can lead to the entire production line of graphic cards.

Only a limited number of lucky people can ultimately buy the cards as soon as they release and become available. Such instant purchases can come at an increased price that results from the chip’s shortage in the general market and the relatively high demand for these cards.

Another point to note is that only graphic cards use superior technology to semiconductor cards. Other electronic devices utilizing the same technology include video game consoles, laptops, and smartphones. All of these devices utilize the technology to create an excellent finished product. It is also used in complex vehicles like airplanes and helicopters.

Most of this dysfunction occurred when the COVID pandemic swept through Chinda and factories were shut down, and since then, it has taken time and effort to keep production to continue. It is highly likely that the semiconductor shortage will not be solved anytime soon, even if the production is full-time.

– Crypto Miners and The Influence Of Crypto Mining

Cryptocurrency started to gain a sharp increase in popularity right before the rise of the COVID-19 pandemic. There is no question that as an individual factor, cryptocurrency miners have been a significant factor in the new and expensive rates of graphics cards and the GPU shortage.

This is because the whole concept of acquiring new crypto coins, like Dogecoin or Bitcoin, is either by purchasing them or mining them. When we mine for cryptocurrency, we need a computer and a speedy processor with a high-end graphics card that can produce fast results.

An essential factor to consider is that crypto miners use multiple PCs to mine, often requiring an entire space covered with computers. This means they need numerous graphic cards, all of which need to be high-end to support the process. In most cases, this wouldn’t be an issue, but crypto miners have an unfair advantage on the average gamer or user, as they were flushed with cash during the pandemic because of the crypto boom.

They used their new cash to buy out the maximum number of possible cards, and at a time when graphic cards were already scarce, this tactic caused two problems. Firstly, the exceptionally high demand during a period with restricted supply drove the prices of these cards even higher. Secondly, it went other potential consumers out of the market as the cards used by miners would soon run out, and they would need fresh stock.

– The Effect of the COVID-19 Pandemic

As a concept that has already been discussed a lot in the previous sections, it is impossible to deny that the COVID-19 pandemic has had its own implications for the idea of the general price increase in GPU cards’ new prices. The COVID-19 pandemic has impacted prices in several ways. The first one is the increase in prices.

With the rise of the pandemic, most people have shifted to a new work mindset, which is working from home. When people go for this remote lifestyle, they need devices that use computer technology, including but not limited to laptops, tablets, and PCs. Regular users can use such devices equally well for entertainment or professional purposes. More importantly, all these devices require the presence of a GPU.

As more and more users become dependent on their computer devices, they look for GPU options that can enhance the performance of their computing devices and provide a smoother technical experience. Naturally, this leads to a direct increase in the demand for GPUs and drives the prices for new products up.

Secondly, the pandemic has also caused shipping issues that have driven up the price of several products, including GPUs. Prices have risen because of the strict limitations on imports and exports moving in and out of a country. The lockdowns and quarantines have done little to help limit the price hikes. Furthermore, with the decrease in allowed imports and exports, luxury goods like GPUs have lost their priorities to more necessary items.

– Improvements in Performance and Specs

Unlike the Covid-19 pandemic, there are also a few natural reasons for the price hike, one of which is the unquestionable rise in quality, especially with the new GPUs. As GPUs undergo upgrades and new versions, they become more and more suited to our individual needs and opt to perform better than their previous counterparts.

With the rise of high-end technology and the lack of compromise established by experienced users, new GPU systems are breaking the barriers between reality and virtually- generated graphics. The added durability factor is an essential aspect of the latest GPU systems, making for a GPU that not only performs a lot better but also lasts significantly longer.

If we compare the new GPUs to their counterparts from even a few years ago, the changes are baffling and amazing beyond calculations. However, these upgrades are not without costs, and most GPUs tend to do the most logical when covering the costs of using the high-end materials in new graphic cards. They raise their prices.

As an add-on, this increases the price for the end-user, but on the plus side, we end up with a card that gives a kickass performance and can go a few years without needing an upgraded version.

– Scalpers Reselling Hardware to Profit

During the COVID-19 pandemic, a new selling technique has considerably increased in popularity. This technique, also known as scalping, has helped to add unnatural price hikes to several electronic items, including graphic cards.

A scalper is essentially anyone with a good eye for picking out in-demand items, purchasing them in bulk, and drying up the supply from the market.

After they have completely dried out the market supply and retained ownership of the available pieces in the market, they sell the products back to the general public at highly increased costs. These prices often range between serious and extremely high, and the problem is that most users willingly pay these rates to get their hands on specific pieces they consider worth the investment. Such positioning is especially popular with rare pieces, where consumers pay the high price simply because they are left with no choice but to go through the high costs of the scalper.

Scalpers have found considerable success during the pandemic and established a monopoly on several items, including graphic cards. The high returns on their investment aid their business model and the GPU price hike even more, as they can sell their pieces at high prices and immediately use the new profits to buy even more details.

The right way to combat this problem is to flush the market with increased supply. Unfortunately, that is impossible because of the semiconductor chip’s shortage discussed in earlier sections.

– The Effect of Blockchain Technology

Another factor that aids the rise in GPU cards’ new prices is related to the concept of cryptocurrency, which was discussed in an earlier section of this guide. To be clear, this factor, also known as Blockchain, is the cryptocurrency system’s base.

The Blockchain is used in multiple industries at this stage, and some sectors that reap its numerous benefits are finances and mortgages. These two systems use Blockchain for records and materials tracking. With the rise of the system and its increasing popularity, other industries are also adopting blockchain technology to give their customers more visible and efficient transactions.

Similar to the case with cryptocurrency, an increase in the use of blockchain technology leads to a rise in the demand for GPU systems capable of validating and handling said transactions. This increase in demand bundled with restricted supply leads to an immediate increase in the price of GPUs.

– The Influence of the Shipping Cost

Since the increase in tariffs imposed on Chinese products by the Trump Administration of around 25%, the cost of shipping has also seen an immediate boost.

The number of products shipped out of China has decreased significantly, and carriers are not as cost-efficient in transferring half-filled ships from China. When fewer products are shipped out, it becomes equally essential to increase their prices to make up for the reduction in the products being shipped out.

As always, it is necessary that no business loses money; to counter this issue, the end consumer needs to pay a higher price.

This increase in shipping costs has victimized the shipping and air freight industries, which has advanced to freight in both passenger planes and regular loads. A significant amount of cargo travels through passenger planes. With the reduction in personal travel after the pandemic, the number of shipments shipped out by air freight has also reduced. This has, in turn, led to an increase in the shipping costs of this method.

– Gaming and Entertainment

With the advent of systems focused on gaming and other entertainment, the demand for high-quality GPUs has also increased. Every computer-intensive activity that is dependent on high-end performance requires GPUs of high quality.

While most people would consider this demand restricted to just gaming, it expands to other industries like entertainment industries that computer excellent animation, high-end video editing, and computer graphics.

People in the online streaming industry also have an increasingly high demand among fans for their content, and their work requires more advanced GPUs that can meet their industry’s standards and intensive workload.

With the rise in the demand for good performance and smoother work experiences, the need for GPUs has also risen. This has contributed to an increase in the price of these products.

– Required Bundling

Another lesser factor that does affect the price of new GPUs is the enforced bundling by some manufacturers. While this factor is not the most significant influence on the price hike, it contributes to the overall increase and is therefore worth having a look at.

The hike in this area stems from the concept that some manufacturers in the GPU market will put out a requirement that any customers who purchase their GPUs also make another purchase, usually that of a lesser product. Such products typically come from the same manufacturer who sees the opportunity with the high demand of GPUs to get slower selling products off the shelf quicker.

Some retailers feel like this required bundling ends up being a hamper of some sorts as they are stuck with a product that might be difficult to move to a regular customer just to receive the GPU that is in demand.

– The Influence of Brands and Branding

Another factor that significantly influences the price of your next GPU is the brand of the said product. It is no secret that there are quite a few brands in a high-demand market GPU market, and only a few enjoy a loyal customer fan base among customer users.

Such brands are usually aware of the impact of their reputation and standing with gamers and computer users. They use this reputation and the factor of time investment on the consumer’s part as a factor when coming up with the final charge for their products.

Sometimes products are priced higher when it is established that customers will move towards a particular option with less hesitation, even if a higher price is associated with it. When a specific brand has demonstrated that it delivers higher quality products, customers will continue to buy their products even if the price is slightly higher than that of lesser brands.

It is no secret that the established of most industries act as a status symbol for many users and will go to great lengths when picking out the following piece for their GPU upgrade. In such scenarios, most customers never hesitate to go for the more popular option, even if the cost comes at a few extra bucks. Besides acting as an indicator of wealth and class for the gamers, it also ensures that the user can enjoy better performance from their GPU at a lesser risk.

– Tariffs on Imported Products by the USA

Another factor that heavily influences the increasing rate of expensive graphics cards is the multiple restrictions and tariffs used by the USA government on electronic goods produced in China.

During the time of the Trump Administration, there was an increased tax imposed on all electronic products coming out of China, and this has been the root cause of the price hike for multiple electronic products.

The Trump administration started its tariffs by placing a 25% tax on every product that used computer chips and was manufactured in China. This expanded to products like motherboards and graphic cards. Like most companies in every country, Chinese tech producers pass on this increased cost to the customer by increasing the price of their products, hoping to recover their costs.

Since most consumers trust the popular Chinese brands they have used for multiple years, they are unwilling to quickly jump into the idea of using a card from a company they are unfamiliar with. This makes them cave in to the price hikes, even though some reduce the frequency of their graphic cards purchase.

This is also true in cases when certain brands or card series are well known to deliver stellar qualities in targeted specs, making most users unwilling to compromise on their gaming and overclocking experience.

Can Graphics Card Prices Go Back To Normal Again

The factors that have increased GPU cards’ new prices are unlikely to dissipate anytime soon, making it unlikely that GPU cards’ new prices will decrease significantly any time soon. There is no way to know when will GPU prices return to normal or when GPU prices will drop.

The only form of visible hope is in the fact that certain brands, like NVIDIA and AMD, will go forward with their plans to launch a set of next-generation cards in the coming months. This could act as a factor that helps stabilize the prices of these GPU cards.

Another factor that will hopefully change in the near future is the effect of the cryptocurrency mining process as the demand for more power-friendly and GPU-friendly methods of mining processes are expected to become more common. This acts as an incentive for more technological innovations.

If it comes to being used on a larger scale, it could reduce the amount of processing power needed to mine cryptos, thus reducing the effect of the mining process on the new prices.

Unfortunately for most enthusiasts hoping to make their purchase any time soon, it is unlikely that the prices for GPUs will reduce anytime in the immediate future, even with these expected factors on the horizon.

FAQ

– What Are Some Popular Graphics Card Brands?

We have already established that certain brands can charge higher for their GPU products, especially famous brands. Regarding gaming GPU cards, AMD and NVIDIA are the companies that produce and sell the core designs. However, once the stock card is ready, different companies come in the future and modify and sell the variations on these cards.

Some such manufacturers include MSI, ASUS, ZOTAC, EVGA ,and Sapphire. The changes these manufacturers make include faster clocking speeds and better cooling systems. However, for some cards, like the Quadro series, NVIDIA will only work with a single manufacturer– PNY. This manufacturer will modify and produce all the hardware for this product.

– Are Graphic Cards Rare?

Yes, graphic cards are still rare, mainly because the demand for graphic cards is simply too high for the supply to match up. In such situations, graphic cards become rare for specific buyers, and it is also a perfect time for scalpers to hoard the GPU units and use this opportunity to increase prices.

– Why Are the Prices of Some Graphic Cards Higher Than CPUs?

Certain graphics cards are priced higher than their CPU counterparts, and this is primarily due to the fact that graphics cards are not CPUs but computers. This leads to some visible differences in base factors.

For example, the cooling system in GPUs is dedicated to them. Another thing is that the name for their respective cores (also called VRAM or video ram) is also devoted to them. All these factors contribute to their prices being higher than an average CPU.

– Is There a Right Time to Purchase Your Graphics Card?

Many people remain on the lookout for the right time to purchase their graphics cards or when the prices of some cards will come down, but unfortunately for most users, it will not be anytime soon. It isn’t easy to find a reasonably priced card at this time. This is mainly due to the fact that the contributing factors to the price hike are not going to change anytime soon.

While the scalpers still lunge at any high-end cards that come into stock and create a personal inventory, crypto minors make it a point to snatch up most of the high-performance cards with 4 GB or more RAM. Coupled with other factors like the pandemic and the global semiconductor chip’s shortage, it is more challenging to pick the right time.

However, there are some possibilities for some users who don’t mind settling for a lesser card. This translates to something older with a more limited range of VRAM; generally, less than 4 GB. Users who can settle for such options might have some healthy alternatives to pick from. For other users who can only pay for the best and the latest, the two options are waiting out the shortage ultimately or getting creative with the available resources.

Conclusion

With the conclusion of this complete guide, we have taken a deep look into what makes the prices of GPUS go up and stay that way. Before we move on to letting you explore the market for the best option, here is a look at some of the more important highlights of the article:·

• There are multiple reasons for the overall price hike of GPUs, but two of the core factors with the most influence are the semiconductor chip’s shortage and the pandemic.
• Crypto miners and scalpers dry up the supply of graphics cards in the market, raising the price of the remaining products.
• Most people are willing to pay more for an established GPU brand, which gives the manufacturer leeway to increase its prices.

It is improbable that the current environment of the GPU market with its higher prices will change drastically anytime in the near future.

Now you are ready to go out there and find the graphic card of your dream that will help your computer to reach new heights of performance. We hope you are as excited for this next stage as we are, and if you ever have any questions about why the new prices are skyrocketing, this guide is always here to solve the mystery!