The prices of graphics cards, particularly those manufactured by NVIDIA, have witnessed a significant increase in recent years. However, new information suggests that the manufacturing cost is decreasing while the commercial price remains high. According to the latest report, the market price for 8 GB of GDDR6 memory for graphics cards is estimated to be around $27.
Every graphics card available in the market is equipped with a specific amount of VRAM (Video Random Access Memory). This memory is primarily utilized to store game textures and other relevant data. It differs from regular RAM in terms of its access speeds, which are considerably faster.
The importance of VRAM should not be underestimated, as it plays a crucial role in gaming. The amount of VRAM on a graphics card determines the resolutions at which games can be played smoothly. For instance, it is recommended to have 6-8 GB of VRAM for 1080p resolutions, while 12 GB is suggested for 1440p resolutions.
The price of GDDR6 memory falls, but you will not notice it
The price of memory for graphics cards has been steadily declining for several months now. During the pandemic, there was a shortage of this essential component due to the high demand for graphics cards. However, the situation has changed significantly, with a significant drop in demand, leading to unsold inventory of some of the latest generation models.
According to industry experts, both NVIDIA and AMD have no trouble acquiring an adequate supply of this crucial component. However, the reduction in manufacturing costs is not being reflected in the final product prices.
This phenomenon can be explained by the economic concept known as the “rocket-plume effect.” It’s akin to the experience of vehicle owners who often witness skyrocketing fuel prices when crude oil prices rise, but the decrease in fuel prices lags significantly when crude prices fall. Similarly, the prices of VRAM memories are taking time to adjust despite the decrease in manufacturing costs.
According to 3DCenter.org, the cost of an 8 GB GDDR6 chip, which is equivalent to 1 GB GDDR6, is currently less than $4, specifically $3.375. This implies that if a graphics card has 8 GB of GDDR6 memory, the cost of that memory would be around $27.
There are even suggestions that the price could drop further to around $2-2.5 per 1 GB of GDDR6 memory for both AMD and NVIDIA. These companies acquire large quantities of these chips, which puts pressure on manufacturers to adjust their prices, resulting in reduced profit margins for immediate sales.
No impact on commercial graphics card prices
In just a year and a half, the price of 1 GB GDDR6 has experienced a significant drop from $13 to less than $4. This represents a decrease of over 300%, which greatly benefits the manufacturers. With such a decline in component costs, manufacturers have the option to maintain or even increase prices, resulting in higher profit margins.
A noteworthy piece of information came to light when NVIDIA released its financial results for the past year. Among the data, it was revealed that the company had achieved an approximate 1% increase in its profit margin. This information gains further significance now, as it is possible that the drop in VRAM prices played a role in this positive financial outcome.
It is becoming increasingly apparent that the challenges posed by the pandemic have subsided. However, despite this improvement, prices have either remained the same or even risen, using the pandemic as an excuse.