Could NVIDIA's Stockpile Of 5nm Wafers Cause GPU Price Drops?

While attempting to navigate a major manufacturing shortage, a declining PC market, and a crypto crash, NVIDIA has made moves to prepare for an expectedly comfortable next-gen GPU launch following a profitable 2021.

After an expensive deal with TSMC and plummeting demand, however, it faces a new obstacle: getting rid of as many 30 series cards as possible before Q1 2023. Could this mean less expensive GPU prices for gamers? Let’s find out.

NVIDIA Is Sitting on a Massive Stockpile of 5nm Wafers

Following the increase in demand for its 30 series GPUs due to crypto miners, NVIDIA made sure to order a great deal of 5nm wafers—a reported $7 billion deal with TSMC—to secure a stable launch for its 40 series cards in 2023. If you're unfamiliar with TSMC, the Taiwan Semiconductor Manufacturing Company is the largest semiconductor chip manufacturer in the world.

This news came from a Wccftech story on NVIDIA's switch from Samsung to TSMC chips, in which the payment is explained to be split into chunks. NVIDIA paid TSMC nearly $1.6 billion upfront, with subsequent payments due per quarter.

This is incredibly expensive, but NVIDIA expected a quick return on its investment. However, the summer of 2022 saw a crypto crash, and a flood of used 30 series GPUs on the second-hand market. This also meant that there was drastically less demand for the current generation of NVIDIA's GPUs, a sudden drop from the high demand of 2021.

With new 30 series stock crowding warehouses and a plethora of second-hand cards available online, NVIDIA finds itself in a difficult position. 3DCenter produced a graph that visualizes the steep decline in GPU prices in Germany since the spike in 2021, showing that prices are at their lowest since March 2021.

In an attempt to adapt and clear space for its partners, all while trying to beat the prices on the used market, NVIDIA began cutting prices.

GPU Prices Continue a Noticeable Drop Into Q3 2022

Since the value of crypto has plummeted, miners have no incentive to continue scraping up all the 30 series stock they can get their hands on. According to a May 2021 NVIDIA Blog post, it has been making efforts to meet 30 series demands and has likely continued to pump out as many cards as it could.

While gamers have been eager to get their hands on the latest hardware, they have simply been unable to. However, fresh cards aren't being scraped from online retailers by bots anymore, but they need to go somewhere.

Wccftech notes that NVIDIA reportedly attempted to reign in its 5nm order, but TSMC is unwilling to compromise. With no way of backing out, and billions of dollars invested, NVIDIA has to move stock quickly. The crypto crash had an effect on GPU prices, and despite the price cuts being rather decent, they were met by further decreasing prices in the second-hand market.

This back-and-forth has continued since, and we are now looking at some of the lowest retail GPU prices in the last two years, from both NVIDIA and AMD.

Will GPU Prices Continue to Drop Prior to the 40 Series Launch?

Because NVIDIA has no control over the used market and it desperately needs to clear its partners' stock to make room for the impending 40 series, it'll have to take extreme measures.

As a matter of fact, Wccftech writes that both AMD and NVIDIA have been slashing retail prices over the last couple of weeks, which has seemingly been inefficient in moving stock as fast as necessary—likely due to the aforementioned used GPU prices being incredibly competitive, and buyers holding out for the 40 series. Wccftech reports an expected price drop in the near future, quoting sources in Taiwan.

All major manufacturers are in a tough place right now, but NVIDIA finds itself in an especially tight bind. The unexpected crash in demand for its current-gen cards has undermined its efforts to proactively secure a profitable 40 series launch. It simply has too many GPUs and needs to clean house.

You Should Consider Upgrading Your GPU by Q1 2023

Prices are the lowest we've seen in quite some time, and they will certainly continue to drop into Q1 2023. Although, they might not get much lower than this, so take caution. As prices drop incrementally, the question becomes "which card should I buy," rather than "should I buy a new or used GPU?"

While retail prices are looking oddly on par with what you'd expect from the second-hand market, why buy a used card from a miner?

We don't know what the 40 series will look like at retail, but retail 30 series cards are looking like an incredible deal for their price—the likes of which we might not see again for a very long time, especially with NVIDIA's 40 series selection.

The GTX 3060 and GTX 3070 are now starting at roughly $400 and $550, respectively. There are plenty of great reasons, price included, to consider one of these sub-3080 cards for your upgrade.