In a recent conference call Nvidia Chief Financial Officer, Colette Kress spoke about the supply and demand for the RTX 30 series of GPUs. Given skyrocketing popularity of gaming due to COVID-19 and stay-at-home recommendations worldwide, it did not come as a surprise that demand for the latest PC hardware from AMD and Nvidia exceeded initial supply. But since Nvidia has not managed to solve GeForce RTX 30-series supply constraints in 2.5 months since the launch, the company is facing heavy criticism from its customers. Nvidia says that it is frustrated with tight supply, but claims that the problem is industry wide.
“While we had anticipated strong demand, it exceeded even our bullish expectations,” said Colette Kress, Chief Financial Officer at Nvidia, during the company’s earnings call with analysts and investors. “Given industry-wide capacity constraints and long cycle times, it may take a few more months for product availability to catch up with demand.”
Cycle times of all modern nodes is about three months, so it is extremely hard for chip developers and makers to quickly react to demand that exceeds supply. Nvidia uses Samsung Foundry’s 8N manufacturing technology to make its GA102 and GA104 processors based on the Amere architecture. This fabrication process is not as popular as TSMC’s N7/N7P or N5 nodes used by such companies as Apple, AMD, and Qualcomm, though actual production capacities that Samsung allocates for its sub-10nm non-EUV technologies are unknown. Furthermore, given complications with logistics, there are other factors that impact production times of graphics cards.
Nvidia stresses that because of high demand for its latest products, it will continue to face GeForce RTX 30-series supply constraints throughout the fourth quarter of its fiscal year, which ends in late January 2021.
“The demand is just overwhelming,” said Jen-Hsun Huang, CEO of Nvidia. “We are going to continue to ramp fast, this is going to be one of our most successful ramps ever. It gives our installed base of some 200 Million+ GeForce gamers the best reason to upgrade in over a decade. So, this is going to be a very large generation for us is my guess.”
For years, Nvidia did not have any serious rivals for its high-end gaming products from AMD, but with the Radeon RX 6800/6900-series products the red team finally has competitive offerings that can fight Nvidia’s RTX 30-series graphics cards. Therefore, assuming that Nvidia cannot supply enough GPUs, AMD might eat Nvidia’s lunch and capture some additional market share. Meanwhile, AMD’s Radeon RX 6800/6800 XT graphics cards are also out of stock (possibly due to high demand), but for now it looks like it is hard to get the latest hardware either from AMD or Nvidia.
Despite supply constraints, Nvidia’s gaming revenue in Q3 FY2021 (which ended on October 25, 2020) was a record $2.27 billion, up 37% sequentially and up 37% from a year earlier. In total, Nvidia earned $4.726 billion for the quarter. The company expects its sales to hit $4.80 billion on Q4 FY2021.