Graphics card shipments fall as mining demand weakens further

Graphics cards manufacturers see their shipments and sales drop ever since the second half of 2018, mostly due to a drop in demand from the cryptocurrency mining market. 

Sources from DigiTimes said that the cryptocurrency mining heyday seen between April 2017 and March 2018 suffered an abrupt downturn in April due partly to the Bitcoin value plunging to under US$7,000 from a peak of nearly US$20,000 recorded in December 2017 and partly to governments of China, South Korea, the US and many European countries rushing to clamp down on digital-coin exchanges following exposures of scams, frauds and market manipulations.

Taiwan graphic cards makers including Asustek Computer, Gigabyte Technology, Micro-Star International (MSI) and TUL have seen their inventories pick up significantly amid the drastic shrinkage in demand from cryptocurrency mining sector. But they have only slightly cut sales prices, maintaining gross margins at around 20%, which, though lower than the previous high of 40-50%, is still twice the level of 8-10% seen in early 2017.

Industry sources said that the prospects for cryptocurrency mining will be increasingly dim due to the enhanced crackdowns by governments in many countries, declining mining investment reward, and the possible move by governments to hike the electricity rates for cryptocurrency-mining uses. In fact, many individual miners and small mining farms have quit the market, and some medium and large-size mining farms have also scaled back their procurements of mining devices.

Accordingly, the sources expected the graphic cards supply chain to return in the second half of 2018 to the previous state of serving mainly the gaming sector seen before the rise of the cryptocurrency mining craze. And those makers with weaker deployments in the gaming sector may see their overall shipments of graphic cards fall significantly in the future.

Meanwhile, TUL is stepping up sales of industrial PC and datacenter acceleration cards as part of its efforts to offset the sales decline in mining graphic cards, the sources indicated.