NVIDIA Faces Inventory Challenge as Graphics Card Prices Drop in Europe and North America

In the global markets of Europe and North America, a notable decline in graphics card prices, inclusive of the latest RTX 40 series, has been observed. This trend points towards potential sales difficulties NVIDIA may be experiencing. 

The tech behemoth is primarily grappling with the challenge of selling off its surplus stock of graphics cards, a situation that could lead to considerable financial setbacks. To mitigate this predicament, NVIDIA contemplates curtailing GPU production. A recent study by Arete Research reveals NVIDIA as one of the six companies on TSMC's privileged list with inventory surpassing the 92-day average. The inventory cycle for NVIDIA currently stands around 220 days, almost two and a half times the standard duration. This positions NVIDIA within the top five companies to breach the 'caution threshold.' NVIDIA aims to curtail its production to protect its trade partners from a similar predicament. Yet, overarching market hurdles like high inflation and economic recession complicate the situation.

The ripple effects of this scenario may present a challenge for the entire industry. Sales for graphics cards, including the GeForce RTX 4070, along with other GPU models from Intel and AMD, have hit a plateau. Consequently, TSMC has cut back on component and technology production, which directly impacts contracts and acquisitions of certain companies while influencing global technology and component demand. To avert a potential market catastrophe, tech firms may need to adopt strategies such as reducing the prices of graphics cards. While this could provide swift results, no official statements regarding this solution have been released by any company.

NVIDIA is wrestling with a daunting inventory issue, and a reduction in GPU production seems to be a viable mitigation strategy. However, the wider market's soaring inflation and economic downturn pose significant challenges. Collective industry action is necessary to ward off a potential crisis. Lowering graphics card prices might be a viable approach, but there are no official announcements on this front yet.