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When Nvidia’s GTC conference kicks off this week, the sessions will be filled with some of the typical discussions on technical topics like CUDA architecture, data-centric AI or simulating quantum computers. In the background, though, there will be more whispers about very untechnical areas like central banks, supply chain stress, unstoppable inflation and invasion. This is a far cry from just a few years ago when the only chatter about guns was about the virtual models in the latest first person shooter.
The chips that were once only noticed by gamers and AI scientists are now key components in many of the most essential parts of the economy. GPUs are the highest-profile circuits sold at the highest prices and they’re now a kind of flagship for the entire industry. When they are hard to find or rising in price, everyone notices.
The effects can be seen browsing through the shelves. For more than the last year, gamers have been complaining loudly about how hard it can be to find a GPU card, spawning videos laced with bitter humor. On Twitter, many curse GPU scalpers and GPU shortages.
Why it’s not raining GPUs
Some suggest the drought is easing, if only because stores aren’t completely empty. Still, many of the listings for Nvidia graphics cards at Amazon at this writing include little notes in red warning that only a few are left in stock. Other vendors like CDW have many cards listed as backordered for 4-6 weeks. Currently, used prices on cards like the RTX 3070 are often just a few dollars below the list price for new ones.
If the problem were limited to just the gamers who had to wait a bit longer to stroll through an elaborate virtual world at 60 Hz, that would be one thing. But these shortages are affecting many other industries. Car manufacturers can’t get all of the chips they need to make the latest models and prices are skyrocketing for anything that rolls. The Mannheim used car index in March 2022 was running 22% higher than one year before.
These supply shocks cascade through the economy. If workers can’t afford a car, they can’t get to the job. If they can’t get to the job, assembly lines shut down. Prices jump as supply can’t keep up with demand. And the process repeats and repeats in what no one wants to turn into an infinite loop that bricks the economy.
“The chip shortage is just not getting any better and it won’t for a couple of years,” said Maribel Lopez, an analyst at Lopez Research. “There’s going to be quite an increase in the processing power that we’re going to need to do certain things like run the metaverse or guide autonomous cars. There’s a tremendous demand for GPU cycles and it far outstrips anyone’s ability to supply it.”
Inflation is just one of the many GPU-related topics raising the stress level of the world. Part of the reason that demand for the GPUs is so high is that some cryptocurrencies like Bitcoin or Ethereum reward the first to solve a worthless mathematical puzzle. Nvidia’s GPUs are some of the fastest options to find a solution and so any bump in Bitcoin, Ethereum or a number of other cryptocurrencies leads to a bump in GPU demand.
This so-called proof-of-work might be better called proof-of-wasted-energy, though, and many are wondering if it makes sense for society to pour so many joules into what was supposed to be a low-cost, frictionless means of settling debts. Environmentalists point to the carbon footprint and anyone who must compete for electricity to, say, cook or heat a house needs to pay more.
For its part, Nvidia has tried to limit these side effects. Some of their newer models are tweaked to make them dramatically slower for cryptocurrency applications but still quite zippy for gamers or AI researchers. The hackers, though, search for weaknesses and it’s hard to keep the market forces at bay, especially when the GPUs are designed to be easily reprogrammed.
Did COVID-19 drive GPU prices?
Another wrinkle is the future of the COVID-19 pandemic and the world’s response to it. Some have wondered how much the pandemic drove GPU prices. More parents and children working and learning remotely meant more purchases of PCs and laptops. Will demand fall away if the world goes back to an office? Or is this a new pattern for GPU demand?
A recent outbreak of a new variant of COVID is also haunting the electronics industry and shutting down factories in Schenzen. Apple’s main supplier, Foxxconn, shut down some assembly lines on April 14th. Will similar caution affect GPU supplies? No one can be certain.
One tricky topic is what might happen to Taiwan Semiconductor Company (TSMC), the world’s leading chip manufacturer that produces some of Nvidia’s best chips, if a shooting war were to break out between China and Taiwan. Just a few months ago, no one imagined that such a battle might start, but then just a few months ago few believed that Russia would be sending waves of tanks to invade Ukraine.
The real war bursting through the proscenium wall creates a bit of an impedance mismatch for the gaming community. While the industry has long devoted an impressive level of attention to even the smallest details in order to recreate much of the feeling of combat, somehow it’s different when there are real tanks and real AK-47s.
Gamers, of course, are well-educated about the patrol-level tactics in the Ardennes Forest thanks to titles like “Call of Duty WWII.” Shadow War DLC Pack 4 of the game sends the user on a mission to “uncover the secrets of a classified Axis weapons facility”, but this doesn’t prepare them for finding a way to save the fab lines that make the chips that once only they loved.
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