Over the past few years, the world has been grappling with a shortage of semiconductors, which are materials that conduct electricity between metals and isolates. The most famous semiconductor is silicon.
If this concept is to be correlated with electronic devices, then the major semiconductors are processors and other micro-circuits that are present in almost all the devices that people use every day, from smartphones to cars.
Semiconductors set a world record in terms of sales in 2021. Electronics production also boomed, with millions of complex semiconductors being consumed by gaming consoles. In terms of production seeing all-time highs by major manufacturers like Nvidia, the number of GPUs produced soared to unseen levels.
Despite all this, electronics prices skyrocketed and manufacturers of related goods struggled to find semiconductors.
Crypto Miners: Guilty or Innocent?
It has become customary to not only mention, but to blame cryptocurrency miners for the global shortage of GPU cards and semiconductors. To their credit, miners would buy vast numbers of graphics processing units, sometimes emptying entire stores at once.
Some countries that are missing the card are already fighting against cryptocurrency mining.
At the same time, the creator, himself, does not take such a fixed position. AMD CEO Lisa Su said in June 2021 that miners are not to blame for the lack and even complete absence of some GPU cards. She said that their impact on the market is usually minimal and does not exceed 5%-10% of total demand.
Andy Long, CEO of WhiteRock Management, a digital asset technology company based in Switzerland, agreed with Su that mining is not entirely to blame:
“GPUs are still in high demand to power Ethereum and other altcoin mining. Nvidia’s published estimates for the percentage of traditional GPUs going to miners are in the single digits, but the true figure is likely to be higher – somewhere in between. Somewhere around 20%.
Another important factor behind the shortage of GPU cards is the COVID-19 pandemic. The supply chain showed that because of the many employees working at home, the number of buyers increased so much that the graphics processor – a vital component in home computers – disappeared from sales.
However, the state of miners’ appetite for GPU cards began to change markedly earlier this year.
Firstly, the change is due to Ethereum (ETH) switching to Proof-of-Stake (PoS) protocol, which is due in the summer of 2022.
Currently, the Ethereum blockchain is maintained by miners to solve cryptographic puzzles and subsequently receive a reward, the value of which is calculated according to the hash rate of each individual GPU.
This is called Proof of Work (PoW). As Ethereum switches to the new protocol, miners will no longer be needed as crypto holders will validate block transactions based on the number of their tokens.
Since GPU cards will not be required for Ether mining, their demand will drop drastically once Ethereum 2.0 takes effect.
This change in demand is already very noticeable. In the first two months of 2022, sales of Nvidia’s GPU cards are down 75% compared to 2021 as large mining companies stop buying such cards. This also means that Nvidia will be forced to redirect GPU cards to the gaming sector and cut prices.
There are other reasons for the fall in prices. Since April this year, the United States has reduced import duties on supplies of goods from China by 25%. The US is one of the main players in the GPU market, where companies such as Nvidia, AMD, and Intel operate, so tariff cuts have driven down GPU card prices.
Buyers’ interest in cards is also declining against the backdrop of people slowly returning to offices after two years of remote work and the need for a modern computer at home to work comfortably.
“Dedicated mining cards are also a big part of the picture now,” Long said, “these are cards with no video output that are solely for data processing. We first saw them in 2017 as dedicated Pascal architecture cards like the P106 and P104.” Now the Nvidia CMP range clearly targets miners – with some dedicated high-end SKUs only available to those willing to order in the tens of millions of dollars. The main purpose is for simple supply and demand as well as with “HPC” type applications where people use gaming cards for rendering and AI tasks.
the loss is not over
The solution to the GPU card shortage problem seems simple: Producers need to make more cards to meet demand. However, in practice, this is not the case. One of the problems is the supply of silicon wafers, which are used to make chips. In 2019, the demand for wafers was low, but in 2020, as the whole world went into quarantine, the demand for computers, tablets, TVs and other devices requiring chips increased sharply. The demand for wafers has soared that Sumco Corp., the second largest maker of wafers, said its production is booked until 2026.
However, the production of processors, GPU cards and memory cards requires more than just silicon wafers. After the war broke out in Ukraine, world manufacturers of semiconductors faced a shortage of neon, which is necessary for the operation of laser systems used to make chips. The problem is that two Russian companies, Ingus and Kryon, produce 45%-54% of the world’s supply of neon-containing gas mixtures. How the global manufacturer will find a way out of this situation is not yet clear.
In March 2022, some experts believed that the semiconductor shortage could end in 2023. In particular, the head of Micron Technology, one of the largest producers of computer memory and computer data storage, believes that starting this year, manufacturers will be able to manufacture a significant stock of chips as well as supply Make arrangements. In 2023, there will be no such problem and global companies will be able to reach the level of mass production that they had before the pandemic.
But the situation in Ukraine could prevent this correction and double the deficit of chips, which could lead to a renewed rise in prices. Recently, Intel claimed that it continued to monitor supply disruptions while trying to find alternative sources of neon. While Samsung said that some factories may face shortages, Dutch ASML, which produces scanners for the printing chips used by TSMC and Samsung, did not hide its concerns, saying that in the next two years , the producers may face shortage of key machinery. Device.
So what will happen to semiconductors, and therefore of devices, in the near future? The GPU market may possibly recover from the COVID-19 pandemic and dwindling demand for miners, but global events are once again putting manufacturers to the test with a shortage of components to produce the devices. Of course, it’s worth believing that businesses will search for raw materials and build new supply chains, but no one can predict how quickly that might happen. In any case, the shortage of semiconductors continues, and the price of GPU cards will rise again, but in this case, the miners will have nothing to do with it.
