Why Are Graphic Cards So Expensive?

Graphic cards, also known as GPUs in technical terms, are the core of electronic gadgets like laptops or PCs. They allow a user to see the images on a computer screen which is not possible otherwise. They are responsible for displaying images, 2D or 3D animations, and games that use high-tech graphics on a computer. Although primarily needed by factories that engage in the production of electronic gadgets, they are in demand too by game lovers. But, the main concern is their soaring prices which make anybody think twice before buying them. Let us know ‘Why Are Graphic Cards So Expensive?’.

Why Are Graphic Cards So Expensive?

Why Are Graphic Cards So Expensive?

These cards were expensive since their inception due to the high cost of production but, the emergence of the Covid-19 pandemic added fuel to the fire. Because of it, the supply chain got disrupted and the imbalance between the demand and supply resulted in an all-time high price for the GPU market. Many factors are responsible for the increased prices, which are elaborated on further in this article.

Basic Reasons that make a graphic card so costly are: –

  • High Cost of Production – One of the most important reasons for it being so expensive is that manufacturers want to cover the cost they incurred in the production of these cards. To meet the expectations of the end-users & maintain the standards by using components only of high quality and the latest technology, the cost goes very high.
  • Used in many devices- Since these cards are versatile as they are used in laptops, computers, play-stations, and even in smart phones, their demand is always high irrespective of their production & supply in the market. As we all know, high demand always leads to high prices.
  • Become Obsolete Faster – Due to the new & upgraded versions coming daily in the market, the old version of the cards becomes obsolete at a faster pace as compared to other types of equipment.
  • Crypto Mining – The chase for crypto currencies by the miners has seen a surge in the recent past. The hunger for earning more & more Bit coins or any other crypto currencies pushed the miners to buy as many graphic cards as possible because many computers/devices are used simultaneously in crypto mining.
  • Tariffs put up by the U.S. government – Custom tariffs of 25% were imposed by US former president Mr. Trump on all the Chinese products using silicon chips forcing the sellers to increase prices and shift the burden to the end consumers.  

Impact of COVID-19 on the prices –

Obviously, the pandemic is responsible for making the situation worse in the following ways: –

  • Undue Advantages Taken by Scalpers – The people who hoard things in advance to sell them later at a higher price are known as scalpers. They created a monopoly in the GPU market and made a lot of profit during the pandemic by buying graphic cards in bulk & sell them at their desired prices to the needy buyers.
  • Global Chip Shortage – Due to the shutdown of factories during the lockdown phase, the production of semiconductors chips, which are used in almost every electronic item from a small-sized cell phone to a huge-sized space rocket, also came to a halt. As a result, graphic cards become expensive because the chips are also required in their production.
  • Increased Demand for laptops – All the offices had to shift to the work-from-home pattern during the pandemic. So, every employee was in a need of a laptop or a PC to continue his work from home. This resulted in increased demand for the graphic cards as well which disturbed the demand-supply equilibrium.

Can we expect the prices to come down in near future?

Unfortunately, the answer is No because: 

  1. It’s nearly impossible to fill the huge gap between demand & supply so fast even if the factories are reopened now. It will take a few years to make the products capable of fulfilling the increasing demands of people for these cards.
  2. Plus, the customs tariff is still in place and has not been lifted by the present US President as well.
  3. Many people have cultivated a habit of online shopping during the lockdown. So, ordering GPUs online has an added cost of shipping as well since the online retailers have to ship them from different countries sometimes because of chip shortages.
  1. Unforeseen & catastrophic events like drought in Taiwan and fire at Japan’s Renesas chips manufacturing plant in 2021 worsen the present situation as Japan & Taiwan are among the biggest manufacturer of silicon chips. This added to the global chip shortage.

The Bottom Line –

The reasons for graphic cards being so expensive are many but, the main contributors are the rupture of the demand-supply chain, the sudden outbreak of the coronavirus pandemic, imposition of high custom tariffs by the USA govt on Chinese goods, crypto mining, etc. In Feb 2021, Mr. Joe Biden ordered for conducting a 100-days investigation to look into the matter so, there’s a ray of hope that everything comes down to normal again.

Why Are Graphic Cards So Expensive?

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