I was wrong
and it's terrible
at the start of last year I predicted
computer hardware prices would rise and
that they would be sold out everywhere
and yep over a year later that has
basically come true but no no don't
congratulate me because while everything
I said was true I wasn't even close to
being correct about why there is still a
shortage of PC parts and a broader
Global shortage of semiconductor
products
but now I've talked to some people high
up in the industry off the record of
course do you know how it is and I
finally got the real reasons why it is
so hard for gamers to find the CPUs and
gpus they need to get them FPS and this
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for those of you living under a rock
currently there is a massive Global
shortage of semiconductors and
everything that they're used to make so
CPUs graphics cards cars even fridges
last February when I predicted there
would be a global shortage of PC
components my reasoning was that covid
and the restrictions it caused would
interrupt manufacturing facilities and
the logistics companies that they rely
on it was a fair guess and lots of smart
people made the same guess with
companies like apple lowering their
projected revenues
but then in reality supply of
semiconductors was only briefly
disrupted and for almost all of 2020
they have been pumping out more CPUs and
gpus than ever
so uh why are the ryzen 5900x and RTX
3080 weapons grade unobtainium then the
real honest to goodness truth guys is
because you keep buying them all when
people got stuck working from home that
old e-machines that they hadn't used in
years suddenly didn't cut it I mean it's
reasonable to think that in one
household Junior could be attending a
lecture the misses could be keeping her
elderly parents company on zoom and Pops
could have suddenly gotten into day
trading or nfts or whatever all at the
same time this has led to a trend
reversal that I don't think anyone saw
coming 2020 was the biggest growth year
in the PC market in a decade with a
whopping 20.6 percent increase in U.S PC
sales and Q4 and fun fact Chromebooks
are actually tracked separately and
those reported a staggering 200 percent
increase in shipments year over year to
add even more fuel to this fire
Enterprises have had to heavily invest
in their cloud service with providers
like Zoom Microsoft with teams and slack
needing to seriously beef up their data
centers to keep up with everyone all of
a sudden working and meeting from home
that's a lot of video data and while you
might think oh well okay Microsoft needs
a new server how does that affect me the
truth is that your ryzen desktop chip is
made of the same chiplets as an epic
it's just down to how AMD glued them
together the two hardest hit sectors
though are automotive and graphics cards
and we'll start with Automotive because
it's simpler and because it's the better
example of how I was kind of right
automakers currently are being very
vocal about having to stop their
assembly lines because they can't get
enough computer chips to go in their
cars but this is actually largely a
problem of their own making back at the
start of the pandemic most automakers
cut their forecasts and reduced their
orders assuming that demand for new cars
would drop and it did temporarily until
all of the sudden no one liked riding
the bus with an infectious disease on
the loose and demand came roaring back
by the time they realized this though
the fabrication capacity that they had
released had already been sold to
someone else
so okay I wasn't right I was just wrong
with the automakers now for gpus well
it's the miners right let's all say it
together guys
you minors you minors you might
have known okay hold on actually nobody
that we talked to actually agreed that
miners were the underlying problem like
to be clear they're not helping the
situation and no one could say for sure
if their gpus are going to Gamers or not
but everyone we talked to is pretty sure
that the majority of gpus are currently
ending up in Gamer's hands it's just
that way more people want gpus than
usual and there is some data to back
this up valve generously makes their
concurrent steam user count public and
if we look whoa
if we look at this it absolutely
explodes at the start of the pandemic
and then just as suddenly jumps again
after the summer when the second wave
forced everyone indoors then at the same
time a new generation of gpus that was
finally a solid upgrade from nvidia's 10
series along with a new generation of
consoles showed up after seven long
years and we shouldn't be surprised in
fact we should actually be grateful that
the new consoles didn't have a ton of
compelling launch titles this could have
been even worse David now you might not
realize this but Nvidia and AMD have to
guess how many gpus that they'll be
selling months or even a year before the
first one hits a consumer's hands and
while they were able to assume that
demand for ampere and big Navi would be
a bit higher than previous launches you
know based on Prototype testing data
being very promising and historical
sales numbers for premium cards they got
it wrong way wrong
I mean you might even remember Jensen's
saying in the lead up to the launch of
the RTX 3070 the 3080 and 3090 have a
demand issue not a supply issue the
demand issue is that well it's much
greater than we expected and we expected
really a lot
so uh okay you might say why don't they
just make more
well because again I'm kind of right
demand issues cause
supply issues and there are only two
companies in the world that can make
this kind of bleeding edge Tech Samsung
foundries and Taiwan semiconductor
manufacturing company or tsmc under
normal circumstances they would be
operating at roughly 80 to 90 percent of
their capacity which strikes a nice
balance between making enough
semiconductors to stay profitable while
offering enough downtime to perform
maintenance and extend the life of their
equipment if AMD or Nvidia had higher
demand for their gpus they would just
buy up some of that 10 to 20 idle time
pump out a couple million more chips and
everything's hunky-dory
but the current situation means that the
Fabs are already running at a hundred
percent capacity so companies are
getting exactly what they pre-booked and
not a way for more
this is why you're seeing some parts of
the industry that are faring much better
stock wise than others finding an iPhone
for example no problem even though it
uses tsmc silicon
but that's not because Apple has some
kind of extra pull because of their size
they've just been selling fewer iPhones
for a couple of years now and the
pandemic didn't change that same thing
for Intel you can buy their CPUs at MSRP
no problem but they've also seen less
growth over the last year so their
demand ended up more in line with their
forecasts now obviously then given the
choice I'd rather be in Nvidia or amd's
shoes even if it does mean that gamers
are mad at me which raises the question
then is there even a strong motivation
to fix this problem I mean high prices
are good for Texas energy suppliers
right
well Nvidia AMD and tsmc may have all
reported record-breaking revenues but if
capitalism has taught me anything it's
that leaving any amount of potential
sales on the table is straight up
unacceptable I'm sure tsmc would love to
sell 20 more Wafers this year
so why is it taking so long it's because
they're trying actually but it takes a
lot of money like tens of billions of
dollars a lot of money tsmc has plans to
build a 35 billion dollar plant in
Arizona upping their spend from 12
billion after Joe Biden called for 37
billion in federal funding to address
the global chip shortage as for Samsung
well they've also got plans for a 17
billion dollar Fab in the U.S by late
2023.
2023
so yeah these plants obviously won't be
done anywhere near soon enough to stop
the shortage of chips today but then
even if they came online tomorrow there
are only one part of the chain after AMD
or Nvidia get the Wafers from tsmc or
from Samsung a lot still needs to be
done to turn those into a graphics card
you can plug into your system they need
to be tested and sorted for their
capabilities they need to be forwarded
to board Partners who need to
manufacture pcbs assemble the cards cue
see them package them you guys get the
idea and the thing is all of those
factories are also at capacity so every
single part of this entire supply chain
I mean even the guys who make the
capacitors that go on the ports needs to
be upgraded which means that these
shortages will continue for quite some
time
how long well we tried to find out but
unfortunately there seems to be a
crystal ball shortage as well and no one
even off the Record was willing to make
a solid prediction
one good gauge that you can use at home
though is the used market right now if
you were to use only retailers as an
indication getting a 5th gen AMD CPU
looks pretty difficult but the thing is
the price is on eBay are only a touch
more than MSRP what that indicates is
that supply and demand for these have
nearly equalized so it's likely we'll be
seeing them in stock regularly pretty
soon as for RTX 3000 Series gpus
big yikes it's estimated that graphics
cards are being shipped anywhere from 10
to 30 percent below demand and it's
estimated that it will take three to
four quarters for the supply of
semiconductors to catch up and an
additional one to two quarters until
inventories are back to normal levels so
yeah you might be lucky to get a GPU at
MSRP this time next year that is unless
maybe big crypto crash leads to big
sell-off
of course there's another burning
question in all of this I mean didn't
basically the entire tourism industry
get laid off aren't we in the middle of
a huge recession why is there this
unprecedented demand for 800 graphics
cards
well here's the thing normally during a
recession the heaviest hit sectors are
Goods producing Industries and
construction people make less money they
can't buy as much stuff pretty simple
but the pandemic recession is totally
different here in Canada our economy has
already returned to about 95 percent of
where it was pre-pandemic which sounds
pretty good and explains why people have
all this disposable income to buy
graphics cards
but it's got a dirty secret economists
are calling it a k-shaped recovery and
what that means is that high earners and
those who are able to conduct their
business remotely have done great and
we've been fortunate enough to be part
of this group but because restaurants
hospitality and entertainment have had
to remain closed that last five percent
of the economy has been absolutely
destroyed so in a nutshell this means
that Johnny big bucks is now making more
than ever but can't go out and blow it
on foie gras and 100 cocktail that
includes a story about the bartender
getting inspired by the forest in Tofino
instead Johnny is padding his savings
account while the bartender is moving
into his or her parents basement so if
your biggest problem right now then is
that you can't buy a GPU at MSRP maybe
consider just waiting buying it later
when it's MSRP and spending some money
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thanks for that
bang bang okay everyone's way off we
should practice that then okay we got
this okay