Based on a report from DigiTimes, it looks like the recent decline in PC demand may affect NVIDIA's upcoming GeForce RTX 40 graphics card lineup as GPU demand has hit a new low & is expected to get worse in the coming months.

The report states that NVIDIA has cut down its orders of TSMC 5nm wafers which are expected to power their next-gen GPU lineup. The report mentions that the PC and electronics market has slowed down rapidly and Apple is also one of the big 3 customers of TSMC who wants to revise their wafer order given the current scenario. But for NVIDIA, the slowing PC market is not even the biggest concern, it's the recent GPU flood.

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Meanwhile, while AMD has cut down its 7nm and 6nm orders which power its current CPU/GPU lineup, they haven't revised their 5nm wafer orders which means the company remains optimistic about its Zen 4 and RDNA 3 product lineup coming later this year.

In addition, NVIDIA has paid a huge amount of prepayment to obtain more process capacity below 5nm since Samsung’s 8nm return to TSMC. However, the decline of the mining boom came quickly and quickly, and the terminal channel and graphics card manufacturers were full of stocks. The large number of second-hand cards released to the market, and the less-than-expected demand for gaming PCs, forced NVIDIA to adjust its plans and indicated to TSMC that it would delay and reduce the first wave of orders.

In addition, although AMD has reduced orders for 7/6nm by about 20,000 pieces, its 5nm PC and server orders have not been revised, and they are willing to accept price increases. Therefore, TSMC has little response to this.

As reported a few weeks back, the crypto crash had resulted in a huge flood of used graphics cards entering the reseller and used marketplace. These cards are available for much cheaper than their retailer-listed prices and most gamers who were waiting for a new solution for their PCs are going to buy these GPUs, even though we advise them not to. Not only is there the existing flood but the NVIDIA GPU inventory that is comprised of current-gen Ampere graphics cards is vast.

NVIDIA wants to get rid of this inventory to make some space for their next-gen GeForce RTX 40 series lineup but currently, they have two cards playing against them, the aforementioned decline in the PC segment and the flood of used graphics cards from the crypto segment. So it's a pretty bad outlook for NVIDIA at the moment.

NVIDIA wants to cut orders, but TSMC is unwilling to make concessions. At present, the adoption of the 5nm next-generation RTX 40 series can delay the purchase of goods for one season, or even to the first quarter of 2023, but NVIDIA is responsible for finding other vacated production capacity. Customers take over to make up, minimizing the impact.

Furthermore, the report states that NVIDIA already paid TSMC to secure a vast supply of 5nm wafers early on. We had multiple reports on how NVIDIA spent Billions of Dollars to acquire 5nm wafers from TSMC last year but that might not have gone as NVIDIA planned as TSMC is not willing to make concessions to the green team and the best they can do is hold back the supply for at least 1 quarter which is likely why we were hearing reports of a delay for the GeForce RTX 40 lineup. The possibility remains that the launch may even be moved to Q1 2023. NVIDIA will also be responsible for finding replacement customers for any vacated production capacity.

Now a positive outlook for all of this would be that NVIDIA may actually have a good supply of next-gen GPUs at launch (when they launch) and we can also expect MSRP-level pricing considering the supply issues have all but vanished and the crypto boom has ended for good.

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