Nvidia asking US gov to exempt GPUs from tariffs

It would be a positive overall if GPUs were exempt though. Right now Nvidia can get away with pocketing the difference, but in the future things might be back to normal with pricing and availability and we might see prices adjust. I just feel like there is no negative to GPUs being exempt from tariffs.
 
I'll grant them that the point of tariffs are to inflate prices of foreign products to entice buyers to shop domestic, meanwhile we still have zilch in the US.

However, I 100% agree that Nvidia will just pocket the difference. a 25% tariff and supposed shortages wouldn't cause revenue to multiply by 3+. Covid causing skyrocketing demand? ok.. but how will cutting out the tariff somehow increase chip production when these companies are already seeing record shattering profits (that they could reinvest)? I don't see this as an actual solution.


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workshop35 said:
https://www.pcmag.com/news/nvidia-urges-us-to-exempt-graphics-cards-from-trump-era-tariffs

If this went through, do you think cards would actually sell for less.....
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It's a large complex system. Generally, if the cost to produce something falls, the sell price to maximize profit will also generally fall as well. Again.. large complex system (and also filled with many places for humans to make decisions based on this large complex system), so definitely not a hard rule. So i guess what I'm trying to say is 🤔🤷‍♀️.
 
The OEM's like Asus need this for their cards to be price competitive with Founders Editions. It's OEM cards that are 25% taxed, not nVidia's. The price in OEM cards would likely drop immediately, if you can find them that is. The knowledge that the buy price is less would prompt scalpers to quickly dump their current inventory. Obviously this would be a good thing.
 
I don't think it'll change anything. The supply issue is still there, tariffs or not.

However I'm all for removing tariffs in general. It didn't work in the dirty 30s and it doesn't work now.
 
A seller of luxury goods wants an import tax break on said luxury goods?
Who would this benefit? Not the end user that is for sure. Nv might pocket a bit, and the middle men would pocket the rest, and the scalpers will still be charging consumers 3x or more MSRP which is not going to go down because of a tax exemption.

If I had a say, and I don't, I would say no to this.
 
GoodBoy said:
The OEM's like Asus need this for their cards to be price competitive with Founders Editions. It's OEM cards that are 25% taxed, not nVidia's. The price in OEM cards would likely drop immediately, if you can find them that is. The knowledge that the buy price is less would prompt scalpers to quickly dump their current inventory. Obviously this would be a good thing.
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OEM like Asus are charging way more then the 25% tariff. None of the AiB are competing against the Nvidia cards cause they do not exist.
 
justin_43 said:
It would be a positive overall if GPUs were exempt though. Right now Nvidia can get away with pocketing the difference, but in the future things might be back to normal with pricing and availability and we might see prices adjust. I just feel like there is no negative to GPUs being exempt from tariffs.
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Prices are NEVER going back to normal. They may come down a bit, but we should expect 30% increase in MSRP across the board for future gens.
 
Gorankar said:
A seller of luxury goods wants an import tax break on said luxury goods?
Who would this benefit? Not the end user that is for sure. Nv might pocket a bit, and the middle men would pocket the rest, and the scalpers will still be charging consumers 3x or more MSRP which is not going to go down because of a tax exemption.

If I had a say, and I don't, I would say no to this.
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Not an import tax, the Trump administration gave all electronic imports from China a 25% tariff in his last year in office. Tarifs are different than Import Taxes and it is an important and not insignificant distinction. It would bring MSRP back down to pre-tariff levels, I know the Biden administration has said they are working to remove the tariffs that were put in place on China but not because of Electronic prices and availability but because it is killing American Algraculture while simultaneously spurring large trade deals between China and Russia who is filling that gap from when China placed their retaliatory tariffs on US imports. Overall those tariffs will have cost more than then ultimately made the government due to all the bailouts they are having to hand out to the stateside industries that the tariffs have impacted, it would have been different if it actually spurred companies to start up new manufacturing in the US, and if COVID hadn't have happened it very well may have but ultimately it didn't pan out.
 
harmattan said:
Prices are NEVER going back to normal. They may come down a bit, but we should expect 30% increase in MSRP across the board for future gens.
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I though that before 3080. I figured there was no way 3080 would be below $1K. It was $700 for FE. That statement of 30% price jumps for next gen isn’t an absolute.
 
harmattan said:
Prices are NEVER going back to normal. They may come down a bit, but we should expect 30% increase in MSRP across the board for future gens.
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The question is, what is normal? I once bought the highest end GPU on the market, a Geforce 3 TI500 for under $350.

But that was a different time. Video cards were less complex than they are today, and there were more competitors on the market. That and $350 in October 2001 dollars is closer to $550 today just due to inflation.

Right now what is driving up pricing is that demand is outpacing Silicon Fab production capacity, at least at the latest generation production nodes. This is driven by any number of things from the fact that Mobile and IoT are growing faster and all need chips, that products that never used to have chips in them now do, and do so more than ever, and yes, also due to mining (though it is less of the problem than many think)

Silicon fabrication capacity just hasn't kept up with demand, and building these plants is very expensive and takes years.

So, do I think a top end GPU will return to $550, the modern equivalent of the price I paid for my top of the line Geforce 3 TI500 in 2001? Absolutely not. For a few reasons.

First, as mentioned before GPU's are much more complex today. They take more design time, beefier cooling, more advanced multi-layer boards, and power stages, etc. etc. It is much more expensive and difficult to fabricate them than it once was, even more so as we are approaching the limits of silicon with smaller and smaller node sizes. So, even if silicon fab pricing returned to where it was back in 2001, GPU's would have to be more expensive than they were then to make them financially viable for businesses that make them. There is more to the cost of a video card than just the silicon price of the GPU itself.

That said, I do expect the pricing to come down a bit once the dust has settled. Eventually the silicon fab supply and demand mismatch will become more reasonable, and the cost to manufacture a video card will come down significantly. It won't come down overnight though.

Businesses (at least successful ones) don't price their products based on what it costs to manufacture them (so called, cost+ pricing). This happens in some highly customized and low volume industries, but in mass production pricing is almost always set at what the customer is believed to be willing to pay. The downside with this supply crisis is that GPU customers have shown themselves to be willing to pay MUCH more than the likes of AMD, Nvidia and their board partners could ever have dreamed, and they are going to do everything they can to try to keep those nice large juicy profit margins as long as they can.

So what can change this and bring the pricing down? Well, it would have to be something that changes the typical consumers willingness to spend. IN this generation it has been driven up by a lack of alternatives. If more alternatives exist, then the willingness to spend may come down.

For instance, market supply analysis might do it. Once silicon capacity becomes available again the likes of AMD and Nvidia may determine that there is value in economies of scale, and that they can make more money by manufacturing a larger volume of products and pricing them lower in order to make them sell in larger quantities.

Also, competition can do it. AMD is finally within range of Nvidia on the performance front, and it is not impossible to picture a future price war to gain market share. Intel is also entering the market. Certainly only with lower end stuff right now, but that might not be the case forever. Research on markets suggest that the most consumer friendly ones with the best pricing have 3-5 players in them. 3 gets us close, and in a much better place than the partial duopoly we've had for years.

What I think is likely is that fab capacity will slowly increase, and the next generations equivalents of the 6800xt, and 3800's will come down in price a bit, maybe to the $800 level eventually. I think this will be the price point for normal consumer level high end parts in a couple of years time. The likes of AMD and Nvidia are not soon going to forget that some customers are willing to pay handsomely for the baddest model on the block though. I think we will see low volume halo models at current pricing, or maybe even higher. It really all depends on the costs involved in bringing them out. If your normal high end product sells for $800, how much engineer time does it make sense to spend on a low volume halo model, and what volume do you need to make that effort make sense financially. There are so many moving parts on this. Whatever they do, they will try to keep naming and branding different on these extreme low volume halo models in order to not piss people off. Nvidia may reintroduce the Titan brand as a consumer product, or may use some new branding all together to try to trick the market into believing that this is something completely different, not just the same top bin as in previous gens priced higher.

The thing is, this comparison becomes difficult to make as there is nothing absolute from generation to generation.

What winds up being an RTX 4080 is by no means a fixed thing. GPU manufacturers can, and do shuffle around the marketing names for things to their advantage from generation to generation. A chip bin level that at one point might have been a GTX 960, might in future generations be labeled as a 4080 or something like that. Generation to generation performance simply is not absolute. There is nothing you can point to that physically makes a 3060 a 3060, or a 3070 a 3070, etc. etc. It's just what Nvidias marketing department decides to label them when the time comes to go to market.

Thus, generation to generation price comparisons become very unreliable and pointless. Is a 3090 today the 30 generations equivalent of the 700 generations Titan? Maybe. But maybe the 3090 today is instead the equivalent of that generations 780 or 780ti. There are no rules. The manufacturers make them up as they go along.

Buyers will certainly have to see a performance increase from generation to generation in the equivalent naming pattern (so 4080 will have to be faster than 3080) or customers will be pissed. But how much faster? There are no rules.
 
Gorankar said:
A seller of luxury goods wants an import tax break on said luxury goods?
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Video cards are not Luxury goods. No idea who started that mentality regarding them.

Definition: Luxury goods, also called superior goods, are products with a demand that is directly related to consumer income exponentially.

A luxury Video Card would cost $15,000. Prices are high but it's definitely not exponentially high. Google exponents if you forgot junior high math.

harmattan said:
Prices are NEVER going back to normal. They may come down a bit, but we should expect 30% increase in MSRP across the board for future gens.
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Once demand and supply balance out, prices will come back down.

More fabs are being built, many more. It's only a matter of time. What we have now is the side effect of just-in-time global supply chains being disrupted by a global pandemic that didn't have enough redundancy, plus tons of ill-informed people refusing to vaccinate. The pandemic is going to drag on on for many years due to the aforementioned people. Supply chains should catch up before then, especially if all larger businesses are required to have either vaccinated or weekly tested employees.
 
GoodBoy said:
Definition: Luxury goods, also called superior goods, are products with a demand that is directly related to consumer income exponentially.

A luxury Video Card would cost $15,000. Prices are high but it's definitely not exponentially high. Google exponents if you forgot junior high math.
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I assumed it meant that higher income people will buy disproportionately more luxury goods, not necessarily that any one good will price disproportionately more. Also not sure exponential is a requirement in the definition (just as long as it grows more than linearly).

IE. People making 40k/year may buy 1 GPU. People making 80k/year might by 4 GPUs (for their whole family). People making 120k/year might by 9 GPUs (each kid needs a render farm for their university 3d modeling course).

https://en.wikipedia.org/wiki/Luxury_goods

Correct me if im wrong.

GoodBoy said:
Once demand and supply balance out, prices will come back down.
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I think I agree that prices will go down, but I dont think there is a guarantee of that. Will also need to take into account the higher inflation rate, but I dont think that will have too much effect compared to current GPU crazy pricing.

IE. At 6% yearly inflation $424 2022 USD will be valued at $400 2021 USD.

It's also interesting that traditionally people compare GPU's from one generation to the next with an assumption of a certain performance increase every generation for a certain price bracket (for GPUs we have a relatively high expectation for growth of performance/price. CPU performance/price increases have already gotten much more modest since intel sandy bridge) .
 
Mode13 said:
I'll grant them that the point of tariffs are to inflate prices of foreign products to entice buyers to shop domestic, meanwhile we still have zilch in the US.

However, I 100% agree that Nvidia will just pocket the difference. a 25% tariff and supposed shortages wouldn't cause revenue to multiply by 3+. Covid causing skyrocketing demand? ok.. but how will cutting out the tariff somehow increase chip production when these companies are already seeing record shattering profits (that they could reinvest)? I don't see this as an actual solution.


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When you skip entry level and pad out your current gen with the highest profit wafer silicon, it tends to be a tidy sum.
 
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