If you were a gamer looking for a GPU upgrade from mid-2017 to mid-2018 you probably spent a few months angry at the GPU market. GPU prices were inflated through most of this period, including a several-month stint where high-end graphics cards were literally selling for more money than entire pre-built gaming PCs. We knew the crypto bubble had burst when GPU prices started coming down, but it wasn’t immediately clear just how badly the market had overheated.
New data from Jon Peddie Research suggests the entire GPU market has been suffering from the mother of all hangovers. The firm released its quarterly data for Q4 2018, allowing us to construct a two-year chart for how much the market has shrunk in the past 24 months.
Note: The data below is confined to the add-in board market, which is strictly between AMD and Nvidia. Intel’s GPU market share in systems that ship without a dGPU is explicitly not considered here.
The tremendous surge in GPU prices we noticed back in Q1 2018 is well attested in the historical record. Less clear, until now, was just how ugly the fall off actually was. Q1 2017 kicked things off with hard declines in sales, markedly stronger than typical seasonality. Beginning in Q2 2017, however, this trend began to reverse. Sales grew exceptionally strongly in both Q2 and Q3, with only a slight seasonal decline in Q4. Q1 2018 should have reflected a seasonal decline. Instead, the market grew briskly.
The Q2 2018 decline was large, but didn’t necessarily worry investors since crypto was a known bubble, and the yearly sales reports for the entire market still showed a small net increase relative to Q2 2017. In retrospect, this wasn’t a return to business-as-usual, but the beginning of a mammoth crypto hangover.
Sales fell further in Q3 and Q4, despite the fact that Q3 typically shows the strongest gains relative to Q2 in the normal seasonal cycle. According to Jon Peddie, sales in a typical Q3 period rise by an average of 14.9 percent. Last year, they fell 19.2 percent instead. Typical Q4 seasonality predicts a decline of 2.3 percent, not the 10.7 percent that actually occurred.
If you chart the full two years of declines, the GPU market at the end of Q4 2018 was roughly 71 percent the size it was in Q4 2016. The cryptocurrency hangover is substantial. The really ugly thing about these figures is that the GPU market for older cards — even brand-new cards — was actually excellent in Q4 2018, particularly if you were in the market for an AMD RX 570 or RX 580. Nvidia’s GTX 1060, 1070, and 1080 cards were also very good deals at multiple points. Despite this, Q4 2018 sales slumped hard.
In its last conference call, Nvidia stated it believes its GPU business decline will bottom out in Q1 and improve thereafter. We’ve seen some analyst predictions that the recovery and massive inventory correction will continue into Q2 before potentially improving in the back half of the year.