NVIDIA's Bumpy Ride: A Q4 2009 Update

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There’s a lot to talk about with regards to NVIDIA and no time for a long intro, so let’s get right to it.

At the end of our Radeon HD 5850 Review we included this update:

“Update: We went window shopping again this afternoon to see if there were any GTX 285 price changes. There weren't. In fact GTX 285 supply seems pretty low; MWave, ZipZoomFly, and Newegg only have a few models in stock. We asked NVIDIA about this, but all they had to say was "demand remains strong". Given the timing, we're still suspicious that something may be afoot.”

Less than a week later and there were stories everywhere about NVIDIA’s GT200b shortages. Fudo said that NVIDIA was unwilling to drop prices low enough to make the cards competitive. Charlie said that NVIDIA was going to abandon the high end and upper mid range graphics card markets completely.

Let’s look at what we do know. GT200b has around 1.4 billion transistors and is made at TSMC on a 55nm process. Wikipedia lists the die at 470mm^2, that’s roughly 80% the size of the original 65nm GT200 die. In either case it’s a lot bigger and still more expensive than Cypress’ 334mm^2 40nm die.

Cypress vs. GT200b die sizes to scale

NVIDIA could get into a price war with AMD, but given that both companies make their chips at the same place, and NVIDIA’s costs are higher - it’s not a war that makes sense to fight.

NVIDIA told me two things. One, that they have shared with some OEMs that they will no longer be making GT200b based products. That’s the GTX 260 all the way up to the GTX 285. The EOL (end of life) notices went out recently and they request that the OEMs submit their allocation requests asap otherwise they risk not getting any cards.

The second was that despite the EOL notices, end users should be able to purchase GeForce GTX 260, 275 and 285 cards all the way up through February of next year.

If you look carefully, neither of these statements directly supports or refutes the two articles above. NVIDIA is very clever.

NVIDIA’s explanation to me was that current GPU supplies were decided on months ago, and in light of the economy, the number of chips NVIDIA ordered from TSMC was low. Demand ended up being stronger than expected and thus you can expect supplies to be tight in the remaining months of the year and into 2010.

Board vendors have been telling us that they can’t get allocations from NVIDIA. Some are even wondering whether it makes sense to build more GTX cards for the end of this year.

If you want my opinion, it goes something like this. While RV770 caught NVIDIA off guard, Cypress did not. AMD used the extra area (and then some) allowed by the move to 40nm to double RV770, not an unpredictable move. NVIDIA knew they were going to be late with Fermi, knew how competitive Cypress would be, and made a conscious decision to cut back supply months ago rather than enter a price war with AMD.

While NVIDIA won’t publicly admit defeat, AMD clearly won this round. Obviously it makes sense to ramp down the old product in expectation of Fermi, but I don’t see Fermi with any real availability this year. We may see a launch with performance data in 2009, but I’d expect availability in 2010.

While NVIDIA just launched its first 40nm DX10.1 parts, AMD just launched $120 DX11 cards

Regardless of how you want to phrase it, there will be lower than normal supplies of GT200 cards in the market this quarter. With higher costs than AMD per card and better performance from AMD’s DX11 parts, would you expect things to be any different?

Things Get Better Next Year

NVIDIA launched GT200 on too old of a process (65nm) and they were thus too late to move to 55nm. Bumpgate happened. Then we had the issues with 40nm at TSMC and Fermi’s delays. In short, it hasn’t been the best 12 months for NVIDIA. Next year, there’s reason to be optimistic though.

When Fermi does launch, everything from that point should theoretically be smooth sailing. There aren’t any process transitions in 2010, it’s all about execution at that point and how quickly can NVIDIA get Fermi derivatives out the door. AMD will have virtually its entire product stack out by the time NVIDIA ships Fermi in quantities, but NVIDIA should have competitive product out in 2010. AMD wins the first half of the DX11 race, the second half will be a bit more challenging.

If anything, NVIDIA has proved to be a resilient company. Other than Intel, I don’t know of any company that could’ve recovered from NV30. The real question is how strong will Fermi 2 be? Stumble twice and you’re shaken, do it a third time and you’re likely to fall.