Nvidia’s Ultimate Play
Updated: Nov 23, 2020
Introduction – Let Them Eat Cake
11/23/20 Update: It has now come to light that Nvidia has been directly selling large quantities of Ampere ASICs to mining firms since Ampere's launch. These firms write their own bios', drivers, and order their own coolers. This explains the conflicting shipment-delivery numbers, and also points to Nvidia using mining firms as a "release valve" for their Ampere stock anytime supply begins to meet demand in retail.
11/8/20 Update: Though the 3080 numbers at the end of October were lower than anticipated, the 3070 launch proved to not be a "paper" one, and indeed 3080s & 3090s are becoming more available in early November based on input from multiple contacts in retail: https://twitter.com/mooreslawisdead/status/1325550719882104834
10/13/20 Update: As covered in a recent MLID video, the "Key Component" Nvidia controls is indeed GDDR6X chips (they've had many millions of chips stockpiled for months), and Nvidia will be shipping 300K+ 3080s & 30K+ 3090s around Big Navi's launch. Tons of 3070 stock too at the end of October. Right on schedule...
9/16/20 Update: As covered in a recent MLID video, I have been made aware of an ~$50 Rebate being provided to AIBs during September for each card sold. This expires in October.
9/3/20 Update: As covered in Broken Silicon #68, I have concluded that the average BOM of an AIB RTX 3080 is ~$600 based on input from multiple AIBs. Thus the FE is being sold at ~10% margins at most, and any price drops from the $700 MSRP will be hard to swallow.
I will start this post by getting straight to the point – I have evidence that suggests Nvidia is trying to have their cake and eat it too when it comes to the perceived price/performance of their new Ampere RTX 30-Series lineup. They are attempting to appear to be launching a lineup that is priced lower than their much maligned Turing generation, but in reality these things will cost far more than they are letting on for the overwhelming majority of shoppers this fall.
To be clear – most of my information comes from an industry veteran. This is a source who has never given me information that wasn’t eventually proven right, but it is still just one person who provided most of the information in this expose. I want to be honest about that with my readers from the start, but be rest assured that I did independently verify some of the details with other provenly reliable sources before this was published. I did dig into select details myself for verification, and every time I dug - nothing from the original source turned up false, and no red flags were raised. So, I am publishing this info, and making sure to do so before Ampere reviews go live. I believe this is information PC Gamers need to know as soon as possible.
Nvidia’s Low Volume Loss Leaders
In June, Igor’s Lab ran a story alleging he had sources confirming the Founders Edition coolers cost more than $150 to manufacture. My source concurs with Igor, even going as far as to say that Igor’s number may be a lowball based on what this individual has been told. Additionally, AIBs have confirmed to my source that Nvidia forced them to provide BOM (Bill of Materials) cost-downs in order for their cooling designs to be approved for sale. This is far from a normal requirement for Nvidia, and in fact it gets weirder when you learn that supposedly most AIB BOM’s detailed margins below 40% if sold even close to MSRP. Some of you probably just connected the dots to what is going on here.
For those who don’t know - Nvidia usually likes margins above 60%, and Nvidia’s cooler definitely costs far more to manufacture than most GPU cooler designs that will be hitting the market on Ampere cards this fall. However, they don’t plan to actually sell many of those Founders cards…
I now need to mention another of Igor’s Lab’s published findings. According to Igor, Samsung’s 8nm node is not having bad yields. In fact, the limited launch availability is due to a shortage of Founders Edition coolers. But the truth according to my main source is that there isn’t a shortage of coolers per se. If Nvidia wanted more of them, they could have had more of them – it’s scarcity by design.
Now let me spell out the real purpose of Nvidia’s extravagant Founders Edition: making sure reviewers have the best samples, with the best coolers, and at an alluring price most gamers won’t be able to obtain by design. They are accepting lower margins than usual on their FE cards with the knowledge that these published results will set unrealistic expectations for gamers. Unrealistic expectations that will stand the test of time in Day One Reviews that will be referenced for years…
But this story goes much further than simply “putting your best foot forward” with Day One Review Cards most people can’t buy. Both Founders and AIB cards will be in short supply in September, but AIB cards will stuff the channels by the end of October.
Therefore, I think this is Nvidia’s Ultimate Play: Intentionally causing an initial dearth of Ampere stock, allowing “supply and demand” to inflate the street price of Ampere when those beautiful $699 Founders cards instantly sell out, and then ultimately forcing AIBs to sell most of their models well above MSRP due to the required BOM Cost-Downs…that will be in ample supply once the street price is elevated.
The Ultimate Play
Nvidia knows that RADEON will be more competitive this year than they have been for the past 5 years. This means they need to go hard with aggressive marketing and perceived price/performance than they have had to for quite some time. At the same time, Nvidia’s stock price is sitting at an all-time high, above $450 as of this writing. That is over double where it was just one year ago. If what this source alleges is true, Nvidia is seemingly attempting to keep margins elevated for another killer earnings season, and yet at the same time trying not to be perceived as the “bad guy” anymore. I will now completely lay out what I am saying, and provide the remaining details:
Nvidia wants to keep their 50%+ average margins while pretending they are offering good value.
They seek to accomplish this by selling incredible Founders Editions with low margins (at MSRP) from their website, but with painfully limited stock by design.
Nvidia knows that if they get stellar Day One reviews praising Ampere for its performance and value, they will win back the hearts of gamers – which they lost with Turing – before RDNA 2 launches. Most people only read and remember the Day One reviews.
There should be AIB models available day 1, but I am told only ~20% of the stock is required to be near MSRP, and likely in models with far inferior coolers to the FE design. Already a glance at some of the announced AIB cards shows that indeed, these are not going to be sold at MSRP: https://www.techspot.com/news/86681-aftermarket-rtx-3080-rtx-3090-card-prices-revealed.html
Additionally, Nvidia is allegedly causing supply of all Ampere models (including AIB) to be artificially limited during the first month of sales. Nvidia is supposedly doing so by controlling some key components AIBs need. I was able to independently verify this with an AIB who said “There will be low stock at launch, but it’s just propaganda.”
Ampere demand will outstrip the initial stock, and so the price will balloon by October.
Eventually, this stock issue will suddenly disappear, much sooner than we have been led to believe with rumors about bad yields.
If all of this is true, Nvidia could state that the elevated prices aren’t their doing, and they could do so while pointing to a very limited number of cards that sell for MSRP every week. Likely models with the cheapest coolers.
The double memory versions of cards (RTX 3080 20GB, RTX 3070 16GB) should land roughly around when Nvidia stuffs the inventory in October. These will also come with a far higher price than the original models.
I can confirm that the double memory cards will not be sold from Nvidia’s website, and thus they will be able to claim AIBs are behind the price hike. These marked up cards are likely what Nvidia really wants you all to buy, and yet all those Day One reviews will say the 3080 is “Just $700.” Having your cake and eating it too.
Samsung’s 8nm node sounds much more able than previously reported by MLID. It doesn’t sound like there are “yield” problems on Samsung’s glorified 10nm node in 2020. At least not problems big enough to cause Ampere stock to be as low as it will be artificially at launch.
I will be honest. The logical side of my brain has tortured me into admitting this plan is brilliant, if true. AMD may compete with Nvidia in price, performance, and especially efficiency this fall – but Nvidia is the master of winning mindshare and keeping margins high at the same time. In this writer’s eyes, the plan could absolutely allow Jensen to send golden samples, the best of the best, to reviewers, with a stunningly effective cooler that garners universal acclaim next to their aggressive (and mostly fake) MSRPs.
This could go down in history as Jensen’s Ultimate Play, and I am honestly not sure what we can do about it. But I do concur with my source that gamers deserved to know.
Epilogue: A Word on Big Navi, and Some Advice for Gamers This Fall
Finally, I would like to provide some updates – or more accurately adjustments - to what I expect from AMD’s (Always Massive Delays') “Big Navi.” I am confident that RADEON will release a Navi 21-derived card that is the following:
At least within spitting distance of the RTX 3080 in rasterization performance. If AMD doesn’t “beat” the 3080, they will assuredly crush the RTX 3070.
Substantially more efficient at originally intended clocks than Ampere, although they may push some models a bit to more directly compete with the 3080. Even when pushed, I do not expect these models to be power hogs.
Potentially smaller than many people seem to expect, at least relative to Ampere. The specs I have just been made aware of are close to what I had incorrectly assumed must be Navi 22. This is made possible by incredible improvements to how RDNA manages memory and bandwidth. It should (for the first time since before GCN) make due with less bandwidth than Nvidia counterparts.
Provides Ray Tracing capabilities that overall exceed Turing, but likely underperform Ampere.
No confirmation on what AMD’s answer to DLSS will be, but they are “taking it seriously.” The software stack is simply not confirmed yet.
AMD is unlikely to match Nvidia in die size, but it sounds like they won’t need to in order to have RADEON cards roughly competing (or maybe even exceeding) the 3080, while using far less energy. This in some ways will disappoint those that were unrealistically hoping “Navi 2X” is secretly “Navi 2.5X”, but it should come as good news for the majority of gamers that just want a decent $400-$600 card that doesn’t require a new power supply. I have stopped just short of saying the exact specs and performance I expect out of “Big Navi,” and that’s because I should be able to provide real & tested performance numbers incredibly soon. So just stay tuned for more info from MLID on this.
Some advice to leakers too – many of the widely accepted “Big Navi” CU & Memory Bus estimates sound entirely incorrect to me at this point. Even the ones I said. Although to be fair, the only recent “Big Navi” specifications estimates MLID detailed was from the sketchiest of the early Nvidia Ampere sources which hasn’t been used for months (and was labeled "unverified" in videos), and that Navi 22 speculation was firmly labeled as speculation based on some specs seen circulating that MLID now believes could be incorrect, or at the very least mismatched to the wrong die.
And finally, some advice to PC Gamers shopping this fall:
Those Founders Edition coolers are not cheap to manufacture, and yet they will be sold at Nvidia’s (almost) pretend MSRP, at least initially. Don’t expect them to be easy to get a hold of, but if you do – you will have snagged one of the best cooling designs on the market for a lower price than most other models.
If you can’t get a hold of a decent Ampere card in September, and you probably won’t, stay frosty for what is about to come. Prices will be elevated, and you will have to hunt hard to get any Ampere cards near MSRP this fall.
If you miss out on Ampere, RDNA 2 sounds incredibly competitive to this writer. Allegedly AMD is also not launching RDNA 2 until their drivers are entirely polished this time around, they will have better cooling than typical AMD launch cards, and they should have better (real) price/performance than Ampere. Don’t dismiss AMD prematurely.
I know this will permanently put me on Nvidia’s shit list, but frankly I never planned on needing a friendly relationship with any of these big corporations. Moore’s Law Is Dead aims to be predominantly fan supported for its entire life so we can talk about whatever we want with complete honestly. Good luck shopping this fall, and thank you for reading. You all deserved to know.