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Just the opposite. Need to let people raise prices to encourage slack in the system. Let’s prices settle where chip makers can produce new chips. There are m

• duncanawoods 5y ago
  It's a puzzle to me why companies like nvidia didn't just raise prices and instead left both customers and profit to the dirty world of scalpers. I guess it's "brand damage" but I feel there would be something more fair and honest if in times of tight supply they ran their own ebay-like store and auctioned them off. It wouldn't feel like a price hike and prices could automatically settle as supply/demand reaches parity.
  • cinntaile 5y ago
    They probably did, the only cards they produce under the Nvidia brand are the Founders Edition cards and those are sold for MSRP. Everything else is made by their partners and those cards increased in price.
    • duncanawoods 5y ago
      Yes, soon after posting I realised I was referring to Asus/MSI/Palit etc. rather than Nvidia. It means either two levels of auction or the Nvidia chip sale is a % of the end unit sale.
      • cptskippy 5y ago
        > Palit I've never heard of this brand, are they big in regions outside North America? Or do they function as an ODM for other brands?
        • duncanawoods 5y ago
          It's a Taiwanese company around since the 90s. They may be more Europe focused with a German office. I've never heard a US reviewer mention them but in the UK, they offer cards cheaper than the other brands. Beyond that, I don't know much about them. I've bought a couple of their cards and never had an issue so they get a thumbs up from me for N=2.
        • aidenn0 5y ago
          I know them from their KalmX line, which is passively cooled.
  • deleted 5y ago
    [deleted]
  • cronix 5y ago
    Some, like this MSI subsidary, were actually selling on ebay at scalper prices. > MSI has admitted that one of its subsidiaries has been selling RTX 3080 graphics cards on eBay at almost double the MSRP. > The controversy first appeared on Reddit, where users accused MSI of scalping its own RTX 3080 graphics cards on eBay under the name Starlit Partner. Since, it’s been confirmed in a Justia Trademarks listing that Starlit Partner operates under MSI Computer Corp and was first set up in 2016. https://www.techradar.com/uk/news/msi-subsidiary-gets-caught-selling-rtx-3080-gpus-on-ebay https://www.techradar.com/uk/news/msi-subsidiary-gets-caught...
    • duncanawoods 5y ago
      That feels a like a partner dipping into the scalper world whereas you want the top level companies to set out something more transparent.
  • zsmi 5y ago
    > It's a puzzle to me why companies like nvidia didn't just raise prices They did. There have been at least three major prices increases which rocked entire industries. There have been reports of people paying 30x the usual price. https://www.scmp.com/tech/tech-trends/article/3133901/europes-no-2-chip-maker-stmicroelectronics-reportedly-raise-prices https://www.scmp.com/tech/tech-trends/article/3133901/europe...
    • duncanawoods 5y ago
      Understandable but it didn't seem to happen like this in commercial GPU sales.
      • freemint 5y ago
        Because there is no run for commercial grade GPUs from miners or gamers stuck indoor.
  • solatic 5y ago
    To over simplify, let's say that you have 100 people in the market: 90 people who can afford $100 per card and 10 people who can afford $200 per card. In typical times, you charge $100 per card and sell 100 cards, earning $10,000 in revenue. Now you have a chip shortage, and you can only produce 50 cards. If you charge $200/card, you only sell 10 cards, earning $2,000 in revenue. If you charge $100/card, you'll sell all 50 cards, and earn $5,000 in revenue. So it can still make sense to keep the price lower if it makes you more revenue overall.
    • AussieWog93 5y ago
      >To over simplify What you've described is nothing like a real market. Where are the people in your model who are happy to pay $110? $120? If there are 10 who'd buy it at $200, and 100 who'd buy it at $100, surely there'd be 50 who'd buy it at $130 or so. That ignores the social aspect entirely, too. How many who were originally willing to pay $100 will later pay $200 when they see others pay that amount for the item and it becomes scarce?
• nicoburns 5y ago
  What makes you think the most critical uses have the most money to pay for chips? I'd imagine there's a lot of crappy (or in any case not critical) consumer products that have much higher margins.
  • HPsquared 5y ago
    Critical uses have the potential to support much higher prices.
  • imtringued 5y ago
    There is more money in consumer markets because there are more customers, not because each customer can pay more. It's usually businesses that spend big on individual purchases.
  • s1artibartfast 5y ago
    IF the use is critical, then the user should be willing to pay more. If they can't, I would want to look into why and question how critical they are.
• vmception 5y ago
  Exactly, its so weird that price sensitive recluses never just considered that GPUs were undervalued? “Omg these [new market entrants] are messing up my ability to take screenshots of my framerate and never enjoy myself” Well now its back to business use cases!
• varispeed 5y ago
  > Need to let people raise prices to encourage slack in the system. The scalpers can absorb the rising prices until the desperate companies no longer can afford the increase. That will cause the market crash, which is not good for anyone. I think government should regulate that space so that businesses engaged in scalping could no longer purchase nor sell the chips.
  • freewilly1040 5y ago
    A “crash” in chip prices would be good for those buying chips
  • s1artibartfast 5y ago
    >The scalpers can absorb the rising prices until the desperate companies no longer can afford the increase The whole point is for manufacturers to raise the price until desperate companies/consumers can no longer afford it and don't buy them. Im not sure where scalpers come in. If prices are set high enough, scalpers can't make a profit.
• throwawaygh 5y ago
  1. Your comment doesn't even provide a prime facie argument against some forms of government intervention. E.g., we could let the market determine prices but mandate that fab equipment suppliers go to the front of the line. 2. Price is probably a red herring anyways. I'm willing to bet that fab equipment suppliers are losing out not on price negotiations, but on volume negotiations. I.e., they might even be willing to pay more -- even much more -- than other users, but can't buy in massive quantities so don't go to the front of the line. 3. Is there any (legal) mechanism at the moment that prevents chip makers from increasing prices? 4. Fab equipment producers are small consumers of chips but have such a disproportionately high impact on the rate of future supply. In the midst of a global shortage, we could straight up socialize 0.00...01% of chips produced every year and hand them out for free to fab equipment manufacturers without even effecting the short-term price dynamics. I'm not actually advocating this, but the assertion that earmarking a small number of chips for a particular high-value use fundamentally skew the market in the short-term is probably false. 5. Even if markets can eventually work in this case -- and for the record I'm convinced that this is a perfect example of contract negotiators being extremely myopic -- market dynamics have non-O(1) time complexity and the chip shortage is wrecking havoc on the real economy. My comment wasn't suggesting price controls or socializing chip fabrication. It was suggesting that we very temporarily give special treatment to a very small consumer of chips that has an outsized impact on production rate, in the midst of a global chip shortage.
  • s1artibartfast 5y ago
    >It was suggesting that we very temporarily give special treatment to a very small consumer of chips that has an outsized impact on production rate, in the midst of a global chip shortage. Why would we do that if the fabs themselves don't think it is worth paying their equipment manufacturers enough to afford their own chips? Giving "special treatment" is a price control. It is forcing a transaction that otherwise wouldn't settle at that price.
    • throwawaygh 5y ago
      > Why would we do that if the fabs themselves don't think it is worth paying their equipment manufacturers enough to afford their own chips? Because there is a global chip shortage that is making life substantially worse for the vast majority of Americans. And because markets are tools used by man, not the other way around.
• mindslight 5y ago
  > Need to let people raise prices to encourage slack in the system You're assuming that increased profit margins will automatically increase supply chain buffers. But rather, the same incentive to hire too many financialists that "save the company money" will exist, and the extra profit margin will just go to increased dividends. And increasing the supply chain buffers won't help much right now either, it has to be done during good times. In fact I'd say most of the shortage is from companies deciding to increase their buffers, in the same way as what happened to toilet paper. "Hoarders" and "speculators" are easy illustrations to point to, but the real demand comes from regular consumers silently buying twice as much as they usually do.
  • verdverm 5y ago
    > You're assuming that increased profit margins will automatically increase supply chain buffers. I read GP's comment as increase prices to decrease hoarding, which in theory could provide the slack in the system. Problem might be that certain products may not be viable if prices get too high. Only those with sufficient margins prior.
    • mindslight 5y ago
      I don't see that raising prices would make consuming companies want to stock up less. A company that requires an input to manufacturing is going to have a pretty steep price-demand curve for every individual component. Even if prices for one of their scarce inputs doubles, they're still going to buy as much as they can rather than risk shutting down their entire production if they run out. Since their competitors are feeling the same pressure, they'll just raise their own prices to compensate. It's like foodstuffs during the early pandemic - when you finally found something that they had been out of, you didn't particularly care about the price, and you generally bought extra so you wouldn't run out if it went missing again.
      • jbay808 5y ago
        > they'll just raise their own prices to compensate. That's how it works in econ 101, but not necessarily in practice. Prices on many goods are less flexible than commodities like oil and lumber, for many reasons. Manufacturers may be locked into fixed-price contracts or distribution agreements, for example. Or a scarce component might be shared across "budget" and "premium" product lines, but the budget line is too price sensitive to change so the premium product goes up 10x instead. Or the company just borrows money and eats the loss...
• jollybean 5y ago
  "Just the opposite. Need to let people raise prices to encourage slack in the system." "We don’t want the government to pick winners and losers when it doesn’t need to. " Markets are not even remotely close to as efficient as you're implying. In a clinch, people are making all sorts of crazy guesses at what the future will bring, making everything very inefficient. Remember that efficient markets depend on rational acting based on good information. We often don't have very good information at the unit level, and, we often act irrationally. Some company flush with cash, decides to buy things at crazy high prices thereby denying the 'critical sources' (those that support production) access. Right now there is a lot of parts hoarding - speculators buying up parts to sell them at higher prices. They're adding no net value to the system and causing all sorts of other problems. The clearing of those prices may happen over time, but not without terrible damage being done. Supply chains are not like stock markets with clear prices and instant transactions. You may not need the government stepping in, but you definitely want non-market actions. For example, chip makers may want to work with their supply chains to ensure a kind of absolutism or preferential customer tranches. FYI this already happens, all the time. Price is not King for parts, like it is on the stock market. Vendors of 'everything' are aware of the long term growth of their business, and will generally want to work with consistent buyers. So in this FUBAR panic, supply chains have to think not about one thing, about many. I believe that root causes was already a fait-accompli at the start of the pandemic when a bunch of parts of the supply chain shut down - we're still paying the price of trying to get things going.