25 votes

EVGA terminates NVIDIA partnership, cites disrespectful treatment

17 comments

  1. [11]
    Luna
    (edited )
    Link
    This is huge. EVGA was Nvidia's leading AIB for awhile (not sure if they still were in recent years, but they were certainly near the top), so to see them exit the market is almost unthinkable. If...

    This is huge. EVGA was Nvidia's leading AIB for awhile (not sure if they still were in recent years, but they were certainly near the top), so to see them exit the market is almost unthinkable.

    If you don't have time to watch the video, these are the important bits:

    1. EVGA will cease all video card manufacturing operations.
    2. Existing customers will remain supported by EVGA’s warranties.
    3. EVGA has withheld inventory to help replace and fulfill cards as needed.
    4. EVGA expects to run out of RTX 30-series video cards by end of 2022.
    5. EVGA is staying in business.
    6. EVGA is not selling its business.
    7. EVGA will NOT expand into new product categories.
    8. NVIDIA was notified in April of 2022. (Edit: This was a misstatement. EVGA meant to say June, not April.)
    9. EVGA has thus far not entertained the idea of Intel or AMD partnerships.
    10. EVGA finished engineering samples of RTX 40-series cards, but will not be selling them.
    11. EVGA claims that employees will be reallocated.
    12. EVGA's belief is that NVIDIA has screwed it over.

    GPUs did make up ~78% of EVGA's revenue, but the margins were already quite low before the crypto bust (they never marked up cards by hundreds of dollars and sold to miners like ASUS, Gigabyte, etc.). Now, only 3060s and below are profitable, even before Nvidia decided to undercut all their AIBs by selling hundreds below MSRP.

    The more I think about it, the more it makes sense. Nvidia is clearly intending to eliminate the AIBs from the equation like 3dfx tried to do in the 90s, and EVGA is cutting its losses before that happens. Fundamentally, AIBs cannot compete with Nvidia on price because Nvidia doesn't have to pay the markup on their own chips, and with how little board customization is allowed these days, AIBs can't compete on much besides the cooler and power delivery.

    This video from JayzTwoCents also does a good job explaining the situation: https://www.youtube.com/watch?v=12Hcbx33Rb4

    Edit: Also, the post confirming this on their forums: https://forums.evga.com/Official-Message-from-EVGA-Management-m3574574.aspx

    11 votes
    1. AugustusFerdinand
      Link Parent
      Added key distinction. NVIDIA has a long history of shit business practices (the primary reason I refuse to buy their products, same with Intel), so I am unsurprised at this news that they've...

      GPUs did make up ~78% of EVGA's GROSS revenue,

      Added key distinction.

      NVIDIA has a long history of shit business practices (the primary reason I refuse to buy their products, same with Intel), so I am unsurprised at this news that they've continued to be shit, I am surprised at a company with EVGA's prominence completely exiting GPU market. I respect the principle of no longer negotiating with terrorists and being at the end of the 3000 series lifetime it makes the perfect time to do so.

      I don't necessarily buy that they'll completely exit the GPU market. They have a lot of staff, knowledge, and manufacturing capability tied up in GPUs, which (As stated in the video) will not age well. I'm sure there are sales guys at Intel and AMD frothing at the mouth to get into bed with EVGA with a willingness to cut one hell of a deal to do so.

      7 votes
    2. [5]
      skybrian
      Link Parent
      For anyone wondering, "AIB" stands for "add-in board." I'm guessing this is to distinguish between video cards bought by consumers versus those that come with the computer?

      For anyone wondering, "AIB" stands for "add-in board." I'm guessing this is to distinguish between video cards bought by consumers versus those that come with the computer?

      3 votes
      1. cfabbro
        (edited )
        Link Parent
        AFAIK, in the GPU industry AIB simply refers to GPUs that have been customized/manufactured by third-party partners, like EVGA, Zotac, XFX, Asus, etc. As opposed to the bog standard ones...

        I'm guessing this is to distinguish between video cards bought by consumers versus those that come with the computer?

        AFAIK, in the GPU industry AIB simply refers to GPUs that have been customized/manufactured by third-party partners, like EVGA, Zotac, XFX, Asus, etc. As opposed to the bog standard ones manufactured by AMD or NVIDIA themselves, like NVIDIA's Founders Edition cards, or AMD's MBA or BBA (Made by/Built by AMD) model of cards.

        They all use the same chipsets, and typically the exact same PCBs and drivers too, but the VRAM, heatsinks, cooling fans, LEDs, branded plastic shell/backplate, factory overclocking, and various other things on AIBs are usually completely different.

        E.g. My Zotac 3070 Ti has 3x90mm fans on it, whereas the 3070 Ti Founders Edition card only has 2x90mm fans. And as a result of the overall better cooling, my card was able to be factory overclocked to 1840MHz Boost Clock, which I have pushed even further to 1930Mhz without any issues, vs 1770MHz Boost on the FE.

        12 votes
      2. [3]
        babypuncher
        Link Parent
        It's a term that refers to just about anyone who makes things that plug into an expansion slot on your PC motherboard. This is a practice that goes back to many the very earliest personal...

        It's a term that refers to just about anyone who makes things that plug into an expansion slot on your PC motherboard. This is a practice that goes back to many the very earliest personal computers. The Altair 8800 had expansion slots, as did the Apple II. The reason being that you often needed special hardware to do special things. One of those things in the early days being rich color graphics. It was not uncommon for computer dealerships to sell the same computer with different add in board configurations to meet various customer needs.

        2 votes
        1. [2]
          skybrian
          Link Parent
          Well yes, expansion boards go back to the beginning of personal computers at least, but I think the the term "AIB" might be more recent? I don't remember anyone using that term back then.

          Well yes, expansion boards go back to the beginning of personal computers at least, but I think the the term "AIB" might be more recent? I don't remember anyone using that term back then.

          2 votes
          1. babypuncher
            Link Parent
            The term is used more to refer to the manufacturers than the devices themselves. You have AIB Suppliers and AIB Partners. Suppliers are companies like Nvidia, who make a chip which can be built...

            The term is used more to refer to the manufacturers than the devices themselves. You have AIB Suppliers and AIB Partners. Suppliers are companies like Nvidia, who make a chip which can be built into an expansion card. Partners are companies like EVGA who design and manufacture expansion cards around these available parts.

            I'm not sure when these terms entered common use, but I was hearing AIB in the '90s before the term "GPU" even took off. Back then you had graphics adapters and 3D accelerators, often as separate cards.

            5 votes
    3. [4]
      Bonooru
      Link Parent
      I don't really want to search through the video and it sounds like you watched it. Is there any mention of how this is expected to change the consumer graphics card market?

      I don't really want to search through the video and it sounds like you watched it. Is there any mention of how this is expected to change the consumer graphics card market?

      1 vote
      1. [3]
        AugustusFerdinand
        Link Parent
        Expected that other makers will gobble up EVGA's allocation and keep making GPUs.

        Expected that other makers will gobble up EVGA's allocation and keep making GPUs.

        6 votes
        1. [2]
          teaearlgraycold
          Link Parent
          I’d expect others to follow EVGA in the years to come - with NVidia gobbling their market share with first party products.

          I’d expect others to follow EVGA in the years to come - with NVidia gobbling their market share with first party products.

          3 votes
          1. Luna
            Link Parent
            I agree with both takes. In the short term, I expect other AIBs will hesitantly take on some of EVGA's allocation (hesitantly because the 4000 series is likely to lose money at first due to the...

            I agree with both takes. In the short term, I expect other AIBs will hesitantly take on some of EVGA's allocation (hesitantly because the 4000 series is likely to lose money at first due to the economy, crypto crash (and death of PoW profitability), etc.), but barring an executive shakeup that reverts the relationship with AIBs to what it once was, I would be shocked if EVGA is the only company to dump Nvidia.

            3 votes
  2. noble_pleb
    Link
    Some great chap called Linus Torvalds once said many years ago, F*** NVIDIA!

    Some great chap called Linus Torvalds once said many years ago, F*** NVIDIA!

    6 votes
  3. [5]
    Bullmaestro
    Link
    I would be shocked if EVGA didn't stay in the video card business. AMD and Intel are probably more-than-willing to line their pockets to nab Nvidia's biggest AIB. If they don't find an alternative...

    I would be shocked if EVGA didn't stay in the video card business. AMD and Intel are probably more-than-willing to line their pockets to nab Nvidia's biggest AIB.

    If they don't find an alternative market, they're dead.

    3 votes
    1. [3]
      Greg
      Link Parent
      EVGA are apparently making more overall profit on their PSUs than GPUs despite the 80/20 revenue split in favour of GPUs; from the numbers I could see in a few minutes of searching it looks like...

      If they don't find an alternative market, they're dead.

      EVGA are apparently making more overall profit on their PSUs than GPUs despite the 80/20 revenue split in favour of GPUs; from the numbers I could see in a few minutes of searching it looks like GPU margins are at 5% and dropping.

      Assuming those numbers are accurate, it makes the logic in what they're doing a bit clearer: focus on doubling the size of their PSU business and they'll make more absolute profit than they are now, with less than half the required capital, and significantly lower risk because the most capital-intensive part of their business is no longer held at the whims of a third party.

      8 votes
      1. [2]
        Diff
        Link Parent
        If the margins are that razor thin that they make that much more money off of PSUs, it makes it very surprising that Nvidia would be continuing to lean on their partners so hard. If it's "that...

        If the margins are that razor thin that they make that much more money off of PSUs, it makes it very surprising that Nvidia would be continuing to lean on their partners so hard. If it's "that easy" to get away and make even more money I'm surprised anyone at all is still putting up with them.

        Off the top of my head I can't think of any of Nvidia's partners that don't have side gigs like EVGA. Some pretty big side gigs in there, too. EVGA I mostly associated with GPUs. Everyone else I mostly associate with laptops or motherboards or storage.

        3 votes
        1. Greg
          Link Parent
          It’s a really good point, actually, and it does make me wonder if NVIDIA would be so unhappy with that situation? Get everyone on founders edition cards and keep the whole pie for themselves....

          It’s a really good point, actually, and it does make me wonder if NVIDIA would be so unhappy with that situation? Get everyone on founders edition cards and keep the whole pie for themselves.

          There’s been a bit more info coming out in the last few days, and apparently EVGA’s GPU margins are especially low due to their manufacturing model; they are indeed around 5% while some other manufacturers are closer to 10%. Combine that with the reason everyone’s particularly upset about this - unusually high quality and good customer service from EVGA - and it paints a picture of them as an outlier in terms of high costs and low margins, but not to an absurd degree. If anything I’d call them the thin end of the wedge, and it’ll be interesting to see if any other partners do go the same way.

          3 votes
    2. Luna
      Link Parent
      I wouldn't be surprised if they were considering/neogotiating deals from AMD or Intel either (but can't say anything currently due to contractual obligations), but due to margins in the GPU...

      I wouldn't be surprised if they were considering/neogotiating deals from AMD or Intel either (but can't say anything currently due to contractual obligations), but due to margins in the GPU business being what they are, I wouldn't be surprised if they just abandoned GPUs entirely.

      But as Greg said, they don't need GPUs to survive. Quite the contrary: although they might have to downsize some, GPUs have been (effectively) a cost center for much of the life of the 20- and 30-series, not a profit center.

      I'd love to see EVGA compliment their AMD motherboards with AMD GPUs, but I'd totally understand if they truly are throwing in the towel on GPUs.

      3 votes