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December 14, 2022·5 min·939 words·Paul Holman
EVGA Drops Out of NVIDIA’s GPU Business After 22 Years, A Major Blow To One of North America’s Top Suppliers of Graphics Cards
The announcement was forwarded to several news outlets including Jon Peddie Research, Gamers Nexus, & Jayztwocents. Although the decision to quit NVIDIA’s GPU business was finalized in June, the company has only made it official now through social networks and the press. The main reason why EVGA decided to take such a huge step and end their prime business is cited as price increases and shrinking margins but there’s more to the story than that.
EVGA has been in the GPU business with NVIDIA since 2000 when they offered their first custom AIC based on the NVIDIA GeForce MX 440 graphics card. Since then, the company has expanded its business into offering PSUs, Motherboards, Coolers, PC Cases, Pre-builds, Peripherals, and several other products that are marketed toward gamers and enthusiasts. Despite all of these additions, GPUs have been at the forefront of EVGA and the reason they are known for.Now EVGA hasn’t explicitly said anything themselves and there are conflicting reports by each tech outlet as to what was the primary reason for them to quit out of the EVGA business but I think Jon Peddie gives us a better understanding of the entire situation between the two companies & what really happened:But in the latest announcement, EVGA has confirmed that they will no longer off NVIDIA GPUs and as such, the GeForce RTX 30 series from EVGA will mark the 22 years legacy. EVGA will still hold an inventory of enough size to carter the RMAs for three years but they will not be making any AICs on NVIDIA’s next-gen GPUs.To help integrate the GPU into all types of market segments, Nvidia invested heavily in R&D, spending over $5 billion in 2021 and is estimated to spend over $7.5 billion in 2022.But, at the same time, manufacturing costs, R&D expense, and market costs have gone up, margins for the AIB partners have come down. The old joke about making it up on volume became less and less funny over the years. Nvidia’s margin, however, went up over time as they moved into adjacent markets.However, the cost of goods, manufacturing, and marketing for EVGA and presumably other AIB partners went up. Also, EVGA is unusual compared to its peer companies in the AIB market because the company maintains a large engineering staff and designs its PCB and cooling system, as well as provides software for monitoring and overclocking (EVGA Precision), 24/7 premium customer service, 48-hour RMA return policy, and an innovative Queue system that delivered AIBs to gamers during the pandemic. EVGA also put more into their packaging than most (if not all) of their competitors as part of its goal to be the quality AIB supplier to the demanding high-end gamer.Slowly, over time, the relationship between EVGA and Nvidia changed from what EVGA considered a true partnership to customer–seller arrangement whereby EVGA was no longer consulted on new product announcements and briefings, not featured at events, and not informed of price changes. On September 7, Nvidia offered via Best Buy an RTX 3090 Ti for $1,099.99, undercutting EVGA and other partners that were offering their products at $1,399.99. There was no warning of the price cut, and it left the partners with little choice but to sell their inventory at below cost to meet the Nvidia price. MSI dropped their price to $1,079.99 on New Egg, and EVGA dropped theirs to $1,149.EVGA says it will continue to sell and support its existing Nvidia-based AIBs, while maintaining enough inventory to support its three-year warranty, but it is ending its relationship with Nvidia. EVGA will still offer its award-winning PSUs (power supplies) and the rest of the product lines.via Jon Peddie ResearchThat’s definitely huge considering NVIDIA is on the verge of announcing its next-gen GeForce RTX 40 series graphics cards in a few days. So fans and enthusiasts who also went for EVGA cards will have to look somewhere else in the coming generation. With that said, EVGA is only quitting GPU business with NVIDIA and that opens up the room for future partnerships with AMD and Intel but as of right now, it’s all but speculation until EVGA confirms themselves.While EVGA was in business with NVIDIA, they controlled 40% of the North American market share of AIC graphics cards. Them quitting would definitely open up the inventory for other AICs to gobble up but it will take time for the die-hard EVGA fans to get adjusted to the new non-EVGA marketplace & as Jon Peddie predicts, It will take around 2-3 (possibly more) quarters for the North American GPU market to adjust to this huge change.EVGA CEO, Andrew HanBarron’s Senior writer, Tae Kim, has an official statement from NVIDIA on the matter which doesn’t explains much:
— tae kim (@firstadopter) September 16, 2022The company will exist and while they will be restructuring to much smaller operations, they will look into other revenue opportunities for the meanwhile before announcing their next GPU endeavors. The company has lots of engineers and experts who have given us some of the best GPU coolers and PCBs for our overclocking & gaming needs over the years. But as of right now, it’s the end of NVIDIA GPUs for EVGA and that makes it just as big of a loss for the green team as when BFG Technologies dropped out of the GPU market or when XFX who also severed their relationship with the green team several years ago.
