Is AMD Losing Money on Every RX Vega 64 sold at MSRP?
Are higher than expected Vega prices exclusively the fault of retailer gouging?
AMD’s flagship Vega GPUs have been no stranger to rumors and speculation, even dating back many months prior to their launch last month. The RX Vega 64, announced by AMD to have a MSRP of $499 in the States, launched with performance that rivaled that of nVidia’s GeForce GTX 1080, albeit with a much higher power draw. The card has proven to be popular despite the excess power use and its tardy arrival to market. Acquiring a Vega 64 at a price near $499 is incredibly difficult and AMD insists that the cards selling for much higher prices are simply due to the rabid demand.
According to a report by Fudzilla, the scarce availability of the standalone RX Vega 64 cards versus the seemingly more procurable $599+ Radeon Vega 64 Bundle Packs is not simply due to market demand, but rather the result of a high bill of materials cost on the manufacturing side of things. The Vega GPUs exclusively use HBM2 memory chips. This type of high-bandwidth memory is incredibly expensive to produce and those costs eat into AMD’s profit margins. It doesn't help that the chip itself is very large in size compared to its main competitor. Larger chip dies cost more money to produce and the RX Vega die measures at 484 mm². For comparison, nVidia's GTX 1080 GPU uses a 314mm² die.
The Fudzilla report implies that AMD is unable to make a profit on RX Vega 64 cards sold at the $499 MSRP and may be losing at least $100 on each card that sells at that price point. I previously reported on rumors two weeks ago from a UK e-tailer that AMD was offering a rebate to retailers to make selling standalone RX Vega 64 GPUs at MSRP feasible. AMD did not directly refute the claims, but said it was working to produce as many of the cards as possible to get them in the hands of gamers.
PC gamers shared concerns over RX Vega’s availability prior to its release due to an expected lack of supply as a result of the GPU Mining Boom of 2017. Customers buying the cards for the purpose of mining drain the supply of cards for sale and facilitate the increasing prices retailers charge for the cards. PC gamers that want the cards to play games are often priced out of the market or are forced to pay huge markups. If RX Vega availability is also being hindered by AMD’s hesitance to flood retail channels with cards it cannot turn a profit on, the chances that PC gamers will be able to buy Vega GPUs at or around MSRP in the coming months could be tenuous at best.
Chris Jarrard posted a new article, Is AMD Losing Money on Every RX Vega 64 sold at MSRP?