Taiwan-based motherboard and graphics card manufacturers saw profits skyrocket in the first half of the year, thanks to increased demand for PCs driven by the COVID-19 pandemic, as well as the cryptomining wave at the beginning of the year.
Although the price of cryptocurrencies has fallen successively since June and cryptomining has subsided in China due to control from Chinese regulatory agencies and the power shortage, miners had already shifted their focus to Russia, Kazakhstan, Europe, the US, Southeast Asia, and Africa.
After more than a month of turbulence, cryptomining demand has made a clear recovery.
Graphics cards are still in short supply and the return to lower prices has been limited. For many factories, graphics cards are still profitable in the third quarter, but motherboard shipments are showing a quarterly decline. The reasons for this are complicated and include a decline in PC demand as a result of the pandemic easing up, the impact of the mid-to-low level CPU shortage on motherboad demand, and the crowding out effect by high-price graphics cards.
Many factories have adopted the strategy of bundling graphics cards with motherboards, computer monitors, and solid-state drives (SSD). The reversing of cryptomining losses is also showing signs of expansion.
Although Intel's new platform will soon hit the market, AMD is also cutting prices. The DIY PC market is still up and down, sales for graphics cards will remain good, and revisions to motherboards will continue.
In recent months, China has been strictly controlling and blocking cryptomining, cryptocurrency trading, and related activities. At first, the market was pessimistic, expecting the demand for cryptomining would be greatly reduced, including weakening sales of graphics cards and ASIC cryptomining machines. Additionally, the massive influx of second-hand cards into the channel market should have accelerated the price collapse of graphics cards.
Unexpectedly, though, there is still room for cryptomining profit and investment due to the prices of Bitcoin and Ethereum holding up. As a result, whether it is an ordinary miner or medium-to-large scale mine owner, the enthusiasm for cryptomining has not diminished since miners had long turned their attention to other countries. In fact, many China-based firms, including Bitmain Technologies, have suspended sales in the Chinese market and shifted their focus to other countries.
Motherboard and graphics card companies pointed out that after the turbulence of June and July, the demand for cryptocurrency transactions and cryptomining returned to normal. No more big fluctuations are expected through the end of the year.
In light of Nvidia's failure to resolve its shortage, the production capacity yield rate of Samsung Electronics and ABF substrate shortage is limited. Expanding the supply by the end of the year will be difficult.
With the support of the cryptomining and esports market, demand and prices for graphics cards will still remain high. Overall profit in the second half of the year for related companies will still be significant.
However, the period of motherboard growth started to show signs of weakening in the second quarter of 2021. Peak season in the second half of the year also showed quarterly declines, which has caused concern among many factories.
Since the beginning of 2021, graphics cards have been in short supply and prices have soared. It is difficult for motherboard and graphics card and channel operators in the seller's market to vigorously adopt strategies such as bundling graphics cards with motherboard, computer monitors, and SSD to boost the shipment performance of other products.
However, after miners get their hands on graphics cards, most of them will return their unused motherboards for cash.
The current situation shows signs of growing. If the bundling model continues, it will have a long-term impact on the motherboard ecosystem.
Industry sources say that even though Intel's new generation Adler Lake processor is set to hit the market in November, AMD has already started to reduce prices. However, due to the notable demand decline in the DIY PC market, the effect new products and price competition will have on buying is still limited. The only product still in short supply due to high sales is graphics cards.
Motherboard shipments fell quarterly in the second half of the year. The decline in shipments in the first half of 2022 will be even clearer as a result of the period high in the first half of 2021.
Motherboard and graphics card companies have further pointed out that the continued high price and volume of graphics cards have contributed significantly to profits, and can make up for the gap in motherboard shipments.
Furthermore, Asustek and Micro-Star International (MSI) have benefited from the continued strong demand for notebooks, allowing their performance in the second half of the year to keep growing.
Asustek reported new revenue highs for August and the January-August period. MSI recorded a single-month revenue high in August. From January to August, revenue for MSI increased by 40% on year. Gigabyte Technology also recorded a new revenue record for January to August owing to its server business.
The resurgence of the COVID-19 pandemic in Vietnam and the impact of local factory shutdowns caused motherboard and graphics card shipments and performance in the third quarter to decline.
China's recent power shortage has yet to impact shipments for ASRock's server production in Suzhou, China.
Overall, motherboard and graphics card shipments in the fourth quarter are expected to improve, as contract manufacturers in Vietnam gradually resumes work in October.
