Tariffs and chip shortages are affecting several important industries
By Justin Hess and Keith Slade Hookano
Graphics Processing Units (GPU), are used in computers for graphics and video rendering. They are most known for their use in video games; however, GPUs have been becoming more popular for their use in creative production and artificial intelligence in recent times.
The terms “graphics card” and “GPU” are often used interchangeably, though there is one distinction between these two terms: a graphics card refers to a circuit board and cooling system that has a GPU incorporated into it. This board also includes the components that are required to allow the GPU to both function and connect with the rest of the system. Graphics cards are extremely important in the modern world and are used in a large number of work environments, as well as recreational past-times and utilities.
Recently, graphics cards have been skyrocketing in price and becoming much more difficult to obtain. This is due to the increasing number of people who need at-home workstations. The recent explosion of cryptocurrencies has also increased the sale of powerful graphics cards in high quantities.
Because of how difficult it is to get ahold of powerful graphics cards, some people have been buying them in bulk to resell at severely marked-up prices. This has further increased the price and rarity of both new and used graphics cards. To gauge community opinion, we interviewed students from Summit Tahoma High School to see what students know about this current situation and how it is affecting their lives.
Aaron Choy is a sophomore at Summit Tahoma high school and has a general knowledge of how graphics cards work, as well as a custom-built computer that is currently suffering from the recent price spike. When asked about how the current price increase has affected him, Choy responded by outlining the negative impacts it has had on him. “A few months ago I started building my very own gaming PC,” he said. “But, when I attempted to build said PC with the GPU I had in, the computer simply didn’t work. I have been looking to replace my GPU that seemingly doesn’t work, but so far, any good prices for GPUs have avoided me.” As Choy outlined, prices and availability for newer or even used graphics cards have been significantly diminished in recent years.
Kaya Gursu, a junior at Summit Tahoma High School, is another person who has experienced troubles with the current state of the GPU market. Kaya mentioned that “yeah, I had to buy a PC like 3 days ago, and so 90% of parts were 4 times the price they normally are.”
Kaya also pointed out a mistake many graphics card manufacturers made when responding to the pandemic: “Manufacturers were ramping down production in anticipation of COVID, and they didn’t realize covid would make people buy more.” When Kaya was asked for his thoughts on the current market he stated, “I think it sucks, because it’s severely impacting development.”
While students such as Choy may be more focused on the personal effects of the price spike, it is also affecting real-world problems as well.
Brian Casey is an Expeditions teacher for Summit Public Schools in the Bay Area, where he teaches entrepreneurship and bike shop. As such, he has a large knowledge base on a plethora of topics. Mr. Casey explained how the chip shortage that is currently affecting the GPU market has increased the prices of cars and industrial equipment. He also spoke about the negative impacts on the worlds of three-dimensional animation and design, as well as people using workstation computers for their jobs.
Mr. Casey also pointed out the effects that the COVID-19 pandemic has had on all markets in general. “We were in a global shutdown, so with that global shutdown it stopped production of even basic resources like silicon and other precious metals to make semiconductors and make graphics cards,” he said. Mr. Casey also commented on how this is affecting schools, and on the poor quality of the Chromebooks that we are given.
High demand is one of the leading causes of price increases amongst graphics cards, but high taxes on them have been a catalyst as well.
At the beginning of 2021, The Trump Administration imposed a 25% tax on graphics cards being produced in China and shipped to the United States. A comment from ASUS’s technical product marketing manager announced a price increase due to multiple reasons, namely the imposed tariffs: “We have an announcement in regards to MSRP price changes that are effective in early 2021 for our award-winning series of graphic cards and motherboards. Our new MSRP reflects increases in cost for components. operating costs, and logistical activities plus a continuation of import tariffs. Other major producers of computer components have also seen similar significant price increases, majorly due to the 25% tariffs.”
Some manufacturers are urging the Biden Administration to exempt graphics cards from the imposed tariffs with Nvidia, HP, and Zotac being some major examples. These companies have made requests to the office of the US Trade Representative, Katherine Tai, to exclude some items from the Chinese tariffs, specifically graphics processors.
Nvidia’s main argument for the exclusion is that there is a lack of computer components manufactured outside of China and that the tariffs are causing a lot of harm to several major industries across the United States: “The products are not manufactured in the US and in only limited amounts in Taiwan,” and, “Efforts to create new capacity in countries that presently do not manufacture such products (such as the US and Vietnam) were unsuccessful and were severely hampered by the fallout from COVID-19.”
Another main culprit for the insane pricing increase is “scalpers”. Previously, the word scalping has applied only to the reselling of tickets for profit, however, it has recently become much more popular in the graphics card and computer component market. When a new graphics card is released, “scalpers” will quickly buy as many of the cards as possible, and intend to resell them at large markups. One example of this is the RTX 3070 GPU that was released by Nvidia.
The card retailed for $569, however, scalpers quickly purchased a large chunk of them, and are now reselling the cards for an average price of $1212, that’s an increase in the price of over 110%.
On top of the slowed production due to COVID, the tariffs that apply to graphics cards produced in China are simply too high. It has further worsened the insane price increases on new and powerful graphics cards and has affected many important industries around the United States. Removing the tariffs might be the boost that the GPU market needs to return to a stable state.
FEATURE IMAGE: RTX 3080 Graphics card by Nvidia PHOTO CREDIT: Alastair Stevenson via Trusted Reviews