Graphics card manufacturer EVGA cuts ties with graphics chip maker NVIDIA
One of the biggest news of the weekend is that graphics card maker, EVGA, will no longer manufacture graphics card due to being fed-up with the way that graphics chip maker, NVIDIA, has been treating them.
Late Friday evening, a computer hardware YouTube channel, Gamers Nexus, released a video dropping the news. The video states that EVGA flew out their team and another YouTube team to talk directly to EVGA’s CEO in a top-secret meeting. Outside of the few EVGA executives and a few NVIDIA executives, the news had been kept top-secret since (maybe) around June (video misstated April, but notes correct the timeline to June) of this year. EVGA employees supposedly only found out moments (through company email) before the video went live.
Why this is crazy: EVGA’s graphics card related activities were about 80% of the company’s revenue. They are essentially cutting that off. To add to that, they are not expanding into new categories. That means their existing categories will need to make up for the numbers, at least in terms of keeping enough money for the employees to continue to be paid.
But wouldn’t this lead to layoffs? EVGA had done some layoffs months ago, probably in anticipation of the move to sever relations with NVIDIA, but the CEO said that he will not be laying off employees after the announcement. So, despite having about 80% of the business gutted, leaving those employees who specialized in that area with nothing to do, the company will instead reallocate them to different areas of the company – if they can. The executives expect there will be some “attrition” though.
The next reason why this is all crazy is the reason they are severing relationships with NVIDIA. It basically boils down to how NVIDIA has treated them and their other partners (MSI, ASUS, etc). The video quotes EVGA as saying that this was not a financial decision, it is a principled decision. Basically, they feel that NVIDIA is screwing them over, and they are done. When Gamers Nexus asks them why they don’t partner with someone else, like AMD or Intel, the CEO said he that he didn’t want to betray them (NVIDIA). This response seemed weird to the people interviewing the CEO because in their minds it seemed okay to do someone wrong after they’ve done you wrong (tit-for-tat). I completely disagree with that sentiment, and I applaud EVGA’s CEO, Andrew Han, for not “sinking to their level” – even if his honor and character could cost him dearly. I have been a fan of EVGA products because of their reliability and their customer service (at least the times I’ve had to deal with them), but how the CEO has put good character, quality, honor above politics and basic business greed, makes me want to go out of my way to support EVGA more.
this was not a financial decision, it is a principled decision.
EVGA
So what has NVIDIA done that made their partners so angry? For one, the partners building the graphics cards only find out the price of the chip (and associated parts) when NVIDIA publicizes them at a press conference (referred to as “on stage” in the video). That doesn’t sound bad, right? But it is if you are a manufacturer. How does it make sense to not know the cost of the parts in your product until a short time (months, in this case) before release? Okay, so maybe that could be understandable if everyone had the same lead time for manufacturing. But NVIDIA also caps the price that their partners can sell at. This means that a partner more focused on quality, such as EVGA, versus others that may not be as quality conscious (won’t say who here) will be limited in their profit margins (already sort of limited) for all the effort they put in to make sure they manufacture a quality product. "But that’s the market," you might say. Okay, but here is the kicker that puts this into almost anticompetitive territory – NVIDIA will release their own graphics cards undercutting the prices they dictate to their partners. And since they also manufacture the chip, they do not have to pay the extra that the partners have to pay to use the chips. They show an example in the video where the MSRP – the retail price – (remember, the range is capped by NVIDIA) where EVGA cards are undercut by as much as $300-400. And if you think the mark-ups due to crypto mining would benefit the manufacturers, well, it doesn’t; those go to the retailers or scalpers who buy them and resell them on eBay.
Granted, this is news stemming from EVGA themselves, so you should take that into consideration. The video does say that some of the base complaints align with what they know from other manufacturers, but it may be slanted towards EVGA’s benefit.
With that being said, it seems like there is something else at play here. And apparently that may be due to the CEO wanting to spend more time with his family and not dancing with NVIDIA so he can deal with their nonsense. Does it mean he is retiring? No – but the possibility is there.
Still, the news is sad for the industry, and also sad for me personally. I’m the type of person who will latch onto something if I find that it is good. EVGA cards have been a faithful staple in all my setups for a long time. So it saddens me to know that I may not be able to get another EVGA card again. But then again with prices of late, I haven’t upgraded in forever. I did manage to get a 30X series card for one of my rigs, but that was it. Hopefully all this will lead to a better future for EVGA and maybe fundamental changes to the way NVIDIA does business.
