EVGA’s low profit margins may have been partially self-inflicted, report says

This past weekend, EVGA announced that they would no longer produce graphics cards ahead of Nvidia’s reveal of their RTX 4000 series GPUs. EVGA claimed their relationship with Nvidia was “abusive” and unfair, but a report from Igor’s Lab claims EVGA’s issues may have been partially self-inflicted.

Many tech fans and enthusiasts were shocked over the weekend by the news that EVGA, one of the more popular AIB manufacturers, would no longer produce graphics cards based on Nvidia GeForce GPUs. EVGA stated that their relationship with Nvidia was “abusive” and accused Nvidia of having a “severe lack of communication” when it came to pricing for graphics cards.

The lack of communication reportedly resulted in EVGA having significantly reduced profit margins, especially following the recent price cuts on higher-end Ampere graphics cards. EVGA notes that they have been losing hundreds of dollars on RTX 3080 and RTX 3090 tier cards ever since the recent market decline and subsequent price drops.

However, a report from Igor’s Lab claims that EVGA’s issues with profits may have been somewhat self-inflicted. Igor notes that EVGA operates differently compared to other AIB producers like Asus, Gigabyte, and many others. Unlike those companies, EVGA outsources the circuit boards and coolers to third parties, which increases the overall cost of producing a card. Igor claims this outsourcing drops EVGA’s profit margins to around 5%, as opposed to other manufacturers whose margins sit around 10%.

According to Igor, EVGA’s generosity has also been one of their downfalls. EVGA’s graphics cards have had significantly longer warranty periods than competitors, and EVGA has also offered a “step-up” program, allowing a consumer to upgrade their GPU should their current card be rendered “obsolete” by a new release.

Igor spoke to an anonymous competitor, who claimed that EVGA’s strategy was “suicidal” and that “if it were profitable, we would have done it long ago.”

It’s fair to assume that EVGA is being truthful with their claims regarding Nvidia’s abusive treatment of manufacturers. Nvidia has been known to set strict guidelines and deadlines for product releases. A report from JPR shows that Nvidia’s guidelines have allowed Nvidia’s profits to grow rapidly, while the AIB manufacturer’s profit margins have fallen nearly 20% since 2000.

All in all, the dust of the situation is still settling and we currently do not know the whole story, as we’ve only heard EVGA’s side of the story. It is also possible that Nvidia may not comment on the situation, leaving curious users further in the dark as to what is really going on. One thing is for certain: EVGA’s upcoming absence from the graphics card market is unfortunate to see, and we hope they can find success moving forward in other product categories.