My take on the pricing of the RTX 5070 Ti GPU

Okay, I know this is really not something that I usually write about on my blog, but I do keep tab on GPUs as I (used to) play games and use (old, secondhand) GPUs in my computers/servers.

A quick summary of the pricing controversy. Nvidia announced the RTX 5070 Ti as a GPU with MRSP of US$750, but AIBs are actually pricing their cards at higher prices, averaging US$950, which is US$200 more. Coupled with the low supply and scalpers reselling these cards at higher prices, the average gamer would really need to be earning a lot of money or really really love gaming to pay for one of these cards.

So who is lying here? Is it really a US$750 card like Nvidia said and AIBs are trying to profit by raising prices? Or is Nvidia lying about the price to make it look cheap on paper in order to compete (on paper) with AMD?

Actually, I think no one is lying here.

If Nvidia actually makes and sells the RTX 5070 Ti, it would probably sell at US$750. Realistically, this means it probably costs around US$650 to US$700 to make. However, Nvidia does not make or sell them, relying on AIBs to do so. It just supplies the silicon to the AIBs.

The problem is that selling a GPU is not simply making it and selling it. AIBs incur additional costs in terms of designing their products, testing the designs, marketing, and distribution. Some of these are fixed costs, like design, testing, and marketing, while distribution cost would vary with the quantity. The fixed costs has to be recovered in some way, and if the quantity is large enough, the impact on final selling price would be low. But if quantity is low, each GPU would need to sell at a higher price to make up for the total fixed costs.

Therefore, it could be that the silicon supply from Nvidia for the RTX 5070 Ti is actually quite low, which means AIBs can sell fewer cards, translating to the setting of higher prices to make up for the fixed costs. AIBs are not artificially driving up prices. Nvidia is not artificially suppressing prices. In the end, the high retail price of the RTX 5070 Ti, compared to the announced MRSP by Nvidia, is probably due to low silicon supply from Nvidia. As for the reason behind a low supply, it could be a number of reasons, and it won't be fair for me to speculate.