Demand for computer components ebbs and flows depending on the latest innovations and expectations. In 2023, the story of demand outstripping supply centered around one component in particular: the GPU. There was a time when the humble graphics processing unit (GPU) was a PC upgrade that made 3D gaming possible. Today, the market for GPUs has grown significantly and includes innovations such as artificial intelligence (AI) programs and blockchains.

The reliance upon and sheer demand for GPU consumption has led to a shortage. Companies such as NVIDIA and AMD have struggled to fulfill orders. The struggle stems from a shortage of manufacturing supplies. Mark Liu, Chairman of TSMC, the company that makes NVIDIA’s high-end GPUs, said that his company only met 80% of the demand in 2023. The shortfall, he believes, is temporary and manufacturers are responding. For its part, TSMC is opening up a new $3 billion facility in Taiwan.

GPU shortage hits gamers hard but hope is on the horizon

The problem, however, is one that gamers have experienced the disadvantages of in 2023. With AI and crypto companies buying up a lot of stock, GPU prices have soared. This has affected the cost of gaming PCs, made supplies scarce, and made it harder to upgrade existing systems.

A powerful GPU is still necessary if people want to play action games online. Resource-heavy games are visually impressive thanks to HD graphics that include effects such as motion blurring, parallax occlusion, and terrain animations. This means modern action games have high frame rates which can only be processed efficiently by powerful GPUs.

Therefore, while the evolution of GPUs and the sudden uptick in demand is great for companies such as NVIDIA, it’s not been so great for gamers. There is a light at the end of the tunnel though. Although the GPU shortage is expected to stretch into late 2024, data from Jon Peddie Research shows that GPU shipments for AMD and Intel dropped in Q4 by 1.5% and 8.5%, respectively. For Intel, in particular, the drop is closely linked to a reduction in sales of pre-built PCs. This, in turn, should mean there are more GPUs on the market for those who want to upgrade their existing PC or laptop.

Demand for GPUs will remain high

Of course, this doesn’t mean things are back to the way they were five years ago. GPU usage is at an all-time high thanks to AI and crypto technology. Large Language Model (LLM) systems such as ChatGPT require an ever-increasing number of GPUs to power their supercomputers.

For context, Inflection AI, a company working to build personal AI chatbots has a supercomputer powering its system. That supercomputer contains 22,000 NVIDIA H100 GPUs. That’s just one AI start-up.

When you add the crypto sector and blockchains to the mix, you can see how the market for GPUs is different from what it was in the early noughties. Gamers are no longer the only people putting pressure on manufacturers. There’s now a wide variety of uses for high-end GPUs. That means we may see more shortages until companies such as NVIDIA and AMD adjust to the new GPU-powered world we live in.

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