GPU leader Nvidia just lost one of its most crucial partners delivering graphics cards to gamers as EVGA cut ties last week. For those less familiar with the company, EVGA emerged over the past two decades as one of the largest producers of customized graphics cards in North America using Nvidia‘s processors – until now.
So why would EVGA abruptly abandon its partner that reportedly accounted for 80% of its business? As an industry analyst and hardware enthusiast, I‘ve followed EVGA and Nvidia‘s storied history closely since their first collaboration in 1999. Below I breakdown the significance of this industry shakeup including EVGA‘s long relationship with Nvidia unraveling, likely catalysts behind the split, impacts on next-gen GPU availability, and what the future may hold for both companies.
EVGA‘s Legacy as Trusted Nvidia Partner
Before speculating on this shocking turn of events, it helps to understand EVGA‘s credentials. Founded in 1999 by Andrew Han, the companyFocus exclusively on producing Nvidia-powered graphics cards for over 20 years. In that time, EVGA emerged as the dominant provider of customized GPUs tailored specifically for gaming in North America.
| Year | Milestone |
|---|---|
| 1999 | EVGA founded, launches first Nvidia card |
| Early 2000s | Gains traction as top GPU AIB partner |
| 2014 | Captures over 30% North America market share |
| 2022 | Hold over 40% market share before Nvidia split |
In contrast to the basic reference design cards that Nvidia sells directly as its Founders Edition series, EVGA built a reputation for quality components and excellent cooling that unlocked extra performance and stability when gaming. Signature EVGA GPU lines like the Kingpin and FTW3 series catered to enthusiasts pushing overclocking limits.
Breakdown of Issues That Led to Divorce from Nvidia
Why would EVGA choose to abandon its largest revenue source that seemed to offer further growth and success? As ugly divorces tend to go, major relationship issues had been bubbling under the surface. Recent interviews with EVGA leadership highlighted a pattern of concerning policies and treatment signaling Nvidia failed to value EVGA as a respected partner.
Pricing & Profits
Despite using Nvidia‘s processors, EVGA operates as an add-in board (AIB) partner. However in recent years, Nvidia began undercutting their own partners by pricing Founders Edition cards significantly lower. As an AIB, EVGA paid higher costs unable to compete with Nvidia‘s direct pricing.
Making matters worse, Nvidia‘s tactics left EVGA struggling to turn any profits on GPU sales over the past two years especially. Even selling at major losses recently, the imbalance grew unsustainable long-term.
| Year | Issue |
|---|---|
| 2020 | Nvidia RTX 3080 FE priced $100+ below AIB cards |
| 2021 | Nvidia RTX 3080 Ti FE priced $100 less than EVGA‘s cheapest model |
| 2022 | EVGA selling GPUs at losses, Nvidia restrictions block unique designs |
Lack of Communication & Support
On top of profitability challenges, EVGA called out Nvidia for failing to provide adequate support critical for AIB partners to develop graphics cards properly. Expanded restrictions made it difficult for EVGA to innovate with unique PCB designs or cooling options to differentiate their GPUs in the market.
Most critically, Nvidia refused to deliver necessary drivers and firmware essential to test upcoming graphics cards until the same day products went on sale publicly. The combination of those key issues ultimately pushed EVGA to walk away instead of continuing the struggle.
Short Term GPU Shortage Concerns
With the launch of Nvidia‘s new RTX 4000 series GPUs imminent, worrying ripples from the EVGA split have already emerged. EVGA confirmed it will not develop any next generation graphics cards with Nvidia‘s new Ada Lovelace architecture. And while EVGA attempts to sell off remaining inventories of popular RTX 3000 cards, analysts project supplies could dry up within months.
To put their significance in context, EVGA represented over 40% of Nvidia‘s total North America graphics card market share. With the departure of such a key partner, intense pressure shifts to competitors like MSI, Gigabyte, and ASUS totry filling the vacuum. However industry experts remain skeptical whether rivals can ramp up production quickly enough to prevent crippling GPU shortages developing through 2023 and beyond.
| Company | Market Share % | Production Capacity Concerns |
|---|---|---|
| EVGA | 40% NA 28% WW |
Exiting GPU market |
| MSI | 30% | Labor/component shortages could limit expansion |
| Gigabyte | 15% | Reported 30% capacity growth maximum per quarter |
| ASUS | 10% | Well positioned to gain share |
"This likely means we‘ll see shortages not only at the next generation GPU launch but also persisting for current-gen parts," predicts GamersNexus founder Steve Burke. "Unless someone else has a lot of unused capacity, they cannot pick up all of EVGA‘s market share."
With many hardware enthusiasts hoping to upgrade aging graphics cards in their gaming rigs, potential shortages could damper excitement and access to Nvidia‘s next-gen offerings. The EVGA split seems poised to have ripple effects on pricing and availability industry-wide heading into 2023 at minimum.
Cloudy Future for EVGA, What Next for Nvidia?
Let‘s examine what the future looks like for both companies as they attempt to chart new courses post-breakup after such a successful 20+ year partnership fueled their respective growth and profits.
EVGA
In the short term, EVGA seems focused on offering continued services and support to its existing customer base. The company‘s reputation grew over the years thanks to quality products and excellent technical support. Maintaining that goodwill could prove essential as EVGA attempts to rapidly expand other categories like power supplies, cooling, and motherboards to offset the loss of graphics card revenue.
Long term, successfully diversifying away from reliance on GPUs will determine if EVGA can endure and stabilize from this industry earthquake. Gaming peripherals and components offer lower margins but plenty of opportunity. Fortunately EVGA appears in solid financial standing with over $1 billion in revenue last year and $50 million in cash reserves according to reports.
Nvidia
While Nvidia may have initiated the break up, they likely feel confident absorbing the short term disruption. Despite losing their largest North America partner contributing over 40% of GPU sales, Nvidia controls over 80% of total discrete graphics card market share. With ambitions to become the world‘s leading AI supercomputer company, computing platforms remain far more crucial than individual graphics card sales to long term aspirations.
However, some impacts seem unavoidable. Nvidia may need to rethink restrictive policies and improve relationships with remaining AIB partners like MSI and Gigabyte to prevent further defections. Damascus Securities analyst Jon Peddie explained to PCMag that "Nvidia may now find it needs to be a bit more cooperative and helpful if it wishes to maintain market share."
An Industry Reshaping Split No One Saw Coming
When EVGA and Nvidia first joined forces in 1999, neither likely imagined over two decades later a messy split would reshape the graphics card industry. Long term impacts from EVGA‘s exit will continue evolving over months ahead. But for PC gaming enthusiasts, the short term outlook promises turbulence. Limited graphics card supply and availability seem inevitable with EVGA gone.
Yet out of chaos can emerge new opportunities as well. Perhaps EVGA can redefine themselves beyond graphics cards. And if Nvidia learns lessons about valuing partners from this breakdown, a chance exists to rebuild stronger relationships moving forward too.
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