1 00:00:00,640 --> 00:00:04,280 I was right. 2 00:00:04,640 --> 00:00:11,599 And it's terrible. At the start of last year, I predicted computer hardware 3 00:00:09,440 --> 00:00:16,240 prices would rise and that they would be sold out everywhere. And yep, over a 4 00:00:14,320 --> 00:00:21,920 year later, that has basically come true. But no, no, don't congratulate me. 5 00:00:19,439 --> 00:00:27,119 Because while everything I said was true, I wasn't even close to being 6 00:00:24,720 --> 00:00:31,439 correct about why there is still a shortage of PC parts and a broader 7 00:00:29,519 --> 00:00:36,880 global shortage of semiconductor products. But now I've talked to some 8 00:00:34,640 --> 00:00:41,360 people high up in the industry off the record of course. You know how it is. 9 00:00:39,040 --> 00:00:48,879 And I finally got the real reasons why it is so hard for gamers to find the 10 00:00:44,079 --> 00:00:51,039 CPUs and GPUs they need to get them FPS. 11 00:00:48,879 --> 00:00:54,719 And this bad news is brought to you by Pulseway. Pulseway is a remote 12 00:00:53,199 --> 00:00:58,239 monitoring and management tool that we use ourselves here at Linus Media Group. 13 00:00:56,640 --> 00:01:02,399 With it, you can control all your Windows, Mac, and Linux machines from 14 00:01:00,320 --> 00:01:05,800 one app. So try it today at the link in the video description. 15 00:01:12,560 --> 00:01:17,840 For those of you living under a rock, currently there is a massive global 16 00:01:16,240 --> 00:01:22,159 shortage of semiconductors and everything that they're used to make. 17 00:01:19,680 --> 00:01:26,799 So, CPUs, graphics cards, cars, even fridges. Last February, when I predicted 18 00:01:24,960 --> 00:01:31,040 there would be a global shortage of PC components, my reasoning was that COVID 19 00:01:29,360 --> 00:01:35,280 and the restrictions it caused would interrupt manufacturing facilities and 20 00:01:33,360 --> 00:01:40,960 the logistics companies that they rely on. It was a fair guess and lots of 21 00:01:38,960 --> 00:01:45,840 smart people made the same guess with companies like Apple lowering their 22 00:01:42,560 --> 00:01:47,840 projected revenues. But then in reality, 23 00:01:45,840 --> 00:01:52,640 supply of semiconductors was only briefly disrupted. And for almost all of 24 00:01:50,640 --> 00:02:01,680 2020, they have been pumping out more CPUs and GPUs than ever. So, uh, why are 25 00:01:58,240 --> 00:02:03,600 the Ryzen 5900X and RTX 3080 weapons 26 00:02:01,680 --> 00:02:07,759 grade unobtanium then? The real honest to goodness truth, guys, is because you 27 00:02:05,680 --> 00:02:12,080 keep buying them all. When people got stuck working from home, that old e- 28 00:02:10,160 --> 00:02:16,560 machines that they hadn't used in years suddenly didn't cut it. I mean, it's 29 00:02:14,959 --> 00:02:20,480 reasonable to think that in one household, Junior could be attending a 30 00:02:18,640 --> 00:02:24,640 lecture, the MS could be keeping her elderly parents company on Zoom, and 31 00:02:22,560 --> 00:02:30,480 Pops could have suddenly gotten into day trading or NFTTS or whatever, all at the 32 00:02:27,360 --> 00:02:32,879 same time. This has led to a trend 33 00:02:30,480 --> 00:02:37,599 reversal that I don't think anyone saw coming. 2020 was the biggest growth year 34 00:02:35,120 --> 00:02:44,000 in the PC market in a decade with a whopping 20.6% increase in US PC sales 35 00:02:40,879 --> 00:02:45,680 in Q4. And fun fact, Chromebooks are 36 00:02:44,000 --> 00:02:51,120 actually tracked separately. And those reported a staggering 200% increase in 37 00:02:48,959 --> 00:02:55,599 shipments year-over-year. To add even more fuel to this fire, enterprises have 38 00:02:53,519 --> 00:03:00,720 had to heavily invest in their cloud services with providers like Zoom, 39 00:02:58,160 --> 00:03:05,280 Microsoft with Teams, and Slack needing to seriously beef up their data centers 40 00:03:03,120 --> 00:03:09,680 to keep up with everyone all of a sudden working and meeting from home. That's a 41 00:03:07,440 --> 00:03:14,800 lot of video data. And while you might think, oh well, okay, Microsoft needs a 42 00:03:12,319 --> 00:03:20,319 new server. How does that affect me? The truth is that your Ryzen desktop chip is 43 00:03:17,680 --> 00:03:25,680 made of the same chiplets as an Epic. It's just down to how AMD glued them 44 00:03:23,280 --> 00:03:29,280 together. The two hardest hit sectors, though, are automotive and graphics 45 00:03:27,680 --> 00:03:33,200 cards. And we'll start with automotive because it's simpler and because it's 46 00:03:31,280 --> 00:03:37,840 the better example of how I was kind of right. Automakers currently are being 47 00:03:36,080 --> 00:03:40,959 very vocal about having to stop their assembly lines because they can't get 48 00:03:39,440 --> 00:03:45,920 enough computer chips to go in their cars. But this is actually largely a 49 00:03:43,680 --> 00:03:49,680 problem of their own making. Back at the start of the pandemic, most automakers 50 00:03:47,760 --> 00:03:55,200 cut their forecasts and reduced their orders, assuming that demand for new 51 00:03:51,200 --> 00:03:57,120 cars would drop. And it did temporarily 52 00:03:55,200 --> 00:04:00,400 until all of a sudden, no one liked riding the bus with an infectious 53 00:03:58,560 --> 00:04:05,040 disease on the loose, and demand came roaring back. By the time they realized 54 00:04:02,879 --> 00:04:10,640 this, though, the fabrication capacity that they had released had already been 55 00:04:07,519 --> 00:04:12,799 sold to someone else. So, okay, I wasn't 56 00:04:10,640 --> 00:04:17,600 right. I was just wrong with the automakers. Now for GPUs. Well, it's the 57 00:04:15,840 --> 00:04:23,520 miners, right? Let's all say it together, guys. You miners. you 58 00:04:21,120 --> 00:04:28,720 miners. You minor. No. No. Okay, hold on. Actually, nobody that we talked to 59 00:04:26,080 --> 00:04:33,520 actually agreed that miners were the underlying problem. Like to be clear, 60 00:04:31,040 --> 00:04:39,360 they're not helping the situation. And no one could say for sure if their GPUs 61 00:04:36,080 --> 00:04:41,680 are going to gamers or not. But everyone 62 00:04:39,360 --> 00:04:47,199 we talked to is pretty sure that the majority of GPUs are currently ending up 63 00:04:44,000 --> 00:04:50,080 in gamers hands. It's just that way more 64 00:04:47,199 --> 00:04:54,560 people want GPUs than usual. And there is some data to back this up. Valve 65 00:04:52,720 --> 00:05:01,440 generously makes their concurrent Steam user count public. And if we look Whoa. 66 00:04:58,800 --> 00:05:07,440 If we look at this, it absolutely explodes at the start of the pandemic 67 00:05:03,759 --> 00:05:09,039 and then just as suddenly jumps again 68 00:05:07,440 --> 00:05:14,000 after the summer when the second wave forced everyone indoors. Then at the 69 00:05:11,440 --> 00:05:18,320 same time, a new generation of GPUs that was finally a solid upgrade from 70 00:05:15,759 --> 00:05:22,880 NVIDIA's 10 series along with a new generation of consoles showed up after 71 00:05:20,240 --> 00:05:26,560 seven long years. And we shouldn't be surprised. In fact, we should actually 72 00:05:24,720 --> 00:05:30,240 be grateful that the new consoles didn't have a ton of compelling launch titles. 73 00:05:28,479 --> 00:05:35,199 This could have been even worse, David. Now, you might not realize this, but 74 00:05:32,240 --> 00:05:40,000 NVIDIA and AMD have to guess how many GPUs that they'll be selling months or 75 00:05:37,520 --> 00:05:45,039 even a year before the first one hits a consumer's hands. And while they were 76 00:05:42,479 --> 00:05:49,199 able to assume that demand for Aier and Big Navi would be a bit higher than 77 00:05:47,120 --> 00:05:53,280 previous launches, you know, based on prototype testing data being very 78 00:05:51,039 --> 00:05:58,479 promising and historical sales numbers for premium cards, they got it wrong. 79 00:05:56,320 --> 00:06:03,039 Way wrong. I mean, you might even remember Jensen's saying in the leadup 80 00:06:00,160 --> 00:06:08,400 to the launch of the RTX 3070, the 3080 and 3090 have a demand issue, not a 81 00:06:05,759 --> 00:06:15,039 supply issue. The demand issue is that well it's much greater than we expected 82 00:06:10,479 --> 00:06:17,440 and we expected really a lot. So uh okay 83 00:06:15,039 --> 00:06:26,080 you might say why don't they just make more? Well because again I'm kind of 84 00:06:20,880 --> 00:06:28,000 right. Demand issues cause supply issues 85 00:06:26,080 --> 00:06:32,240 and there are only two companies in the world that can make this kind of 86 00:06:29,600 --> 00:06:36,560 bleeding edge tech. Samsung Foundaries and Taiwan Semiconductor Manufacturing 87 00:06:34,240 --> 00:06:41,120 Company or TSMC. Under normal circumstances, they would be operating 88 00:06:38,080 --> 00:06:43,120 at roughly 80 to 90% of their capacity, 89 00:06:41,120 --> 00:06:46,639 which strikes a nice balance between making enough semiconductors to stay 90 00:06:44,880 --> 00:06:50,319 profitable while offering enough downtime to perform maintenance, and 91 00:06:48,479 --> 00:06:54,639 extend the life of their equipment. If AMD or NVIDIA had higher demand for 92 00:06:52,400 --> 00:06:58,880 their GPUs, they would just buy up some of that 10 to 20% idle time, pump out a 93 00:06:57,600 --> 00:07:03,120 couple million more chips, and everything's hunky dory. But the current 94 00:07:01,440 --> 00:07:08,160 situation means that the fabs are already running at 100% capacity. So 95 00:07:05,919 --> 00:07:13,039 companies are getting exactly what they pre-booked and not away from more. This 96 00:07:11,520 --> 00:07:16,479 is why you're seeing some parts of the industry that are fairing much better 97 00:07:14,560 --> 00:07:22,000 stock-wise than others. Finding an iPhone, for example, no problem, even 98 00:07:18,639 --> 00:07:24,400 though it uses TSMC silicon. But that's 99 00:07:22,000 --> 00:07:28,720 not because Apple has some kind of extra pull because of their size. They've just 100 00:07:26,880 --> 00:07:32,960 been selling fewer iPhones for a couple of years now. And the pandemic didn't 101 00:07:30,639 --> 00:07:37,360 change that. Same thing for Intel. You can buy their CPUs at MSRP, no problem. 102 00:07:35,599 --> 00:07:42,639 But they've also seen less growth over the last year. So, their demand ended up 103 00:07:40,160 --> 00:07:47,199 more in line with their forecasts. Now, obviously then, given the choice, I'd 104 00:07:44,720 --> 00:07:52,319 rather be in NVIDIA or AMD's shoes, even if it does mean that gamers are mad at 105 00:07:49,120 --> 00:07:54,080 me. Which raises the question then, is 106 00:07:52,319 --> 00:07:59,919 there even a strong motivation to fix this problem? I mean, high prices are 107 00:07:56,960 --> 00:08:05,919 good for Texas Energy suppliers, right? Well, NVIDIA, AMD, and TSMC may have all 108 00:08:03,520 --> 00:08:09,680 reported record-breaking revenues, but if capitalism has taught me anything, 109 00:08:07,759 --> 00:08:14,319 it's that leaving any amount of potential sales on the table is straight 110 00:08:11,840 --> 00:08:19,680 up unacceptable. I'm sure TSMC would love to sell 20% more wafers this year. 111 00:08:17,280 --> 00:08:24,400 So, why is it taking so long? It's because they're trying actually, but it 112 00:08:22,000 --> 00:08:30,800 takes a lot of money. Like tens of billions of dollars, lot of money. TSMC 113 00:08:27,520 --> 00:08:32,800 has plans to build a $ 35 billion plant 114 00:08:30,800 --> 00:08:37,200 in Arizona, upping their spend from 12 billion after Joe Biden called for a $ 115 00:08:34,959 --> 00:08:40,880 37 billion in federal funding to address the global chip shortage. As for 116 00:08:39,039 --> 00:08:46,399 Samsung, well, they've also got plans for a 17 billion fab in the US by late 117 00:08:44,159 --> 00:08:52,240 2023. 2023. 118 00:08:49,279 --> 00:08:56,640 So yeah, these plants obviously won't be done anywhere near soon enough to stop 119 00:08:54,000 --> 00:09:01,600 the shortage of chips today. But then even if they came online tomorrow, 120 00:08:58,720 --> 00:09:06,720 they're only one part of the chain. After AMD or NVIDIA get the wafers from 121 00:09:03,760 --> 00:09:10,800 TSMC or from Samsung, a lot still needs to be done to turn those into a graphics 122 00:09:08,720 --> 00:09:14,399 card you can plug into your system. They need to be tested and sorted for their 123 00:09:12,720 --> 00:09:19,040 capabilities. They need to be forwarded to board partners who need to 124 00:09:15,839 --> 00:09:21,279 manufacture PCBs, assemble the cards, QC 125 00:09:19,040 --> 00:09:27,440 them, package them. You guys get the idea. And the thing is all of those 126 00:09:23,839 --> 00:09:29,519 factories are also at capacity. So every 127 00:09:27,440 --> 00:09:33,839 single part of this entire supply chain, I mean even the guys who make the 128 00:09:31,360 --> 00:09:37,680 capacitors that go on the boards needs to be upgraded, which means that these 129 00:09:35,519 --> 00:09:43,200 shortages will continue for quite some time. How long? Well, we tried to find 130 00:09:41,279 --> 00:09:47,920 out, but unfortunately, there seems to be a crystal ball shortage as well, and 131 00:09:45,760 --> 00:09:52,480 no one, even off the record, was willing to make a solid prediction. One good 132 00:09:50,880 --> 00:09:56,399 gauge that you can use at home, though, is the used market. Right now, if you 133 00:09:54,480 --> 00:10:01,040 were to use only retailers as an indication, getting a fifth gen AMD CPU 134 00:09:59,040 --> 00:10:06,640 looks pretty difficult. But the thing is, the prices on eBay are only a touch 135 00:10:03,920 --> 00:10:10,959 more than MSRP. What that indicates is that supply and demand for these have 136 00:10:08,640 --> 00:10:16,880 nearly equalized, so it's likely we'll be seeing them in stock regularly pretty 137 00:10:12,720 --> 00:10:19,760 soon. As for RTX 3000 series GPUs, 138 00:10:16,880 --> 00:10:25,040 big yikes. It's estimated that graphics cards are being shipped anywhere from 10 139 00:10:21,839 --> 00:10:26,959 to 30% below demand. And it's estimated 140 00:10:25,040 --> 00:10:30,800 that it will take 3 to four quarters for the supply of semiconductors to catch up 141 00:10:29,040 --> 00:10:35,440 and an additional 1 to two quarters until inventories are back to normal 142 00:10:32,399 --> 00:10:39,360 levels. So yeah, you might be lucky to 143 00:10:35,440 --> 00:10:42,800 get a GPU at MSRP this time next year. 144 00:10:39,360 --> 00:10:45,440 That is unless maybe big crypto crash 145 00:10:42,800 --> 00:10:48,720 leads to big sell-off. Of course, there's another burning 146 00:10:46,880 --> 00:10:52,240 question in all of this. I mean, didn't basically the entire tourism industry 147 00:10:50,640 --> 00:10:57,200 get laid off? Aren't we in the middle of a huge recession? Why is there this 148 00:10:54,640 --> 00:11:01,360 unprecedented demand for $800 graphics cards? 149 00:10:59,360 --> 00:11:05,360 Well, here's the thing. Normally during a recession, the heaviest hit sectors 150 00:11:03,200 --> 00:11:09,839 are goods producing industries and construction. People make less money. 151 00:11:07,839 --> 00:11:15,279 They can't buy as much stuff. Pretty simple. But the pandemic recession, it's 152 00:11:12,880 --> 00:11:20,240 totally different. Here in Canada, our economy has already returned to about 153 00:11:17,200 --> 00:11:22,000 95% of where it was pre- pandemic, which 154 00:11:20,240 --> 00:11:26,000 sounds pretty good and explains why people have all this disposable income 155 00:11:23,519 --> 00:11:30,800 to buy graphics cards. But it's got a dirty secret. Economists are calling it 156 00:11:28,320 --> 00:11:35,120 a K-shaped recovery. And what that means is that high earners and those who are 157 00:11:33,279 --> 00:11:38,560 able to conduct their business remotely have done great. And we've been 158 00:11:37,120 --> 00:11:42,880 fortunate enough to be part of this group. But because restaurants, 159 00:11:40,880 --> 00:11:49,440 hospitality, and entertainment have had to remain closed, that last 5% of the 160 00:11:45,839 --> 00:11:51,040 economy has been absolutely destroyed. 161 00:11:49,440 --> 00:11:55,440 So, in a nutshell, this means that Johnny Big Bucks is now making more than 162 00:11:53,120 --> 00:11:59,200 ever, but can't go out and blow it on Puagra and a $100 cocktail that includes 163 00:11:57,839 --> 00:12:03,600 a story about the bartender getting inspired by the forest in Tofino. 164 00:12:01,279 --> 00:12:08,560 Instead, Johnny is patting his savings account while the bartender is moving 165 00:12:05,440 --> 00:12:10,399 into his or her parents' basement. So, 166 00:12:08,560 --> 00:12:16,000 if your biggest problem right now then is, is that you can't buy a GPU at MSRP, 167 00:12:13,279 --> 00:12:19,920 maybe consider just waiting, buying it later when it's MSRP, and spending some 168 00:12:18,560 --> 00:12:24,800 money with a local business in the meantime. We've got a couple down below that we think are great and are local to 169 00:12:23,279 --> 00:12:28,720 us, and feel free to drop your recommendations for your city down in 170 00:12:26,880 --> 00:12:33,440 the comments. I'm also going to drop a recommendation to check out our sponsor, 171 00:12:30,800 --> 00:12:37,760 Fubo TV. Fubo TV is an amazing alternative to paying high cable prices 172 00:12:35,440 --> 00:12:41,680 and dealing with cruddy cable companies. It comes with over 100 of your favorite 173 00:12:39,600 --> 00:12:46,079 channels, including all major sports league networks, NFL Red Zone, ESPN, 174 00:12:43,600 --> 00:12:50,320 ABC, CBS, and more. 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We should 184 00:13:25,680 --> 00:13:30,079 practice that then. Okay, we got this. Okay.