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AMD Radeon prices may stabilize soon as channel inventory depletes

Following months of excessive inventory of AMD Radeon graphics cards in the channel, the situation has finally gotten better for Advanced Micro Devices. As a result, rapid price drops on Radeon graphics cards may stop shortly.

Early this year the value of cryptocurrency increased to new heights and mining enthusiasts started to massively acquire AMD Radeon graphics cards that are better suited for mining than Nvidia GeForce graphics adapters. After the price of cryptocurrency collapsed, miners started to sell Radeon boards on Internet auctions and even return them to stores in some cases. As a result, many gamers bought graphics cards from Ebay. Consequently, it became increasingly harder for AMD to sell its products to end-users, especially because of the massively successful Nvidia GeForce GTX 970/980. This led to price drops and withdrawal of refurbished graphics cards from the market in order to clear the road for new hardware. However, recently the refurbished boards started to re-emerge, which is a good sign, according to some analysts.

“In the past 3 weeks, we saw a return of the refurbish market for AMD mid- and high-tier cards at retail websites,” wrote Ian Ing, an analyst with MKM Partners, in a note to clients, reports Tech Trader Daily. “Recall in a recent note, the return of AIB refurbished cards likely signals abating excess inventory concerns (post cryptocurrency mining collapse).”

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If there is no or little excess inventory in the channel, it becomes unnecessary for AMD and its partners to keep prices low or run special promotions to sell graphics cards. It also means that AMD and its add-in-board allies can introduce new products.

“We believe AMD has several levers to discourage AIB makers from rapidly refurbishing and reselling returned cards, and further oversupply the market (given AIB price protections),” said Mr. Ing. “Our defined ‘refurb ratio’ (# refurbished cards/total cards [for a particular model]) has risen from 0 to 13.3 per cent at the high-end (Radeon R9 290X), and 6.7 to 15.5 per cent at the mid-end (Radeon R9 290). As a result, we think inventory digestion is progressing better than AMD’s ‘little bit in Q4’ commentary.”

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KitGuru Says: If AMD and its partners have truly managed to get rid of excess inventory in the channel, expect prices on certain AMD Radeon graphics cards to go up. While price increases can be insignificant, the main thing to keep in mind is that they will not get more affordable if demand and supply is in order.

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