It’s not often we write about prices going up.

Last week there was a rumor going around that AMD intended to raise prices on the 5800 series. At the time we wrote this off as yet another highly-speculative rumor based on shaky evidence. Official price hikes are virtually unprecedented, after all.

Then things changed.

We’ve talked previously about TSMC – the foundry both NVIDIA and AMD GPUs are manufactured at – having yield issues with their 40nm process. This first surfaced with the Radeon 4770, which at the time of its introduction was being built while TSMC’s yields were below 40%, and this coupled with its popularity made for a significant shortage around its introduction. TSMC continued to improve their yields, and by the time of the Radeon 5000 series launch, AMD told us that they weren’t concerned with yields. As of this summer, TSMC was reporting yields of 60%.

On Friday the 30th, Digitimes broke the word that TSMC’s yields were back down to 40%. This we believe is due to issues TSMC is having ramping up overall 40nm production, but regardless of the reason it represents a 33% drop in usable chips per 40nm wafer. When you’re AMD and you’re rolling out a top-to-bottom 40nm product line in a 6 month period, this is a problem.


The 5870 and 5850: Out Of Stock Everywhere

When the 5800 series launched, we knew supplies would initially be tight, but we had been expecting them to pick up. With these yield problems, that has not happened. Instead 5800 cards continue to be out of stock near-universally, even with the fact that most OEMs have yet to start using these cards. AMD’s current 5800 supplies are being exhausted just by Dell and self-builders.

Meanwhile NVIDIA started the end-of-life process for the GTX 200 series some time ago, with production of the GT200 GPU ramping down. So NVIDIA doesn’t need to play pricing games with AMD, as they’ve already planned on selling out anyhow.

With low supplies, no (single-GPU) performance competition, and no price competition, you have the perfect storm for a price hike.

All of a sudden that rumor about an AMD price hike became far more realistic. Checking around, virtually none of the 5800 series cards are listed at their MSRP. Although they’ve continued to be in low supply since launch, it’s only recently that there’s been a breakaway from the $379 and $259 MSRP of the 5870 and 5850 respectively.

After our latest round of price checks, we talked with AMD about the situation and asked them if there was any truth to the rumor of an official price hike. The news is not good: 5850 prices are officially going up. AMD is citing supply issues of components (including memory) amidst the heavy demand for the 5850, and ultimately deciding to pass the cost on to the consumer. Meanwhile there is no official price hike for the 5870, although it’s going to be affected by any increased component costs just as much as the 5850.

  ATI Radeon HD 5870 ATI Radeon HD 5850 NVIDIA GeForce GTX 295 NVIDIA GeForce GTX 285
Original MSRP $379 $259 x x
AMD Estimated MSRP $379 $279 x x
Our Estimated Prices $400 $300 $450 $350

Bear in mind that the 5850 is also a special case. AMD can’t keep the 5870 in stock, never mind the 5850. For every fully-functional Cypress die they get, the only reasonable option is to build a 5870 out of it. The only things that should be going in to the 5850 are dice with a defective functional unit, making them ineligible for use in a 5870. Without an idea of how many harvestable dice TSMC is spitting out, we can’t get any real numbers, but the most reasonable assumption is that most of them are either fully-functional or unsalvageable, so we expect AMD and their vendors to be producing many more 5870s than they will 5850s. In other words, the 5850 shortage is going to be worse than the 5870 shortage.

The result of all of this is, is that regardless of the reason, there’s a price hike across the entire 5800 series – an official hike for the 5850, and an unofficial hike for the 5870. AMD has not established a new MSRP for the 5850, but their best guess is $20; ultimately it’s up to vendors (and retailers) to determine pricing. It’s hard to get an idea of what the price is going to be on a card that’s always out of stock, but an MSRP of $279 is probably too low. $300 (or more) is a more realistic target for the 5850. As for the 5870, it seems to be settling around $400.

Our best guess is that these new prices will continue through the rest of the year, even if supplies pick up as TSMC gets their yields back in order. Without any serious competition from NVIDIA, these cards can be priced anywhere between $300 and $500 based on performance alone, and no one has any incentive to keep prices down so long as 5800 series cards keep flying off of the shelves. It’s Economics 101 in action.

We can’t say we’re happy with any of this, but we can’t accuse AMD and their vendors of acting irrationally here. It’s a lousy situation for consumers, but that’s a shortage for you. When has there ever been a good shortage?

Finally, with these price hikes, our product recommendations are changing some. The 5870 is still the card to get if money is no object, but the 5850 is far more situational since it’s no longer the great bargain it once was. We can get 1GB 4890s for $170 right now, which have become downright cheap compared to our projected $300 for a 5850. Certainly the 5850 whips the 4890 by upwards of 40%, not to mention DX11 and Eyefinity, but at that level it’s commanding a 75% price premium. It’s a $300 card and performs accordingly, but don’t break the bank in order to get a 5850 at these prices.

If you want a cheap 5800 series card, then it looks like you’re out of luck until 2010.


The Biggest 5850/4890 Performance Gap

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  • mapesdhs - Friday, November 06, 2009 - link


    Indeed, as long as the demand is there, then by definition they will
    sell no matter what the price.

    I remember before the PS1 officially launched in the UK, some were
    happy to pay $1500 for the import model in HMV...

    Ian.

    Reply
  • mapesdhs - Friday, November 06, 2009 - link


    As usual in the UK we get screwed. Looking at a typical seller site
    (Scan), apart from there being no 5850/5870 cards in stock anyway,
    the prices are through the roof - equivalent of $370 for the 5850
    and a whopping $532 for the 5870.

    I'd been planning a 5850 build before xmas, but not now, prices are
    silly and they're not available.

    NVIDIA must be delighted with the situation as it means there will be
    many more people in the market for a new card when their next GPU
    launches than would otherwise be the case.

    These days it seems like the whole PC market is getting a bit wonky.
    AMD has no modern performance CPU, Intel has no modern budget CPU,
    AMD's latest GPUs can't be found and cost a fortune, AMD's old GPUs
    are being phased out even though they're still perfectly ok, NVIDIA
    only has old tech still being sold in revamped forms (or the prices
    are also crazy, eg. up to almost $700 for a GTX295 here) or their
    cards aren't in stock either, and so on.

    About the only thing that seems to be evolving sensibly as of late
    is storage re SSDs with TRIM at reasonable prices, and AMD's good-
    value budget CPUs like the Athlon II X4 620.

    Ian.

    Reply
  • TinyTeeth - Friday, November 06, 2009 - link

    "These days it seems like the whole PC market is getting a bit wonky. (etc.)" lol, spot on.. Reply
  • marc1000 - Friday, November 06, 2009 - link

    yeah!! and has anyone checked the auctions at EBAY today??? from yesterday to today the price of 5850 board went from US$ 300 (it was alread higher than newegg) up to US$ 450!!!! it's completely insane!!!

    the 5750 is keeping the same US$ 140-150 price tag, however.. half the performance, less than half the price... it is getting more and more attractive to me...
    Reply
  • ph3412b07 - Friday, November 06, 2009 - link

    sounds like another class action lawsuit in the making... both ATI and Nvidia shelled out millions for the last one. Reply
  • ph3412b07 - Friday, November 06, 2009 - link

    sounds like another class action lawsuit in the making... both ATI and Nvidia shelled out millions for the last one. Reply
  • SlyNine - Friday, November 06, 2009 - link

    Seems to me, that hurting TSMC right now would be like shooting yourself in the foot. TSMC needs their resources to keep improving yields and manufacturing processes. Reply
  • FAHgamer - Saturday, November 07, 2009 - link

    True, but when GlobalFoundries comes close to starting production, it won't be that much of an issue for AMD anymore. Reply
  • tviceman - Thursday, November 05, 2009 - link

    The first to market coup AMD pulled off with 58XX series is being trampled over by the yield issues. By the time it is finally sorted out, nvidia will have fermi out and will only have lost out on a very small number of sales. Reply
  • SlyNine - Friday, November 06, 2009 - link

    Nvidia is going to suffer from the same problems AMD is right now. Since TSMC is the die maker. In fact Nvidia will be worse off since their core is more complex. Reply

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