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



View All Comments

  • 12GaugeShotty - Monday, November 9, 2009 - link

    There aren't any other DX11 capable graphics cards equal to the 5850 though. So no, he cannot just go with something else. I would assume you are meaning nVIDIA but there goes DX11 as well as a hotter running graphics card that sucks up more power and is practically at it's EOL.

    Fortunately for me, I am glad that I snagged a MSI Radeon HD 5850 the moment it came in stock. ;-)
  • SlyNine - Friday, November 6, 2009 - link

    His dual 5850's would smoke anything else you're planning on building. Unless you use a 5870 , but then you have the same problem. Waiting isn't a bad idea right now. Reply
  • cgramer - Thursday, November 5, 2009 - link

    I'd been waiting to build a system until the 5800 series came back in stock, and was debating between a single 5870 or two 5770s in CrossFire. Looks like 5770s for me, especially after reading your other article from when the 5770 and 5750 came out. 5770CF was near the top is just about every benchmark. Reply
  • cgramer - Thursday, November 5, 2009 - link

    The link to the previous article with 5770/5750 benchmarks:">
  • rolodomo - Thursday, November 5, 2009 - link

    by dominating both price and performance. They've just blown it. Ultimately this will be good news for the consumer. Whenever either company achieves temporary dominance, they alway find an excuse for $500 graphic cards that provides an opening for the other guy to recover (notice the pattern?). Reply
  • Griswold - Friday, November 6, 2009 - link

    Aside from the who blew it, AMD or TSMC debate, what makes you think AMD missed the opportunity? Nvidia is nowhere with their next generation... feb, march, april maybe? If TSMC sorts their problems out as promised before the end of the year, AMD can still cash in for quite a few months.

    Furthermore, nvidia will first have to prove that their product is as good, let alone better than what AMD offers and that they can sell it for a competitive price. We still dont know jackshit about the gaming capabilities of that thing - and that speaks volumes.

  • Dudler - Thursday, November 5, 2009 - link

    AMD didn't blow it. TSMC blew it. Amd can't be blamed for TSMC screwing up again!

    Good news is that GF should have their 28nm bulk process ready second half next year. And according to Fudzilla ATi are designing their Northern Islands (aka R900)to go with both GF and TSMC.

    In my mind there is no doubt that ATi will switch manufacturer at the first opportunity, TSMC has had their chance and fell short. I guess they will be stuck with the impossible projects of nVidia.
  • erple2 - Thursday, November 5, 2009 - link

    Ultimately, this argument fails because the consumer is not buying TSMC's products. They're buying the product from AMD (really, from the distributors, like Sapphire, ASUS, etc). It's not the consumer's problem that TSMC can't deliver chips correctly. These are all business decisions that AMD had to make before they started the 5x00 series processors.

    That's kind of like saying that the consumer would blame a tire manufacturer for not providing the car they want to buy. The consumer doesn't (and honestly shouldn't) care that the tire company is not supplying enough tires because they can't make tires fast enough to the car manufacturer.

    The consumer buys the card in a nice, pretty, retail box because they don't want to have to assemble their own video card.

    Ultimately, a vendor like XFX, ASUS, Sapphire, etc won't blame TSMC (or Samsung or the maker of the screws they use, or the brand of solder they use on the board) for the reason they aren't delivering the product to the consumer. If they do, they are incorrectly passing the buck.

    As a techie, however, I understand the problems associated with it. The consumer, however, simply knows that they can't get this newfangled fast video card.
  • Dudler - Friday, November 6, 2009 - link

    You are both correct and wrong. Of course I wont blame TSMC for screwing up their 40nm capability. But knowing this, I wont blame ATi either.

    These things happen, especially at such high levels of production, and when you have one sole supplier, with no alternative options. From ATi's view, its force majeure.

    Why has someone to accept blame? I know this is the american way, is just how it is. Hopefully TSMC untangles their process fast, and then we all will be satisfied.
  • kn00tcn - Thursday, November 5, 2009 - link

    but there is only 1 'tire manufacturer' that makes 40nm chips, so there is no choice (unless you mean amd could have chosen to get GF going earlier & to be capable of 40nm) Reply

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