Gigabyte Technology has had a killer of a year financially, posting insane levels of increases from their graphics card sales, as did the rest of the industry in 2017-2018. It came to a head in December 2017 as Bitcoin and Ethereum reached their highest points ever, and the GPU drought was in full effect – cards were either being bought by private miners straight off the factory floor before shipping to distributors, or they were seeing increases up to 150% over the standard selling price at the retail level. However, with the crypto market slowing down a bit and cards becoming generally more available, mass sales are dropping. In its earnings presentation for June 2018, Gigabyte posted a 31% loss in revenue compared to the same month in 2017, and warns investors that more losses will be coming.
In their earnings for June 2018, Gigabyte recorded revenues of over New Taiwan $3.8 million, bumping their accumulated revenue for the current financial year to $34.35 million. Overall, the company’s accumulated revenue is 25.86% higher than the previous financial year, which is a massive boost. However, the company also posted a 31% loss in monthly revenue compared to 2017. June 2018 has seen a big return in GPU stocks, but also a drop in either the rate of sales, or a drop in the price the cards were being sold at.
Compared to 2017, Gigabyte’s revenues show that the demand for GPUs was strong even as Bitcoin was crashing – they sold almost $9 million worth of GPUs in March 2018 alone. March 2017 only saw around $4.3 million, and that was before the GPU shortage began as Ethereum’s value started to rise. However, 2017 overall didn’t see Gigabyte ship in these kinds of volumes. Their average throughout 2017 was $4.9 million, and at no point did they ever come close to earning more than $6 million in revenue. What we’re seeing in January and March are buyers for mining farms trying to ride the wave of increases in the Ethereum price as it fluctuated, believing that things would be on a fast track upward.
Digitimes reports that although things look bad for Gigabyte right about now, this isn’t bad news for the company. According to sources close to Digitimes, most of the Taiwan-based GPU manufacturers have only slightly cut their sales prices while still maintaining 20% gross margins, so they’re still earning about twice what they were making per GPU back in 2017. But if the trend for the price of Ethereum keeps going down, we’re going to see a big drop in GPU shipments as companies wind down their production of existing GPU stock to make way for new graphics cards coming in Q3 2018.
This may turn out to be the catch, however. As GPU shipments get lowered, so existing stock will likely see a small price bump – and whatever’s in the channel currently won’t get heavily discounted because GPU mining is still a going concern. There’s no mass sell-off of mining hardware, and people are still setting up new farms even with the increasing difficulty level. I expect that miners are actually prepping themselves for the arrival of new GPUs which will push their computing power to much higher levels.
Via Gigabyte Investors, Digitimes.