Among the third-party GPU manufacturers from Nvidia, EVGA is perhaps the most well known. The brand is known for its high-quality RTX and GTX graphics cards with generous consumer policies, as well as power supplies, coolers and motherboards. The partnership between Nvidia and EVGA, which lasted for more than two decades, has now ended, and EVGA will not only stop making Nvidia GPUs, it has no plans to build any GPUs again. It’s not a clean breakup either.
In a statement to Gamers Nexus, which broke the news, EVGA stated, “This is not a financial decision, it is an initial decision.” EVGA accused Nvidia of keeping partners out of the future product loop, cutting GPU prices without warning, and limiting the prices at which GPUs can be set. According to an Nvidia employee who spoke to Gamers Nexus, Nvidia CEO Jensen Huang sometimes wonders “why these people [EVGA and other Nvidia partners] They make money when they don’t do much? “
One major issue is that Nvidia sells its Founder’s Edition models for much less than partner models. EVGA is said to be losing hundreds of dollars on every RTX 3080, 3090, and 3090 Ti it sells because it needs to cut prices to stay competitive with Nvidia. However, this number takes into account manufacturing only.
Although EVGA says this is not a financial decision, finances certainly play a role. Note John Pede Research That Nvidia’s gross margin has continued to increase year on year while the already small margin for GPU partner companies has declined. In its estimate for 2022, Jon Pede Research believes that Nvidia will see about 65% gross margin for its entire business while AIB partners will only see 5%. Lower margins are due to increased production, research and development and marketing costs. According to Jon Peddie’s research, creating low margins on volume is no longer attractive.
Gamers Nexus was skeptical of EVGA’s story. In its report, host Steve Burke points out that the company may be ordering too many GPUs. During the crypto boom And it can burn due to the sudden drop in mining. Burke notes that something similar happened with 20-series RTX GPUs when the company lost money in the six-figure range.
EVGA CEO Andrew Hahn may also have personal reasons for ending the partnership. Gamers Nexus says Han, who is in his 60s and has served as CEO since founding EVGA in 2000, wants to spend more time with his family as he approaches retirement and feels Nvidia’s alleged disrespectful attitude is no longer worth it.
Although 78% of EVGA’s revenue is derived from its graphics business, the company says it will continue to power its other projects. The company’s second largest venture is power supplies, and while it makes up only 20% of EVGA’s revenue, it has four times the total margin of its graphics business. Losing the vast majority of its revenue remains a problem, although EVGA has openly denied that there will be any layoffs.
Han also denied that he would sell EVGA. The company appears to be in a sound financial position. Furthermore, the CEO didn’t want to neglect EVGA’s reputation by selling it to another company that might only be interested in making a profit.
While EVGA could partner with AMD or Intel to keep the AIB GPU business going, the company has made it clear that it won’t make any GPUs in the future. Gamers Nexus speculates that the EVGA CEO may have personal reasons for not wanting to pursue a partnership with Nvidia’s competitors, similar to his personal reasons for ending the partnership with Nvidia.
For existing EVGA GPUs, the company has confirmed that it will honor warranties and RMA as long as supplies last. However, its supply of RTX 30-series cards will run out by the end of the year, and it’s not certain how easily EVGA will back its warranties, whether or not the company is willing.