Material Costs for Video Cards

B

BigCactus

Gawd
Joined
Jul 2, 2008
Messages
743
Alright, what are the material costs of a 4870 vs. a 4870x2, and a gtx260 vs. gtx280. I'd like to get an idea of how much money Nvidia or ATI profits on each card. I'm guessing it costs maybe $60 in materials to make a video card???...just a guess...
 
Perhaps, depends on the card. But you're missing a lot more than that. Materials cost is probably lower than that, but you need to consider research, design, pilot testing, locating parts manufacturers, labour, marketing, distribution, promotions, warranty costs, etc. All told card companies probably only make any significant profit off the latest and greatest cards (e.g. 4870x2, 280), and a small steady stream from their best sellers (e.g. 8800 GT, or 4850). Low end cards probably constitute little profit. Margins are probably much lower than you'd expect once you factor all these things into account, except for the very expensive cards. This is why they can (sort of) afford drastic price slashing on these cards.
 
BigCactus said:
I'm guessing it costs maybe $60 in materials to make a video card???
Click to expand...
Probably more like $1 for the actual raw materials which go into it.

But it takes five billion dollars worth of equipment to put the thing together, and hundreds of millions in R&D to design the thing in the first place.
 
There's a saying that pharmaceutical companies use to justify the high costs of prescription drugs:

The 2nd pill cost 2 cents to make. The first pill cost 2 billion dollars.
 
Quite right...

It cost millions in development costs just to get the first card
on the shelf... All of that money was borrowed in the form of
high interest short term loans and the bank sits on the board
of directors until that loan is paid off...

That's why the first of anything cost the most... As the loan gets
paid off, the prices go down... The manufacturer really doesn't
make any more or less profit at the begining or end of a line of
hardware they just don't have to include the loan payment in the
price anymore near the end...
 
LuminaryJanitor said:
Probably more like $1 for the actual raw materials which go into it.

But it takes five billion dollars worth of equipment to put the thing together, and hundreds of millions in R&D to design the thing in the first place.
Click to expand...

For the 4870x2 I doubt that. If you look at the heat sink...that's a nice chunk of copper. Aint no way that is worth only a $1.
 
how much does microsoft make on every copy of windows sold?

in tech, material costs are not the limiting factor usually, its the intillect and time that goes into creating them. that is what you are paying for.
 
Ocean said:
how much does microsoft make on every copy of windows sold?
Click to expand...
At this state? Nothing but profit. 180 million copies of Vista have been sold. That's made them more than they spent designing and developing it.
 
Motox502 said:
What is the point in this topic?
Click to expand...

Probably disgruntled at why cards cost so much to buy but so little to make whilst ignoring the other factors that users have addressed in the above. I could be wrong though.
 
Point of this thread is to see if these video card companies are gouging consumers, kind of like how we question as to whether oil companies are gouging us as well. We already know that ati and nvidia have conspired with each other before to inflate the value of video cards, hence the class action law suit against them in which there is evidence about secret meetings, emails, and staging competition. I'm pretty sure my 4870x2 is worth at least $20 in materials alone. So how much do you think Nvidia and AtI makes off one card. I'm guessing they make about a 200% return or more on each card after you figure in manafacturing costs/materials/intellect/etc.
 
BigCactus said:
Point of this thread is to see if these video card companies are gouging consumers, kind of like how we question as to whether oil companies are gouging us as well. We already know that ati and nvidia have conspired with each other before to inflate the value of video cards, hence the class action law suit against them in which there is evidence about secret meetings, emails, and staging competition. I'm pretty sure my 4870x2 is worth at least $20 in materials alone. So how much do you think Nvidia and AtI makes off one card. I'm guessing they make about a 200% return or more on each card after you figure in manafacturing costs/materials/intellect/etc.
Click to expand...

Nvidia has lost money this generation per GTX 200 series card sold because of ATI's 4000 series coming out cheap and fast at launch , 260 was what 400? and the 280 was 650 and both have seen major price cuts. ATI though for awhile now (2000 series , 3000 series) has lost alot of money for the past few years since Nvidia has remained ahead of the curve for video performance ...BUT has made a boat load of money off GPU's for the xbox 360.

In terms of material cost video cards for awhile now hardly cost anything to produce , as its been pointed out the billions of dollars required for the fab's is the most expensive part of getting these 20-30 dollar cards out the door, If the cards materials cost say 100-200 a piece then our cards would cost just a unbelievable amount of money (say 5-6k each , like the old days)
 
Imo, each board probably costs in the ballpark of about 50-60 bucks WITHOUT the IC. With the IC it really depends on which IC you're using... So if its like a GTX 200 series IC the price to manufacture the card increases by alot.
 
BigCactus said:
Alright, what are the material costs of a 4870 vs. a 4870x2, and a gtx260 vs. gtx280. I'd like to get an idea of how much money Nvidia or ATI profits on each card. I'm guessing it costs maybe $60 in materials to make a video card???...just a guess...
Click to expand...

You're also paying to get the results of years of R&D that Nvidia/ATI spent to create those ~1 billion transistor GPUs plus the money TSMC etc. spent on perfecting their manufacturing process. Anyone can buy a chunk of silicon, some plastic, copper and aluminium for a fraction of the cost of a 4870 - but turning that into a working DX10 videocard is a different thing alltogether.
 
Point of this thread is to see if these video card companies are gouging consumers,
Click to expand...

Perhaps a Business 101 class would be in order. The phrase "as much as the market will bear" comes to mind. Although ATI/AMD due to competitive pressure seems to using the "price/performance = volume " philosophy lately to the delight of all of us that are cost conscious. A wise move in a poor economy.

You need to know the:
cost of materials
labor
overhead

Its the overhead you will never figure out as it includes R+D, physical plant, marketing, sales, support etc. The company itself tries very hard to quantify this cost but if it is like most companies it has only a fair to middling handle on what they actually are. If you think the company is making too much money you could alway just buy stock, but I dont recommend it.
 
The cost of the silicone in a 4870 is at least 60$, iirc the cost of a single GTX280 chip (at launch) was ~125$. There are huge material costs on graphics cards, it is not in any way, shape, or form a 50 cent part they are selling at 400$.
 
BigCactus said:
Point of this thread is to see if these video card companies are gouging consumers, kind of like how we question as to whether oil companies are gouging us as well.
Click to expand...

If you are comparing video cards to fuel and food, you need serious help. It's not like you need a $600 video card just to get by. Both companies make $60 video cards, if you are worried about cost go and get one.

It's like saying you are being price gouged on the cost of a new Ferrari. :rolleyes:
 
vengence said:
The cost of the silicone in a 4870 is at least 60$, iirc the cost of a single GTX280 chip (at launch) was ~125$. There are huge material costs on graphics cards, it is not in any way, shape, or form a 50 cent part they are selling at 400$.
Click to expand...

Obviously
 
The Silicon that these chips are made out of isn't exactly cheap. With this cost you also have to take into account the errors which occur with manufacturing processes. Thus, a G200 won't be only 2.5 times more expensive than a rv770, probably more like 4-5 times (guesstimate), because the larger the chip, the more likely it is to have an erroneous transistor. To compensate for this you can have many SKU:s with the broken parts disabled.
 
PRIME1 said:
If you are comparing video cards to fuel and food, you need serious help. It's not like you need a $600 video card just to get by. Both companies make $60 video cards, if you are worried about cost go and get one.

It's like saying you are being price gouged on the cost of a new Ferrari. :rolleyes:
Click to expand...

I don't believe I ever compared video cards to food :confused: Using oil companies was merely an example of people questioning price gouging. And if you think about it, how many billions of people and thousands of businesses rely on the personal computers that have a video card in it. People could live without fuel and video cards obviously. That's a whole can of worms that I'm not getting into.
 
I'd also like to add something else into the mix. Think about the xbox 360 for example. It is quite amazing that you can buy this system for about $300...and it has a video card, hard drive, plastic housing, controller, HD dvd player, etc. $300 is about the price of a single gtx260 or single 4870 video card.
 
I doubt retailers like Newegg, ZZF, Fry's etc, are making a killing based on their retail prices. We should probably try to break down the value chain in terms of where the product is at that point in time and the value of the good at that point.

Raw materials -> NVidia Manufactured chips/ram/etc. -> Board Partner Manufacturer -> Retail

My guess is that the biggest margins are made earlier in the chain and diminish as you move down. In the end, everybody's in it to make buck ~ it's probably the retailers that make the least.

Maybe NV has some financial statements we could look at to get an idea of their expenditures?
 
BigCactus said:
I'd also like to add something else into the mix. Think about the xbox 360 for example. It is quite amazing that you can buy this system for about $300...and it has a video card, hard drive, plastic housing, controller, HD dvd player, etc. $300 is about the price of a single gtx260 or single 4870 video card.
Click to expand...

The idea behind consoles is to NOT make money on them, but to get them in as many homes as possible and make the $$$ off of game contracts.

Alot of people are also forgetting the waste managment these companies have to go through, mostly TSMC, when they run the maps to create these chips alot of chemicals are used and after usage or too much dilution they need to get rid of it, by either paying a company to dispose of it (which is expensive) or pay a company to recyle it (why isn't AS expensive)

You have R&D, physicial material, electrical, chemical, 3rd party manufacturing, shipping, labor, disposals that will ALL factor into the price, you don't go to a 5-star resteraunt and complain about a $20 steak when you can get one easily for less then half that at the store...
 
Game contracts...well maybe that's why we aren't seeing that many pc games as of late...they all just want to make games for consoles as that's where the money is at *sigh*
 
Partially true, alot of developers feel safer building for consoles since they do have less theft, or at least they have less ways of recording it, much like torrents on the internet do, which keeps tracks of every IP and how many total downloads completed.

The thing about developers and consoles is they also have alot less overhead, they develop for a set tier of parts and they are done, theres no driver reforming, theres no hug bug related issue with another 3rd party device that they have to release a patch for, not to mention Live and Home offers these developers another easy way to patch if they need to.

The console market right now is indeed alot comfyer for developers and a much larger head ache for the actual console makers, just look at how awsome the Xbox360 sold with a ton of defective systems, or the PS3 not selling early on since it cost so much, these guys had to rethink their plan alot where as developers just have to think about marketing.
 
BigCactus said:
. And if you think about it, how many billions of people and thousands of businesses rely on the personal computers that have a video card in it.
Click to expand...

Most of those computers have an onboard video chip that cost them next to nothing in relation to the entire cost of the computer.

Here's 13 video cards under $25
http://www.newegg.com/Product/ProductList.aspx?Submit=ENE&N=2010380048 4093&name=$10 - $25

BigCactus said:
I'd also like to add something else into the mix. Think about the xbox 360 for example. It is quite amazing that you can buy this system for about $300...and it has a video card, hard drive, plastic housing, controller, HD dvd player, etc. $300 is about the price of a single gtx260 or single 4870 video card.
Click to expand...
It does not have a HD-DVD player. It does not come with a monitor. Microsoft takes a loss on it so you will buy $60 games. You really have no idea what you are talking about.

Here ya go computers for under $300. :eek:
http://www.dell.com/content/products/category.aspx/inspndt?c=us&cs=19&l=en&ref=dthp&s=dhs:eek:
 
PRIME1 said:
Most of those computers have an onboard video chip that cost them next to nothing in relation to the entire cost of the computer.

Here's 13 video cards under $25
http://www.newegg.com/Product/ProductList.aspx?Submit=ENE&N=2010380048 4093&name=$10 - $25


It does not have a HD-DVD player. It does not come with a monitor. Microsoft takes a loss on it so you will buy $60 games. You really have no idea what you are talking about.

Here ya go computers for under $300. :eek:
http://www.dell.com/content/products/category.aspx/inspndt?c=us&cs=19&l=en&ref=dthp&s=dhs:eek:
Click to expand...

Not exactly, that is why the thread title ends with a question mark...and unless you can tell me the exact profit that these companies make on each video card they sell...neither do you.

PC games sell in the $40-$60 range...at least the major mainstream titles upon release. The only reason you see some pc games for dirt cheap is because they aren't mainstream titles and they probably aren't worth a crap. And if they are worth a crap and they are cheap...then they are simply older games. I was at best buy recently and cod4 still sells for 49.99.

Pretty much every title that hits the xbox360 is mainstream, therefore the price is high. It just seems like console games are more expensive in that sense. In actuality they just have better games than can command a higher price. My Xbox 360 came with a HD DVD player, but it would seem as though it does not come with it in retail stores. So you are right in that regard.

Regardless, a $300 computer is not going to play games as well as an xbox 360. I would say it would take a 700-900 dollar computer if you were to buy the components brand new to match the performance of a xbox360.
 
BigCactus said:
Regardless, a $300 computer is not going to play games as well as an xbox 360. I would say it would take a 700-900 dollar computer if you were to buy the components brand new to match the performance of a xbox360.
Click to expand...

Comparing Apples to Oranges really. You cannot match the performance of a Xbox 360, because the problem resides mainly in the games themselves. They are optimized for that specific Xbox configuration, which will never change. However, there is no game optimized for all the PC configurations out there. Not to mention that the PC is flexible in things like resolution and graphics options, while the console is not. Comparison is impossible.
 
BigCactus said:
Regardless, a $300 computer is not going to play games as well as an xbox 360. I.
Click to expand...

But one cannot browse the web, type up reports or assignments, compose music, edit photos, do minor video editing or code on the Xbox 360. Correct, a $300 PC isn't meant for gaming but a Xbox 360 isn't meant for a lot of other tasks as well.

BigCactus said:
In actuality they just have better games than can command a higher price.
Click to expand...

I disagree. There are games that were/are released for both the PC and 360. Yet the PC version will be usually be cheaper, even if the games were released at the same time. 360 games usually command higher prices due to the aforementioned licensing practice.
 
I can't tell you the exact profit/loss per card. But since both companies are public, you can search for their SEC filings. http://www.sec.gov/edgar.shtml Or just google their profits losses for the past few years.
Looking at those, Ati/Amd have not made a profit in a while, Nv was raking it in for a while but has dropped back some. Look at them yourself and decide whether they have been gouging or not. It has been said numerous time already, but due to costs we don't know anything about, only Nv, Ait, and their AIB partners know what it actually costs to make a vid card.
 
You must log in or register to reply here.
Back
Top