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Nvidia, AMD and Intel could be 'lured into' dire chip shortage overcompensations

Investing in GPU stocks may be a bit of a trap
(Image credit: Pixabay - CorrieMiracle)
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With the pandemic having sent the world into a tech buying frenzy, the chips inside our PC components have all but passed into myth. And as manufacturers scramble to fill the gap in supply, Jon Peddie Research has issued a warning (opens in new tab) about the dangers of overcompensation.

“The risk," says Peddie, "is that semiconductor suppliers will be lured into over-reaction and believe that suddenly 100s of millions of new users have appeared and the demand will stay high. That’s not only not realistic, it’s also not true—where are they coming from—not this planet?”

This may be a pessimistic outlook, but it is grounded in experience.

While this may be the first time a global pandemic has impacted a chip shortage, it's not the first time we've seen an overreaction to increased demand. Back in 2018 we witnessed Nvidia stock (among others) plummet (opens in new tab) due to sales falling short of expectation and a crash in cryptocurrency-related GPU sales.

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Now, we're just coming out of a similar spike—this time thanks to a host of intermingling factors that toppled the market to form the tragic state of PC building (opens in new tab) we're in today—and investors are all aflutter in the fallout.

But Jon Peddie and company are convinced that pandering to the increased demand is a bit of a trap. Nvidia and AMD certainly appear to be a little more hesitant to throw their lot in with cryptocurrency demand than they once were, so perhaps they're already well-aware of the potential dangers ahead.

Katie Wickens
Katie Wickens

Screw sports, Katie would rather watch Intel, AMD and Nvidia go at it. Having been obsessed with computers and graphics for three long decades, she took Game Art and Design up to Masters level at uni, and has been demystifying tech and science—rather sarcastically—for two years since. She can be found admiring AI advancements, scrambling for scintillating Raspberry Pi projects, preaching cybersecurity awareness, sighing over semiconductors, and gawping at the latest GPU upgrades. She's been heading the PCG Steam Deck content hike, while waiting patiently for her chance to upload her consciousness into the cloud.