Why it matters: Motherboard and video card makers will continue to experience ill effects from misfortunes in 2018 that led to excess inventory. Those hoping to score a deal out of the situation may be out of luck as at least some hardware makers could raise prices to maintain profitability.
The hardware hangover plaguing motherboard and graphics card makers is expected to spill over into the first half of 2019.
Industry sources tell DigiTimes that a combination of Intel's processor supply shortage, a sustained chill in the cryptocurrency mining sector and lackluster buying at terminal markets amidst the trade dispute with China led to increased inventory levels at companies like Asus and Gigabyte in the third quarter. As such, revenue for the peak season fell below expectations.
Asus, for example, saw its third quarter net earnings drop 43 percent to $107.95 million. Gigabyte in the third quarter only brought in $4.27 million in profit after tax, the lowest level recorded since Q4 2008. Its motherboard shipments could dip below 12 million units this year, a better case scenario than the 10 million unit dip rumored earlier this year but still far from ideal.
Sources further note that enduring sluggish demand from the DIY market, Nvidia's pricey new GPU platforms and poor growth momentum in China will result in dim revenue prospects for the fourth quarter.
As the issue stretches on, sources say Intel and Nvidia are likely to raise chip prices to maintain profitability.
Nvidia's stock is still down following a massive drop in value late last week. As of writing, it's down nearly 25 percent since closing at $202.39 on Thursday.