Nvidia taking its time before increasing RTX 40 series production, according to reports

According to DigiTimes, Nvidia's backend service providers are not seeing an increase in orders for testing and packaging its latest GeForce RTX 40 GPUs based on the Ada Lovelace architecture. They believe the company is taking its time and allowing its partners to sell any remaining inventory of the GeForce RTX 30 series before providing them with the latest generation graphics chips.

Nvidia's OSAT providers, Siliconware Precision Industries (SPIL) and King Yuan Electronics (KYEC), have not received any indication from the company about increasing production of the GeForce RTX 40 series even though Nvidia released almost all of its Ada Lovelace GPUs for client applications, including AD102, AD103, AD104, AD106, and AD107, according to the report.

To aggressively increase the production of new GPUs, Nvidia needs to produce them at TSMC, then test and assemble them at SPIL or KYEC. While the company has paid TSMC in advance for its silicon manufacturing services for the 2021-2022 period and likely has Ada Lovelace-based N4 wafers in stock, it still needs to reserve OSAT capacity before increasing orders to ramp up capacity. However, it appears Nvidia is happy with the current release of the GeForce RTX 40 series and has shown no intent to increase it.

Normally, Nvidia's GPU sales to partners tend to increase in the third quarter, so the company should reserve OSAT services now. If the information in the report is correct, it seems Nvidia would rather wait a little before ramping up testing and packaging of its Ada Lovelace silicon.

The company's partners already offer desktop graphics cards such as the GeForce RTX 4070, RTX 4070 Ti, RTX 4080, and RTX 4090. Although these are among the best graphics cards, apparently the demand is not as high as Nvidia would like. Dozens of laptops also use the GeForce RTX 4050, RTX 4060, RTX 4070, RTX 4080, and RTX 4090 GPUs. Nvidia's Ada Lovelace GPUs introduced so far cover virtually every segment of the market, and solutions like the recently launched GeForce RTX 4070 and the expected RTX 4060 are expected to become quite popular. This means Nvidia will need more GPU volume and packaging services.

Perhaps Nvidia and its partners already have enough RTX 30 and 40 series GPUs for sale, so there is no need to accelerate testing and assembly even before the supposed launch of the GeForce RTX 4050 and RTX 4060 GPUs in May-June. Granted, it has not yet attempted to lower prices to the sub-$500 space. While testing and assembly procedures take up a lot of time, not as much as wafer production, so although Nvidia was delayed by several weeks compared to its normal schedule with the OSAT services order, given the overall sluggish demand for new PCs, it is unlikely to generate tangible issues for the market.

We have seen many reports of drastic drops in PC and laptop sales, and after a couple of incredible years (in terms of demand and price), it seems like many people and companies are happy to stick with what they have as we face economic uncertainties. Still, since this information comes from an unofficial source and lacks many details, consider it more of a rumor than a fact.

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