Price War Reversed: ATI Increases Pricing of New High-End Graphics Card

From X-bit Labs: ATI, graphics business unit of Advanced Micro Devices, on Monday said that it would increase the price of its ATI Radeon HD 5850 graphics processing unit (GPU) by $20+ due to overwhelming demand towards the new graphics cards as well as increased costs of components and logistics.

“Due to the accelerated ramp of the ATI Radeon HD 5800 series products to meet overwhelming demand at a time when a recovering computer industry is limiting supply on some parts, AMD is incurring higher component, memory and logistics costs. While many of our products are impacted by these increased costs to varying degrees, we are only adjusting pricing on the ATI Radeon HD 5850 product at this time,” said Jay Marsden, a spokesperson for the company.

Both large suppliers of graphics processors – ATI and Nvidia Corp. – faced rather massive declines in sales of higher-end discrete chips in the last twelve months. As a result, in order to lower the risks, both companies reduced inventory levels and their orders to manufacturers. Furthermore, Taiwan Semiconductor Manufacturing Company (TSMC) said that the yield of chips made using 40nm fabrication process dropped again to around 40%, which means that the vast majority of 40nm chips ordered go to scrap bin.

Despite of the fact that ATI will increase the price of its Radeon HD 5850 GPU by around $20+, the company believes that the demand towards the chips will not get lower since at present ATI Radeon HD 5000-series is the only DirectX 11 product family on the market today. Moreover, actual graphics cards may not become considerably more expensive.

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