GPUs are the types of processors that handle most of the functions of your computer, including playing games and running 3D applications. During the tech recession, GPU shipments have dropped as much as 35% year-over-year; even more surprising, however, are the reasons behind this massive nosedive in shipments.

If you’re interested in understanding why this drop has occurred and how it might affect your business, keep reading to learn more about what’s going on behind those plummeting shipment numbers.

PC Gaming is on the decline

PC Gaming has been on a steady decline for years. 
This is because of a multitude of reasons, including increased competition from mobile gaming.

The PC Gaming Alliance predicts that by 2017, PC games will account for only 35% of total video game sales. That's down from 40% in 2010. 

PC gaming is not what it used to be and it's very clear that the recession has had an effect. However, this is not only due to economic factors. It's also because of the changes in technology. For instance, as time goes on and prices decrease for televisions, more people are moving away from desktop monitors or at least relying on them less than they have in the past.

Desktop monitors typically come with graphics cards as part of their standard set up which means if someone doesn't want to buy a monitor separately they need to buy one that comes with its own graphics card which can cost upwards of $400+. As fewer people buy desktop monitors or high-end graphics cards, there is less demand for those products which results in lower shipment rates.

Mobile gaming is on the rise

The rise in mobile gaming is one of the reasons why shipments have been plummeting. Mobile gaming has grown exponentially in recent years and many consumers choose to buy a phone that can play games, rather than an expensive console. This means that PC gamers who typically purchase a high-end graphics card for their desktop or laptop, are now choosing to use a lower-end card on their desktops and laptops to save money.

Another factor is that many people who would normally buy these cards during peak seasons, such as Christmas or Father's Day, are holding off because they're not sure if they will have enough money in their budget for this holiday season.

The console market is drying up

Modern GPUs can do many different tasks and they're generally used for gaming. However, when there are more gamers than there are GPUs available to buy, the market becomes over saturated. It's an easy way to think about why more people use their computer for work instead of play when they have a mortgage to pay on top of rent.

This is one of the reasons that I think we're seeing such a dramatic drop in GPU shipments during this recession. In fact, according to Jon Peddie Research, PC graphics card sales dropped by 31% year-over-year in Q2 2008 compared with Q2 2007. That's as big a decline as you're going to see before companies start laying off workers or declaring bankruptcy.

GPUs are being used less for mining

GPUs have been used in cryptocurrency mining for some time. However, with a decrease in cryptocurrency prices, miners have less incentive to purchase GPUs for their rigs. The decreased demand has led to a sharp decline in GPU shipments, which is having one of the biggest nosedive's during this recession. In January alone, AMD shipped 32% fewer GPUs than it did last year while Nvidia shipped 3% fewer GPUs than it did last year. The downturn in cryptocurrency prices and increased competition from ASICs has caused an oversupply of GPUs on the market, leading to lower revenue.

According to Forbes Magazine, AMD's stock price dropped 12% after reporting an 8% drop in revenue compared to 2017; Nvidia shares dropped 7%. 

The result is that GPU stands for Graphics Processing Unit rather than being used as General-Purpose CPU (a class of microprocessor), and that Intel may be forced out of the GPU market by 2020. There are also concerns about rising power consumption due to the need for more cooling equipment.

The market for GPUs is over saturated

The graphics processing unit, or GPU, is a type of processor that allows computers to generate and display images. GPUs have been in high demand since they were first created. The problem is that while demand for GPUs has soared during the recession, it has yet to catch up with supply. And even when production ramps up again, there will be an over-abundance of GPUs on the market causing prices to plummet.

While this might seem like good news at first, those who make their money by selling GPUs could suffer. These sellers include those companies that manufacture the chips as well as retailers like Best Buy which sell the products. It’s not just the chip manufacturers who may lose out though: Graphics card manufacturers like ATI Technologies and NVIDIA Corp also stand to take a hit.

They typically charge between $100-$300 per graphics card depending on its capabilities. For example, ATI's most expensive Radeon HD 4890 card retails for $249.99 US dollars (USD) whereas its cheapest model, the Radeon HD 3450 can be purchased for only $79.99 USD USD. If supplies increase then prices should go down - but if buyers opt instead to buy cheaper Intel CPU-based laptops then both ATI and NVIDIA may find themselves without customers