Earlier this month, graphics specialist NVIDIA (NASDAQ:NVDA) launched its next-generation flagship gaming graphics processor called the GeForce GTX 1080 Ti. The 1080 Ti is in many ways like the NVIDIA Titan X that the company launched last summer, but with a few modifications that allow it to be both cheaper than the former ($1,200 versus $699) as well as slightly better performing (independent third-party reviews show the 1080 Ti averaging 2% better performance than the Titan X in 4K gaming).
Although it's still early on in this product's life cycle -- NVIDIA's flagship graphics processors tend to stay flagships for about a year -- it looks like early demand for the product is outstripping supply.
Sold out everywhere
The first wave of graphics cards based on the GeForce GTX 1080 Ti graphics processor -- NVIDIA's own "Founders Edition" models -- seem to be sold out all over. They're out of stock on popular online computer hardware reseller Newegg.com and on NVIDIA's own website, and only appear to be available through third-party resellers on Amazon (NASDAQ:AMZN) at prices well above MSRP.
Where's the bottleneck?
What's interesting is that the 1080 Ti isn't based on a brand-new chip that NVIDIA only just recently began ramping into production -- but rather on the same chip, called GP102, that powers the Titan X as well as NVIDIA's Quadro P6000 professional visualization and Tesla P40 high-performance computing accelerator cards.
That chip has been rolling off the production lines for a while now and is manufactured in Taiwan Semiconductor Manufacturing Company's (NYSE:TSM) mature 16-nanometer FinFET+ technology, so I'd be surprised if NVIDIA is having processor supply issues.
The actual add-in-board design (i.e., the board upon which the chip and memory are mounted and the cooling solution) should also be made up of components like the ones that NVIDIA has had in production for quite a while in support of its GeForce GTX 1080 and Titan X add-in-boards, so I don't see the board itself being a potential production bottleneck.
What could be limiting initial supply -- on top of what is probably solid demand for the GPU itself, given its attractive price/performance characteristics -- and helping to drive this apparent supply/demand imbalance is the fact that the 1080 Ti uses a new speed grade of a memory type known as GDDR5X. The 1080 and the Titan X use GDDR5X graphics memory from Micron (NASDAQ:MU) that offers transfer rates of 10 gigabits per second (that's 10 billion bits per second). Micron has been manufacturing that memory type for a while and so I'd imagine that the company can produce them at high volumes with reasonable manufacturing yields at this point.
The 1080 Ti, on the other hand, uses a new speed grade of GDDR5X from Micron, rated at 11 gigabits per second (10% faster). This new speed grade, which really represents the bleeding edge of graphics memory technology, is almost certainly harder to manufacture than the slower stuff used in the 1080 Ti that may be the bottleneck initial 1080 Ti supply.
If that's the case, I'd expect 1080 Ti supply to ease up as Micron runs more GDDR5X wafers and gets better at manufacturing the higher speed grades.