Report: Graphic Card Shipments to China Weakened Since Government Banned ICOs

UPDATE: There are reports circulating that China might move to ban Bitcoin exchanges.

The cryptocurrency craze has provided the semiconductor industry with much appreciated demand for high powered chips and graphic cards. However, according to DigiTimes, the recent ban of ICOs in China might hinder sales.

Source: DigitTimes

China authorities have recently issued a ban on initial coin offerings (ICOs) on grounds that it is a form of unapproved fundraising, requesting all the China ICO platforms immediately cease their illegal financing operations and return funds to investors. The move has significantly dampened the fever for mining virtual currencies among people in the country, which, in turn, is expected to affect the shipments of graphic cards to the China market in the fourth quarter of 2017, according to industry sources.

Prior to this, the values of virtual currencies such as Bitcoin, Ethereum and Litecoin, had galloped since April this year amid global investment craze and the sprouting of ICO platforms, with the crytocurrency mining fever drastically pushing up demand for graphic cards through mid-Agust.

This helped to reverse the traditionally flat shipment performance of graphics card suppliers in the second quarter this year. Gigabyte Technology, for instance, saw its graphics card shipment volume hit a new quarterly high of one million units in the April-June period, with revenues surging 4.8% sequentially and 16.2% on year to reach NT$13.96 billion (US$464.7 million) for the quarter. Micro-Star International (MSI) also scored record shipments and profits for graphics cards in the quarter.

Most suppliers of graphic cards witnessed their shipments hit new monthly highs in July before declining gradually in August and September due to China’s crackdown on ICOs. Nevertheless, they are still expected to maintain robust shipment records for the third quarter. Gigabyte Technology, for instance, shipped 550,000 graphics cards in July and 500,000 units in August, with shipments estimated at 450,000 units in September. Accordingly, combined shipments of graphics cards for the first three quarters this year would reach the same level as registered for the entire year in 2016. This is also the case with MSI.

For graphics card suppliers, the largest factor affecting their shipment performance is not the memory supply shortage or rising memory cost, but the difficulty in predicting the movement trend of virtual currencies. As the mining fever has started to ease since mid-August, the high quotes for graphics cards have also gradually declined to normal levels. Accordingly, industry insiders expect graphics card shipments for the fourth quarter to fall to the same quarterly levels as seen in the past years.

The most pronounced weakness in the semis can be seen in AMD (-3%), SWKS (-1.45%) and NVDA (-1%).

Eretheum is down 8% and Bitcoin -5.3%