EVGA Terminates NVIDIA Partnership, Cites Disrespectful Treatment

[Music] this story is top secret most of my team won't even know about this story until after it goes live when you all see it we flew out to evga's California headquarters for a closed doors meeting with evj CEO Andrew Han and here's what he had to say about Nvidia we are not going to be on Nvidia CEO Jensen's lap on stage so I don't want people to speculate what's going on when we're not there ebj has decided to not carry the next gen evj is continuing the current product line we will continue the current gen until we run out and this video marks the beginnings of a historic shift in the video card industry at Large [Music] before that this video is brought to you by the height y60 the height y60 is one of the most unique cases to launch anytime recently coming in multiple color options like this bright red and it's also built for both water Cooling and Air cooling the case pays extreme attention to detail particularly with cable management paths like you can see with the quality rubber grommets that are always passed through and with split lower and upper chambers learn more at the link in the description below Nvidia comprises 80 percent of evga's Revenue so this change could Mark the beginnings of a long and drawn out demise for the company if it doesn't navigate these next few months carefully it could also Mark however the beginnings of something new a less stressful and more mobile organization where they're freed from the binds of their encumbering partner and video EVGA CEO felt restrained by Nvidia I commented to him that this decision must be hard for you and he said this this is easy working with Nvidia was hard words for NVIDIA we'd hope though for the sake of evga's employees that the decision might have been a little bit harder but it didn't stop there the company wouldn't even entertain the idea of working with Intel or AMD when we asked and we pushed the point and after asking repeatedly why evj wouldn't make someone else's board we asked the obvious does EVGA intend to return to Nvidia for the 50 Series no they're done hand said and they're done with all video cards while he remains CEO existing customers will continue to get support and evj is withholding some boards as RMA Replacements and for warranties but once they sell through inventory this year that's it no more EVGA video cards EVGA has made a lot of cards over the years so this is a big change they built their company on the back of cards like these for decades now and as for Intel and AMD as potential partners that's a different story entirely let's start with the relevant facts from our information gathering before we get to the fascinating part of the story that describes the downfall of the relationship as it was torn asunder between Nvidia and EVGA starting with those facts evj will cease all production of manufacturing for video cards existing customers will remain supported EVGA tells us by ebj's warranties by its normal processes so that remains in place UJ has withheld some inventory as well this is intended to help it hold over as it might need to replace cards that get lost in the mail get damaged need Replacements or have defects where they need to resolve it somehow for the customer they're keeping some back and not selling them for those purposes next one they're expecting to run out of the 30 series by the end of this year evj is staying in business at least for now this is one of the points they made it very clear to us that they're financially sound and stable and have no intent of going out of business uh and it will trigger a downsizing but at least as of today EVGA stayed in business evj is not selling its business and it actually has very strong convictions against that so that's not something you need to worry about either necessary but it's something we're going to talk about more later as well now also interesting here EVGA is not expanding into more product categories so even though it's not selling the business and it is killing its video card arm of the business which again is 80 of the revenue even though the profit is smaller overall the lack of expansion is a little concerning because it means there's a lot of employees who will not have a thing to do anymore now Nvidia was notified of evga's decision to stop making video cards back in April but only the absolute upper echelon of management is aware of this decision so a lot of Nvidia staff will be finding out when this video goes up another point from the information gathering stages where this was all conducted with evj CEO this is as first party as it gets not rumors uh EVGA has thus far not entertained the idea of working with Intel or AMD we talked with them about this at Great length for over an hour in that conversation and there was just no interest from EVGA CEO however we really do think there's an opportunity there and they should be exploring it but as of now that's what they told us EVGA again finished making EBT samples of the 40 series cards they will not be selling them though the reason we're bringing this up is because if you see photos leak online of evjrtx 4090s then it's because they made some I can't say a lot more than that because that product is under NDA uh but they made some and they're not going to be selling them if you see a leak though it's an engineering sample it doesn't mean that this video is invalid this decision is very real it came from the CEO evj claims that employees will be reallocated to other Departments of EVGA and realistically there is going to be some kind of mass Exodus because it's just impossible to take there's about 280 people there right now worldwide as we understand it they've already laid off 20 of their Taiwan Workforce a couple months ago and it's just not possible to get rid of that much of your business and be able to give everyone a new job within the company it's not that big of a company and some people will be left without a job function and although ebj CEO says that he will take care of his team and keep paying them to some of extent we believe that realistically if people don't have a thing to do even if they're okay accepting charity for a while at some point they're going to go I would like to do something now for the money thank you and even go somewhere else so for instance people like Kingpin or Vince Lucito who's on the overclocking team and is a marketing machine for EVGA it will no longer be able to do the job he was hired to do and that's going to be true for a lot of other people on the team as well so there will likely be some departures there is going to be some attrition uh even though evj intends to support its staff and finally evga's belief is that Nvidia has screwed it over basically so this is where we're gonna approach it in sort of a neutral or objective way because some of the stuff from EVGA first party doesn't quite make sense but also we've heard many of these things about Nvidia in the past and they align with things that we know uh for nvidia's treatment of Partners so there's some truth and there's also some flavor from EVGA because they were the ones controlling the dissemination of the information for this so let's talk about evj's side of the story we asked why would you walk away from Nvidia and the answer was that it's about respect in talking to EVGA the company told us Point Blank this is not a financial decision it is a principled decision EVGA and competing board Partners have told us nearly every launch that they don't find out Basics about the very product their partnered to sell like the MSRP until Nvidia CEO is on stage we're told this is true even for cost to buy the chip Nvidia apparently only gives placeholder costs for some gpus like flagships until the MSRP is revealed publicly it's hard to run a business when you don't even know what the cost of your product is that you're imminently launching we've learned that Nvidia has both a floor and a ceiling for card prices on some cards so only flagships for the ceiling with board Partners restricted from selling Flagship models above a certain cost this restricts creativity for uniquely high-end boards but those are the rules of the game and other board partners are willing to work within them so if EVGA doesn't want to play by those rules anymore and they exit the market The Other Board partners are going to descend like vultures upon the allocation that EVGA gets from Nvidia and although ebj insisted to us that being an Nvidia partner is not ultimately profitable clearly it's profitable enough for the companies that sell many millions upon millions of video cards uh each generation so even though Asus gigabyte and MSI have all had the same complaints to us about how Nvidia sort of treats them or supplies them with information before a launch they all seem to be doing at least well enough to keep selling the cards and not want to back away from It ultimately a couple percent margin although absolutely terrible against millions of products it starts to add up fast so we knew there was a lot more to this story and we would have to dig into it and video won't sell fewer gpus because of this so losing the EVGA maybe they lose some coverage and in some parts of the world but this isn't really about sales here it's more about a statement for EVGA and losing a partner of 20 plus years that's been exclusive to Nvidia here this entire time that sends one hell of a statement but it doesn't only send a statement about Nvidia EVGA feels its supplier Nvidia is undercutting evga's ability to sell products with Nvidia Parts by offering the founders edition cards at a lower price which it can do because Nvidia makes both the GPU and the card they don't need to take the margin off the GPU in the same way looking at Best Buy's website right now we see the founders edition cards are cheaper than EVGA video cards EVGA can't compete here and it's already losing money on its 30 series cards at these prices whereas Nvidia stands to profit regardless because it is both the supplier and the manufacturer of the board and sometimes even the seller of it so we put put this table together we have some specific number values but we can't share those with you yet possibly in December we're hoping to do a follow-up but talking to EVGA we've learned that the company is losing hundreds of dollars per video card when selling at the current market prices lower tier cards like the 30 60 are still profitable but everything from an RTX 3080 to a 3090 TI is a loss in the hundreds of dollars and the prices are controlled in part by Nvidia and the problem here for EVGA is they don't want to make boards that are substandard that have thermal issues power design issues or other problems and that means costing more and since they aren't the supplier they can't run as low as Nvidia can we asked dvga if it tried to work this out with Nvidia before killing the partnership that they've had and evj's Joe Darwin basically head of operations answered with this you can only ask so many times we tried to have the discussion with them and your hand jumped in and said they know so it's done then they're not making more video cards now even Jay only had three people from the company in the meeting with us and its staff won't be finding out about this decision until today when this video goes live just a few hours before it and so as interesting as the story is about evg and Nvidia the one thing we were worried about here maybe more immediately is what happens to evja's people as a result of this decision trying to figure out what happens next for the staff at EVGA we started asking about the revenue numbers about 78 percent of Eva's gross revenue comes from video cards right now today about 20 percent comes from power supplies about two percent the remainder comes from miscellaneous things that'd be motherboards the E1 coolers things of that nature and EVGA CEO claims that the power supply margin profit margin for its power supplies is 300 percent higher than the profit margin for its gpus or its video cards so that's how you end up with the company that has 78 of its Revenue but a really comparatively small portion of its profit coming from One Division and it's also how you end up in the conundrum EVGA is now in where it will no longer have sufficient revenue or work more importantly it's really the work that matters more to sustain 280 people most of whom work on video cards when there will no longer be video cards being manufactured at the company so I asked if there would be layoffs and evga's Joe Darwin jumped in and said we're not going to lay anyone off that was the direct quote he noted that they expect some attrition or basically some bleed of employees as they are informed of this news likely today and start deciding if they still want to work on the projects that they well if they still want to work there now their projects are dead basically and we also know that they already had layoffs a few months ago in the Taiwan office so a lot of EVGA staff is only there for gpus and the numbers just don't make sense for EVGA will not need all the PCB Engineers who worked in the video card department to move over to power supplies even though they're trying to create roles for them there there's only so many power supply PCB designers you need and the skills might not always line up additionally the support staff won't have as many customers to support after this year and even starting now the amount of people who call in for help it's going to go down and the support staff sure you could retrain them on power supplies but you only need so many people supporting power supplies especially if you're not trying to grow that division of the business further still Logistics warehousing and sales staff will now not be managing video card inventory anymore those jobs they're not gonna stay there's nothing for them to do so it's a reality of this business where those roles will get cut if they don't have work and Eva Jay sure the CEO says he will pay and support his staff and try to keep them all employed and that is fantastic and admirable and sort of the right thing to do but they also can't pay on charity and lose money because then everyone will lose their jobs so at some point they either need to rely on attrition where people just depart or they're going to have to really work on retraining and distributing people throughout the company and growing new business sectors because sustaining will not be enough so anyway our next question was what about Vince EVGA relocated its resident overclocking expert and marketing machine Vince Kingpin lucido to Taiwan about 10 years ago now he's done well here but he's entirely focused on overclocking and mostly gpus and getting evga's name to the top of all of the charts without gpus and with motherboards functionally dead in the water at EVGA Vince will have little to do evj CEO Andrew Hans answer was I think Vince has his own plan and my answer to that was you should check with them because I'm not so sure about that I just spoken to him recently uh so that's for them to work out but Han says he will take care of his people we do believe he'll take care of at least a couple of the core people have been at the company forever it will just come down to is there a provision of interesting work or is it just pay for sake of loyalty which is again admirable that's really a great thing to do that you don't have to and not many companies would do it but normally people do want meaningful work to go along with that so it just depends on how they work that out so earlier we said that evj made some conflicting statements what we've tried to make clear to really everyone in the industry but especially in this situation EVGA is that our job is to be as in the middle as possible and try to understand nvidia's perspective and dvj's perspective we're not the EVGA PR machine to just try and tell their story and so looking at the story we did find quite a few holes in it as it was developing they started to congeal and re-re close as we got through more details but we'll get to that so evj's complaints about Nvidia we think are valid so uh complaints about not receiving information prior to Jensen Juan getting on stage and announcing the parts that's a little ridiculous and uh it is a problem so that is absolutely a valid complaint now similarly evj is not free of fault itself over these last couple of generations the company we think is probably over ordering during mining booms especially and it gets burned when that demand dries up and it evaporates in a heartbeat as you all know literally days ago maybe one day ago when this video went up ethereum went off of proof of work and like that there's GPS Supply again for really cheap and that hurts companies like EVGA who have new inventory they want to sell as they compete with things half the price on eBay and a lot of them so EVGA insists that it is solvent that has strong financial footing and that has liquidity that it has built up over the last year or so during this really high demand period where it's been able to sell everything it makes up until now it also emphasized it has no debt and it owns its buildings which is a great place to be in but they got burned like this in the RTX 20 series as well and this seems to be history repeating itself where EVGA with the 20 series lost a lot of money in in six digits at least for the 20 series towards the end of it and it's like that again now where there's oversupply of a previous generation leading to a trigger of losses on sales towards the end of the generation's lifespan probably over the span of the 30 series was in demand for so long it sounds like they did well it sounds like they're still okay they've got liquidity they have cash but it's these last few months of the 30 series where whatever is left that they're selling at a loss that's going to start chewing away at the profit they've been trying to bank for years now and depending on how much there is it could be a bad situation to be in so we kept asking questions and digging here now while I can respect principal decisions and I think you all know this because you've seen our content you know how we'll take a stand on principal alone sometimes and torch ad contracts and in a heartbeat uh there is another point where different principles take priority over the original ones that you're acting on in this case what I'm talking about is evj's staff and its employees where they might really should take priority when making a decision that will affect the jobs at the company so we felt like there had to be more to this decision and evj CEO he's in his early 60s now uh retirement might make sense the first card he made came out about 22 years ago and he was among the first people making Nvidia board partner cards so because this decision felt like it had holes in it I'd switched to Andrew Han's native language to try and connect a little bit better for an answer and the question was very simple just Andrew the Yahoo and he said not yet looking at the exterior of the building you could see where there's another Avenue here and the whole flight out to EVGA this question was burning in the back of my mind which was again speaking and Mandarin with him which is just do you want to sell and his answer is very simple very straightforward no at least he said he doesn't want to sell to the types of investors he thinks would take over Han made it very clear that anyone who'd want to buy would be in it for the money of course because they're investors and our interpretation of his side of this conversation was as if he'd rather die with the company than sell it to vultures who would tarnish the reputation EVGA had built and who would hurt the customers which they have very clearly at least for the U.S market been dedicated to in fact he said as much when he said that they were built on community and they didn't want to sell to people who would take that away from the core of the company so it's very respectable but he also noted that there may be people within the ranks of evj who could eventually take over if it ever comes to retirement for the current CEO and he would move into more of an advisory role at that point who knows it could be that if that happens in some years someone internally takes over and decides I am willing to deal with the time it takes to deal with nvidia's or amds or in towels they all do it uh and I'm willing to put video cards back on the map for EVGA time will tell we're not there yet for now though Andrew Han doesn't want to retire although we eventually learned that there's another reason for the termination of this partnership with Nvidia and its family Andrew Han told us that he's been running the company for decades now he wants to spend more time with his family at this point and uh he feels that nvidia's lack of appreciation of his company's work is no longer worth the time that Nvidia requires to participate in launching of its gpus so that when we finally got to that answer it made a lot more sense because up until then purely numerically financially potentially even ethically at some level for the other employees it was difficult for us to understand the decision at the core but with this information it became clear that it's more of a personal decision it's not just a personal uh principle or some kind of Vendetta against Nvidia it's also a desire for time in life outside of the GPU industry and euga has told us in the past that it feels Nvidia is vindictive and that's coming from the number one partner how this decision ripples through the rest of the partners remains to be seen as for AMD and Intel when we pressed for over an hour on the topic of whether EVGA would partner with AMD or Intel we were met with a confusing answer EVGA told us about how apparently Nvidia has fought it over its overclocking products and high-end products and made it difficult for EVGA to be creative with what they want to make they've also told us how they've been yelled at at press functions for allowing the Press that's us to film certain things because Nvidia didn't fully control those things at the time in spite of all these bad experiences evj still has no plans to work with the AMD or Intel and uh the reasoning again was was confusing and contradictory probably ultimately because there was some personal decision-making fuel in it but one of the statements made was quote because of the partnership at least I don't betray them talking about Nvidia obviously everyone in the rooms that's me Jay and John Petty uh looked at Andrew Han and said but it seems like you think they betrayed you so who cares we made the point that Intel needs a strong and competent board partner right now and that EVGA could add disproportionate value with its experience to Intel's Endeavors the response was quote that's Intel's problem actually GPU business is a good business Nvidia has a good product so as of now evj doesn't want to work with Intel that could change if the right people at Intel reach out to EVGA and can get through to them but the longer evj stays out of the video card Market the more their relevance will fade if they come back in four years and say we're ready to go again that value is not going to be the same as it is right now right now AMD or Intel would kill to have EVGA working with them on products and evj could demand better pricing at a higher margin because of their position but that's going to go away if they don't move fast so EVGA has some strong points here kind of wrapping up things you know by all accounts from board Partners Nvidia is on the overbearing side at times and Nvidia has kind of moved towards a closed ecosystem but it's not there yet we could see evidence maybe of Nvidia wanting to do an apple-like approach where it's the only provider of its gpus it saws them in Founders editions that's the only model but they're lacking a lot of the localization the logistics globally the control of the supply chain to make that possible today we spoke with someone from Nvidia and uh basically asked for some flavor as to how does Jensen Juan and Nvidia how do they think and operate this was the quote we got Jensen likes well integrated and fully controlled vertical Solutions he'll ask why are these guys the board Partners making money when they're not doing much nvidia's problem is it doesn't control the supply chain like apple does they can lose money on a board where Apple won't apple is run by a supply chain guy with other supply chain staff living in Taiwan and China doing nothing but sourcing this aligns with what evj CEO told us which was that Jensen Juan he feels that treats Partners as if they have zero contribution and no cost with all the PCB the heatsink design the fan design the tuning overclock functionality and software uh his feeling was that this is not appreciated by Nvidia CEO um so Nvidia may eventually Endeavor to make cards independently but as of now Nvidia still needs and seems to want to work with board Partners to do all the hard stuff down the chain like support supply chain management and all that stuff so we've tried to take as balance the view as possible here hopefully it's coming through because this was not easy to write it took several it took about a week actually to really refine it and it's easy to try and build on the conflict and on the hate friend video but we also want to point out that evja controlled the distribution of this story from its perspective and so that's why we tried to try to take it as neutrally as possible we could see both sides a little bit by and large there's evidence to support that Nvidia acts in a very controlling fashion with its Partners probably nvidia's defense would be yeah but they'd screw it up or do you see all the leaks that happen or something like that so certainly there's a defense we do see a little more on the partner side for that aspect of things that where you know they deserve respect for cooling the gpus that everybody is making right now that's not easy that's a lot of work and it's really expensive it deserves respect it's not like they're just doing nothing and added no value and making money off of nvidia's hard work it goes both ways both parties are putting in a lot of hard work so anyway evga's CEO we spoke to him and we do think they made some questionable purchasing decisions over the last two generations so they're not fully clean of fault um for perhaps some of the stress that they felt and I think they recognized that but the CEO said that he feels relief and as if sort of a weight has been lifted uh and so we can respect the principal decisions there the personal reasoning also makes sense I worry about the staff a little bit most companies would appoint someone to head up growth elsewhere if the CEO doesn't wish to you don't have to kick them out it's a private company but they'll normally appoint someone so EVGA now needs to prove itself this either is the beginning of the end for the company and it's only going to get worse or they will now be completely Unbound from these apparently caustic ties that have been restraining their Innovation for however long so it's up to them to prove what happens next and that is all for this report thank you for watching and for supporting our independent coverage and our efforts to fly around and get this stuff properly reported we pay for all of our own flights hotels and everything else to do these trips and collect the information for you so you can support us at store.gamersaccess.net by grabbing a modmad coaster pack or more or go to patreon.com Gamers Nexus thank you for watching we'll see you all next time

Channel: Gamers Nexus

Views: 1,733,845

Keywords: gamersnexus, gamers nexus, computer hardware, evga, evga out of business, evga kills gpus, no evga 40 series, no evga rtx 40, evga quits nvidia, evga nvidia, evga video card manufacturing, evga rtx 3080, nvidia rtx 4080

Id: cV9QES-FUAM

Length: 29min 53sec (1793 seconds)

Published: Fri Sep 16 2022

Reddit Comments

[u/Difficult_Bend_4813]

This really sucks because EVGA has always been my favorite GPU AIB...

[u/xAlias]

Damn, this is pretty sad news. Losing competition is bad for the customers in the long run!

[u/chingy1337]

Woah holy shit what the fuck??? I only buy EVGA too. Damn

[u/LordTekno]

EVGA has also been purging other inventory, dropped prices drastically for their current gaming accessories. Big chances ahead for them. I wish them good luck.

[u/Armed_Buoy]

Well this fucking sucks. My last two cards have both been EVGA and I've been pretty happy with them. Guess I'm going to have to look elsewhere if I want to get a 40 series.

Really weird that they're so adamant about not going over to AMD or Intel. I get that they're tired of dealing with Nvidia's fuckery, but completely dropping a product line that's responsible for 80% of your company's revenue... I'm very worried for EVGA's longevity if they don't seek out another GPU partnership.

[u/TandrewTan]

Whoa, had no idea Steven spoke pretty good mandarin

[u/PunjabiPlaya]

This image taken from the Ars article really explains it.

[u/Nestledrink]

Long time coming

There's a bit of history here

Pre-10 series, Founders Edition has always been offered in a limited fashion. It was always called NVTTM (NV Time to market) which means the FE (or known as reference model) was there in a limited fashion to help AIB to get to market and then the FE disappears and AIB cards took over entirely

10 series was the FIRST time where FE has been offered for the entire LIFE of the product and FE is priced higher vs MSRP for some of the SKU

20 series improved the cooling but again FE charging higher price vs MSRP for some of the SKUs and being offered for the entire LIFE of the product.

and 30 series basically improved the cooling enough that most people don't need AIB AND it's priced at MSRP AND exists for the life of the product.

So it's no wonder that AIB started to feel the squeeze now.

[u/elplebe519]

Asus gave me the run around. MSI refused to even look at the card until I threatened legal action, gigabyte took a month to reply, but EVGA had my GPU RMA taken care of in 2 weeks time. Gonna miss 'em.