Analysis of AMD's Graphics Card Pricing Strategy: Assessment of Market Competitiveness Amid DRAM Shortages

Based on collected data and industry dynamics, this report presents a systematic and comprehensive analysis.

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The world is currently facing the most severe DRAM memory supply shortage since the end of 2024. The core driver of this crisis stems from the explosive growth in demand for artificial intelligence infrastructure and data centers [1][2]. According to data from industry research firms TrendForce and Counterpoint Research, the average selling price (ASP) of DRAM has risen by approximately 50% in 2025, and is expected to climb a further 50% by early 2026, with price increases for some categories even reaching 300% to 400% [3][4].

From a supply chain perspective, the three major DRAM suppliers—Samsung, SK Hynix, and Micron—have all actively cut production capacity for traditional product lines, and prioritized allocating production resources to High Bandwidth Memory (HBM) and DRAM for AI servers [5]. This capacity reallocation has directly led to tight supply of consumer-grade GDDR6 and GDDR7 VRAM. Notably, GDDR VRAM accounts for 20% to 25% of the production cost of high-end graphics cards, and this proportion even reaches 80% in some high-end models [6].

Amid DRAM cost pressures, the graphics card market is experiencing a significant price adjustment period. According to supply chain sources, AMD has raised graphics card prices since January 2026, and NVIDIA is expected to follow suit in February 2026 [7]. Market analysts predict that due to potential DRAM cost increases of 300% to 400%, retail graphics card prices could double in 2026 [8]. Some high-end variants of NVIDIA’s flagship RTX 5090 may even hit the psychological threshold of $5,000 [9].

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David McAfee, AMD’s Vice President and General Manager of the Ryzen and Radeon divisions, has clearly stated the core of the company’s pricing strategy in public:

[10][11]. McAfee noted that the company has established long-term strategic partnerships with major DRAM suppliers to ensure stable memory supply for Radeon graphics cards. However, he also acknowledged that maintaining price competitiveness faces “structural challenges” amid the current shortage environment [12].

AMD’s pricing strategy can be summarized into the following three dimensions:

The company has stated that it will do its utmost to keep price increases within a “reasonable range” and avoid passing all cost pressures onto end consumers [13]. Previously, AMD introduced an official pricing policy for the RX 9000 series of “a $10 markup per 8GB of VRAM”, corresponding to an increase of approximately 3% to 5% [14].

AMD maintains close communication with graphics card authorized partners (such as ASUS, MSI, Gigabyte, Sapphire, etc.), attempting to alleviate price pressure through supply chain optimization and cost-sharing mechanisms [15].

Facing NVIDIA’s pricing power in the high-end market, AMD has chosen to focus on a “performance-per-dollar” strategy, abandoning direct price wars with NVIDIA in the ultra-high-end segment [16].

Despite AMD’s intention to control prices, market realities have led to substantial price increases across its product lines:

Graphics Card Series	Model	Price Increase
RDNA 4 (RX 9000)	Radeon RX 9070 XT	Up to 17%
RDNA 4 (RX 9000)	Radeon RX 9070	Up to 15%
RDNA 4 (RX 9000)	Radeon RX 9060 XT 16GB	Up to 14%
RDNA 4 (RX 9000)	Radeon RX 9060 XT 8GB	Up to 10%
RDNA 3 (RX 7000)	Radeon RX 7900 XTX	Up to 10%
RDNA 3 (RX 7000)	Radeon RX 7900 XT	Up to 4%
RDNA 3 (RX 7000)	Radeon RX 7800 XT	Up to 6%
RDNA 3 (RX 7000)	Radeon RX 7600 XT	Up to 13%

(Radeon GPU prices have risen by 10% to 17% compared to the suggested retail price [17])

• Maintaining Consumer Goodwill
  : Amid NVIDIA’s substantial price hikes, AMD’s “consumer-friendly” positioning helps maintain brand loyalty [18]
• Differentiated Market Positioning
  : Remains competitive in the mid-range market (priced at approximately $300 to $600), avoiding direct confrontation with NVIDIA in the ultra-high-end segment [19]
• Supply Chain Stability
  : Long-term cooperation agreements help secure supply of key components, avoiding market share losses due to stockouts [20]

• Gross Profit Margin Pressure
  : If AMD chooses to absorb part of the DRAM cost increase, it will directly compress profit margins [21]
• Pressure on Channel Partners
  : AIC manufacturers face dual pressure from rising costs and restricted selling prices, which may affect their enthusiasm for promoting AMD products [22]
• Supply Sustainability Challenges
  : Even with long-term agreements, ensuring sufficient supply amid industry-wide shortages remains uncertain [23]

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According to AMD’s latest financial report (Q3 2025, as of September 27, 2025), the company’s overall gross profit margin is 52%, up 2 percentage points from 50% in the same period last year [24]. This improvement is mainly driven by product mix optimization, rather than cost control. Notably, the Client and Gaming segment recorded revenue of $4.048 billion, a year-on-year increase of 73%, with strong demand for gaming GPUs [25].

However, the impact of DRAM shortages on gross profit margin has a lag effect. During the Q3 2025 reporting period, DRAM prices had risen but had not yet been fully transmitted to finished product costs. It is expected that financial data in the first half of 2026 will more clearly reflect the actual impact of pricing strategies on profitability.

From a cost structure perspective, the cost of graphics card products consists mainly of the following components:

• GPU chip (advanced process manufacturing, accounting for 30-35%)
• GDDR VRAM (accounting for 20-25%, and as high as 80% in some high-end models [6])
• PCB, cooling system, power supply (accounting for 15-20%)
• Packaging, testing, and logistics (accounting for 10-15%)

: The direct impact on gross profit margin is approximately 2-3 percentage points
: The direct impact on gross profit margin is approximately 1-1.5 percentage points
: The direct impact on gross profit margin is approximately 3-4 percentage points

Considering product mix optimization (higher proportion of high-end products) and economies of scale, it is expected that AMD can control the negative impact of DRAM shortages on gross profit margin within 1-2 percentage points, but prolonged cost pressure may cause gross profit margin to gradually fall back to the 48-50% range [26].

AMD’s financial position provides a buffer against cost pressures:

• Cash and Short-Term Investments
  : $7.2 billion (Q3 2025), up 41% from $5.1 billion at the end of 2024 [27]
• Inventory Level
  : $7.313 billion (Q3 2025), up 27.5% from $5.734 billion at the end of 2024, indicating the company is building safety stock [28]
• Free Cash Flow
  : $2.405 billion (latest annual data), providing financial flexibility for pricing strategies [29]

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According to the latest data from Jon Peddie Research (Q3 2025), the discrete graphics card market presents a highly concentrated competitive landscape:

Vendor	Market Share	Quarterly Change
NVIDIA	92%	-1.2%
AMD	7%	+0.8%
Intel	1%	+0.4%

Although NVIDIA still holds an absolute dominant position with a 92% share, its share has dropped 2 percentage points from 94% in Q2 2025 [30][31]. This change is mainly attributed to two factors: first, the improved market acceptance of AMD’s RDNA 4 architecture products (Radeon RX 9000 series); second, some consumers have switched to AMD products due to the substantial price hikes of NVIDIA’s RTX 50 series [32].

:

1. Shift of Price-Sensitive Consumers
   : The aggressive pricing of NVIDIA’s RTX 5080/5090 series (price increases of over 50% for some models) is driving price-sensitive consumers to AMD [33]
2. Filling Mid-Range Market Gaps
   : AMD’s RX 9070 XT (suggested retail price of approximately $600) has significant cost-performance advantages in the $400 to $700 price segment [34]
3. Supply Chain Differentiation
   : Some analysts believe that AMD’s choice of GDDR6 instead of GDDR7 as VRAM for the RX 9000 series is a pragmatic move amid the current shortage, helping to avoid the extreme shortage of GDDR7 [35]

:

1. Absence in High-End Market
   : AMD’s RDNA 4 architecture products cannot compete with NVIDIA’s RTX 5080 and higher-end models, lacking competitiveness in the enthusiast market [36]
2. Doubts About Supply Sufficiency
   : Market feedback indicates that AMD graphics cards face supply shortages; if this cannot be resolved, the window for market expansion may be missed [37]
3. NVIDIA’s Countermeasures
   : NVIDIA may artificially create scarcity by cutting supply of the RTX 50 series (by 20%-40%) to maintain prices and squeeze AMD’s market space [38]

Considering the effects of pricing strategies and market dynamics, it is expected that AMD’s discrete graphics card market share will gradually increase to 8%-10% in 2026, but the probability of exceeding 10% is low. The main limiting factors include:

• AMD’s next-generation RDNA 5 architecture is not expected to launch until late 2026 or 2027, creating a product gap of approximately one year [39]
• NVIDIA’s strong position in data centers and AI provides strong brand premium support for its consumer GPU business [40]
• Intel is increasing investment in the discrete graphics card market; although the Arc series has a small share, its growth momentum is notable [41]

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Against the backdrop of DRAM shortages, AMD’s pricing strategy is essentially a

strategy — sacrificing some short-term gross profit margin to gain market share growth and brand value enhancement. The success of this strategy depends on:

1. Consumer Sensitivity to Cost Performance
   : Amid overall graphics card price increases, “relatively affordable” constitutes a competitive advantage [42]
2. Timing of Cost Pass-Through
   : AMD’s choice of gradual price increases instead of one-time sharp adjustments helps reduce consumers’ price sensitivity [43]
3. Acceptability of Product Performance Gaps
   : Although the RX 9000 series lags behind the RTX 50 series in ray tracing and AI computing, the gap in traditional rasterization performance has narrowed [44]

From a financial perspective, AMD’s pricing strategy has the following long-term impact pathways:

• Revenue Side
  : If the increase in market share is sufficient to offset the decline in gross profit margin, revenue can still grow
• Profit Side
  : Short-term pressure, but if consumer loyalty can be established, long-term brand premium capacity is expected to improve
• Cash Flow
  : Abundant free cash flow provides strategic flexibility to support price competition for a certain period

For investors focusing on AMD, it is recommended to track the following indicators:

• Gross Profit Margin Trend
  : Whether quarterly gross profit margin shows a continuous decline
• Gaming Business Revenue Growth Rate
  : Sustainability of revenue growth in the Client and Gaming segment
• Inventory Turnover Rate
  : In an environment of rising costs, inventory management efficiency directly affects profitability
• Market Share Changes
  : Quarterly AIB shipment data from Jon Peddie Research

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1. Effectiveness of Pricing Strategy
   : AMD’s strategy of “controlling price increases and setting reasonable prices” is rational and necessary in the current market environment, helping to maintain its consumer base and market share, but it cannot fully avoid the profit margin pressure brought by rising DRAM costs.
2. Impact on Gross Profit Margin
   : It is expected that DRAM shortages will put 1-3 percentage points of pressure on AMD’s gaming GPU business gross profit margin, but the company’s overall gross profit margin (52%) can still remain in a healthy range above 50% in the short term.
3. Market Share Outlook
   : AMD is expected to increase its discrete graphics card market share to 8%-10% in 2026, but exceeding 10% faces dual challenges of product capability and supply sufficiency.
4. Strategic Sustainability
   : The sustainability of this pricing strategy depends on the duration of DRAM shortages and AMD’s cost pass-through capability. In the long run, AMD needs to make breakthroughs in product innovation (such as the RDNA 5 architecture) and supply chain vertical integration to fundamentally improve its pricing power.

• DRAM shortages may persist until the second half of 2026 or longer, and cost pressure may exceed expectations
• NVIDIA may counter AMD’s market expansion through price wars or supply adjustment strategies
• If AMD cannot resolve the supply sufficiency issue of the RX 9000 series, the room for market share growth will be limited

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[1] Tom’s Hardware - “AMD vows to fight for gamers as DRAM shortage sends GPU prices skyrocketing” (https://www.tomshardware.com/pc-components/gpus/amd-vows-to-fight-for-gamers-as-dram-shortage-sends-gpu-prices-skyrocketing-radeon-gpu-prices-have-already-surged-over-10-percent)

[2] Gizmodo - “AMD Promises to Try and Keep GPU Prices Low Against the Ravages of the RAM Shortage” (https://gizmodo.com/amd-promises-to-try-and-keep-gpu-prices-low-against-the-ravages-of-the-ram-shortage-2000710505)

[3] IntuitionLabs.ai - “RAM Shortage 2025: How AI Demand is Raising DRAM Prices” (https://intuitionlabs.ai/articles/ram-shortage-2025-ai-demand)

[4] DropReference.com - “Increase in GPU prices in 2026? Analysis and market status” (https://dropreference.com/en/blog/news/price-increase-graphics-card-2026)

[5] DarkFlash - “Will GPU Prices Rise Next? The Ripple Effect of Flash and Memory Cost Surges” (https://www.darkflash.com/article/will-gpu-prices-rise-next-the-ripple-effect-of-flash-and-memory-cost-surges)

[6] Wccftech - “AMD and NVIDIA video card prices will increase significantly in early 2026 due to memory shortage” (https://ixbt.games/en/news/2025/12/31/ceny-na-videokarty-amd-i-nvidia-vyrastut-v-nacale-2026-goda-iz-za-deficita-pamiati.html)

[7] Wccftech - “AMD Expected To Focus More On RX 9070 XT Than Its Non-XT Variant” (https://news.google.com/atom/articles/CBMijwFBVV95cUxOWmlpMGRfQlhaem1pZFlUZmlhM1EzbXp2blFpek1LVC1YRl9xZkI3QW11cHVBQlFaZU1pemlmVHBEVFlYejBOTnJUVXZmeEZxTDY0c0d0ckE2MnE2eXJnYlZRem0wTERmX3k0d1Y5eGVJYk1OSm1LeTAxRndHTGNOQzZ1SnhTbFFKNkczZDMtb9IBlAFB)

[8] Tom’s Hardware - GPU pricing analysis (https://www.tomshardware.com/pc-components/gpus/amd-vows-to-fight-for-gamers-as-dram-shortage-sends-gpu-prices-skyrocketing-radeon-gpu-prices-have-already-surged-over-10-percent)

[9] Digital Trends - “AMD has new chips, but RAM prices are the real boss fight” (https://www.digitaltrends.com/computing/amd-has-new-chips-but-ram-prices-are-the-real-boss-fight/)

[10] Tom’s Hardware - “AMD vows to fight for gamers” (https://www.tomshardware.com/pc-components/gpus/amd-vows-to-fight-for-gamers-as-dram-shortage-sends-gpu-prices-skyrocketing-radeon-gpu-prices-have-already-surged-over-10-percent)

[11] Gizmodo - AMD GPU pricing statement (https://gizmodo.com/amd-promises-to-try-and-keep-gpu-prices-low-against-the-ravages-of-the-ram-shortage-2000710505)

[12] Tom’s Hardware - David McAfee quotes (https://www.tomshardware.com/pc-components/gpus/amd-vows-to-fight-for-gamers-as-dram-shortage-sends-gpu-prices-skyrocketing-radeon-gpu-prices-have-already-surged-over-10-percent)

[13] Gizmodo - AMD pricing strategy (https://gizmodo.com/amd-promises-to-try-and-keep-gpu-prices-low-against-the-ravages-of-the-ram-shortage-2000710505)

[14] Tom’s Hardware - Radeon GPU price analysis (https://www.tomshardware.com/pc-components/gpus/amd-vows-to-fight-for-gamers-as-dram-shortage-sends-gpu-prices-skyrocketing-radeon-gpu-prices-have-already-surged-over-10-percent)

[15] Tom’s Hardware - AIB partner collaboration (https://www.tomshardware.com/pc-components/gpus/amd-vows-to-fight-for-gamers-as-dram-shortage-sends-gpu-prices-skyrocketing-radeon-gpu-prices-have-already-surged-over-10-percent)

[16] Gizmodo - AMD performance-per-dollar strategy (https://gizmodo.com/amd-promises-to-try-and-keep-gpu-prices-low-against-the-ravages-of-the-ram-shortage-2000710505)

[17] Tom’s Hardware - Price increase table (https://www.tomshardware.com/pc-components/gpus/amd-vows-to-fight-for-gamers-as-dram-shortage-sends-gpu-prices-skyrocketing-radeon-gpu-prices-have-already-surged-over-10-percent)

[18] Gizmodo - Consumer-friendly positioning (https://gizmodo.com/amd-promises-to-try-and-keep-gpu-prices-low-against-the-ravages-of-the-ram-shortage-2000710505)

[19] Gizmodo - Mid-range market focus (https://gizmodo.com/amd-promises-to-try-and-keep-gpu-prices-low-against-the-ravages-of-the-ram-shortage-2000710505)

[20] Tom’s Hardware - DRAM supply agreements (https://www.tomshardware.com/pc-components/gpus/amd-vows-to-fight-for-gamers-as-dram-shortage-sends-gpu-prices-skyrocketing-radeon-gpu-prices-have-already-surged-over-10-percent)

[21] AMD 10-Q Filing - Financial analysis (https://www.sec.gov/Archives/edgar/data/2488/000000248825000166/amd-20250927.htm)

[22] Reddit - PowerColor representative statement (https://www.reddit.com/r/pcmasterrace/comments/)