UBS: Cryptocurrency price shocks and ASIC mining have a greater impact on AMD than Nvidia

As cryptocurrency fever reached its peak last winter, demand for high-performance graphics cards made by AMD and Nvidia surged.

But now, with the prices of Bitcoin and Ethereum falling from their highs, UBS Group AG has warned that chipmaker AMD could suffer bigger losses than rival Nvidia if demand continues to shrink.

In an investment note to its clients this week, UBS Group AG said that while the two companies have roughly the same revenue streams in the crypto market, Nvidia has the advantage of also having cryptocurrency mining SKUs, so when the discrete GPU market experiences a cryptocurrency market correction, AMD’s net income (net/net) will be more affected.

However, what is certain is that UBS believes that even if the cryptocurrency market has experienced a "collapse-style" decline like in early 2018, compared with gaming graphics cards, AMD and Nvidia's revenue in the mining market is still very considerable - since the beginning of this year, the price of Bitcoin has fallen by half.

UBS analyst Timothy Arcuri said:

“The shrinking cryptocurrency mining market and the sudden impact on the sales market may cause the average selling price of graphics cards to fall. In addition, the number of graphics card sales will also decrease compared with previous quarters. However, this situation should not have an impact on the long-term sales trend of graphics cards. However, if ASIC mining machines are launched later this year and demand increases, AMD’s market gap may further widen.”

ASIC is an integrated circuit designed and manufactured for a specific purpose or in accordance with specific user requirements and the needs of a specific electronic system. ASIC mining machines do not require an Internet-connected computer with a graphics card, but are specifically designed to mine cryptocurrencies directly. Obviously, this type of mining machine will have a huge impact on AMD's demand for mining graphics cards.

AMD's stock price has fallen 9% since the beginning of 2018.