Shipments of discrete graphics could decline by up to 30-40 percent in the second quarter of 2014.

The substantial drop has been caused by excessive inventories and the end of the cryptocurrency mining craze, reports dodgy Digitimes. 

We discussed the altcoin mining boom and its possible fallout a couple of months ago, so you may want to check it out for some background.

No more GPU mining

The tl:dr version goes something like this: bitcoin can no longer be effectively mined using GPUs, so over the past 18-24 months GPU miners have been flocking to alternative cryptocurrencies based on ASIC-proof algorithms such as Scrypt. The most popular Scrypt coins are litecoin and dogecoin, which is basically an elaborate meme-inspired joke, but it’s wildly popular in some circles and the community has a great sense of humour, as it’s looking to have some fun rather than make a quick buck.

The first Scrypt ASICs are taping out and they will render GPU miners obsolete overnight. Some of these chips can deliver as much hash power as 250-400 Hawaii XT cards. Miners don’t have anywhere to go, there’s nowhere to migrate. Many mining rigs will be up for sale soon, but as we pointed out back in April, it is probably a good idea to stay away from mining cards in the second-hand market.

Seasonality kicks in

Digitimes cites “sources from graphics cards players” and claims that sales have been impacted since April. This is not exactly a scoop, as we expected demand for GPU miners to cool off this quarter and so did AIB partners.

AIBs and channel retailers reportedly asked AMD and Nvidia to slash their prices in order to reheat demand, but the companies chose to dial down shipments instead. Although the decline is substantial, it was not unexpected and it merely accelerated seasonal trends. People simply don't tend to buy heaps of graphics cards during the summer, especially not when the World Cup is on the telly, although the cup doesn't make much of a difference in North America.

Furthermore neither AMD nor Nvidia have a lot of fresh products to offer. Nvidia has just a single Maxwell-based discrete card, while AMD has a few Hawaii products which have been around for nine months.

Unfortunately this won’t change anytime soon and the slow transition to 20nm is another concern.