ATI, graphics business unit of Advanced Micro Devices, on Monday said that it would increase the price of its ATI Radeon HD 5850 graphics processing unit (GPU) by $20+ due to overwhelming demand towards the new graphics cards as well as increased costs of components and logistics.

“Due to the accelerated ramp of the ATI Radeon HD 5800 series products to meet overwhelming demand at a time when a recovering computer industry is limiting supply on some parts, AMD is incurring higher component, memory and logistics costs. While many of our products are impacted by these increased costs to varying degrees, we are only adjusting pricing on the ATI Radeon HD 5850 product at this time,” said Jay Marsden, a spokesperson for the company.

Both large suppliers of graphics processors – ATI and Nvidia Corp. – faced rather massive declines in sales of higher-end discrete chips in the last twelve months. As a result, in order to lower the risks, both companies reduced inventory levels and their orders to manufacturers. Furthermore, Taiwan Semiconductor Manufacturing Company (TSMC) said that the yield of chips made using 40nm fabrication process dropped again to around 40%, which means that the vast majority of 40nm chips ordered go to scrap bin.

Despite of the fact that ATI will increase the price of its Radeon HD 5850 GPU by around $20+, the company believes that the demand towards the chips will not get lower since at present ATI Radeon HD 5000-series is the only DirectX 11 product family on the market today. Moreover, actual graphics cards may not become considerably more expensive.

“We are confident that even with this price change, the ATI Radeon HD 5850 continues to offer outstanding performance per dollar for the enthusiast community [...] On average you could see a $20+ increase by some partners for their Radeon 5800s.  Some partners are already charging that for their boards so the increase will be defined and rolled out by partner” added Mr. Marsden.

Originally AMD set manufacturer suggested retail price for ATI Radeon HD 5850 at $399, whereas the cost of the more powerful ATI Radeon HD 5870 was set at $499.

Last year ATI and Nvidia started price war in a bid not to lose market share amid the shrink of the market size. It looks like as the recovery in the computer industry becomes more evident, the price war gets reversed.

ATI Radeon HD 5870 – the world’s most powerful GPU to date that was previously known as ATI RV870 or ATI Cypress – features 1600 stream processing units, 80 texture units, 32 render back ends and 256-bit memory bus. The chip incorporates unprecedented number of transistors – 2.15 billion and has maximum compute performance of 2.72TFLOP/s. Another version of the chip – ATI Radeon HD 5850 – sports 1440 stream processors, 72 texture units, 32 render back ends, 256-bit memory bus and peak performance of 2.09TFLOP/s.

Tags: ATI, AMD, Radeon, Evergreen, Cypress, 40nm