I'm not a business guy, but I think I would be very worried if I created any opening (even on the very long term) for competition to justify itself being built up to meet demand (or national security requirements of other countries) on an industry I mostly control, because I prioritized extremely high prices for a few years that might have the effect of changing the arithmetic for potential competitors that wouldn't have done it before.
It makes me consider whether there would be retaliation in later years against the US intellectual property system in countries other than China. While RAM is a tangible product, the areas it serves aren't really.
If I understand this comment correctly, it's saying that Micron and the others would be better off selling RAM at below the price they could get, in order to keep competitors from deciding to enter the market.
Such collusion might well be a violation of anti-trust law, but in any case, it wouldn't work. If they decide to sell at below-market price, they must (by definition) be preventing some customers from buying by some non-price mechanism (eg, only selling to companies run by other members of the CEO's family). Potential competitors would then see an opportunity to sell to these excluded customers.
Not exactly, I think it's saying that Micron would be better off increasing supply themselves (and thus lowering prices) than waiting for a competitor to come and provide more supply to meet the higher demand.
If there was enough existing competition, that might be the right move, because if they don't increase capacity, a competitor probably would in order to gain more market share. But I think the barrier of entry for making RAM is high enough that Micron can probably get away with keeping supply low (and thus prices high) for at least a few years before a new competitor appears. Assuming demand stays high that long.
They have two massive DRAM fabs (56000 m^2 cleanroom size each) that they started construction on in 2022 and 2023 in Idaho, with production starting in 2027 and 2028.
Yeah there is no such thing as selling a commodity below its market price on the open market. Someone else will come and arbitrage that away, or it’s not an open market.
A well-known anticompetitive tactic is for a big player with a vast bank account to move into an area and eat losses while waiting for their competitors to starve. Well observed in the 90's movie rental market, so certainly real.
No, because they're hardly enforced. China has been blatantly dumping a buttload of products for decades and the U.S. has been asleep at the wheel as it continues to hollow out our domestic manufacturing industries even further.
The argument I've seen about why someone else doesn't start selling RAM is it takes a year or two to ramp production. But here's a CEO saying he's going to make sure prices stay high enough, long enough that you can spin up a competitor
> But here's a CEO saying he's going to make sure prices stay high enough, long enough that you can spin up a competitor
2 years is not remotely enough time to spin up a competitor. It's not even enough time for a current leading competitor to spin up another fab.
If you are a newcomer you are talking a decade or more before mass production. If you are HK Hynix perhaps 5 years or so.
The majors all have large fabs under construction, but the majority of new production from those facilities won't be coming fully on-line until 2028 at the earliest. Even from the date of first wafer shipped most of these facilities take 6-12mo to reach mass production level output.
Chinese DRAM is interesting only because they started building capacity (expertise) a decade ago. Only now are the expected to have any material impact on the total volume of the market. And if they want to gain even more market share, they will be under the same ~5 years to spin up a brand new fabrication plant. Perhaps a bit less because they are China, but still multiple years.
Imagine being the sucker to go and do a big capex build out for a hypothetical demand in two years. Have fun explaining that to the investors who supported you. Also you probably need 5 years to cover your expenses at whatever the current costs are. If the volatile prices collapse you are in a world of hurt.
Someone will certainly take this bet - but it is a high risk one.
Micron is a trillion dollar company. The CEO would never say something like that directly. He's talking in the "business dialect" of English and you have to read between the lines a bit.
The CEO is saying nothing that everyone who analyzes the situation and knows at least something about semiconductor production wouldn't say. Demand is way up, supply cannot keep up, it will take some time to increase supply.
Micron is working on increasing that supply. The started building a massive fab for DRAM in 2022 in Idaho. It should start production in 2027. They started a second massive fab for DRAM next to it in 2023 with production scheduled for 2028.
This is the info that people should be looking at. Building these facilities takes time. I'm guessing they are thinking that demand is not going to decline anytime soon to justify this buildout. EDIT both SKHynix and Samsung are also expanding their DRAM production lines and new plants. So they are all working on adding new capacity.
Not to be snarky, but the CEO is saying that the supply will be tight for years. I know Econ 101 is over simplified but I do recall that when you reduce supply and demand stays constant, or increases, the price goes up.
I also recall some Econ 101, but I seem to recall a little but more than you since I also recall that the price goes up when the supply stays constant or even increases but the demand increases faster than the supply increases.
The CEO is saying that that is the situation we are in.
Demand has increased massively over a short time. Supply cannot increase as rapidly because for big demand increases it involves building new factories and equipment which takes significant time.
The CEO says that their new stuff will start coming online in 2028 but they can't forecast when supply will catch up.
or less, as you seem to forget what this whole discussion is about.
If they dont make sure the prices dont go up, they go up.
Once theyre up, and expected to stay up for the foreseeable future, competitors see a gigantic opportunity. Suddenly, the large amount of investment necessary to the ball rolling is worth it.
Once this opportunity is taken advantage of, the original market position of the company being able to freely set whatever price they wanted is eroded forever -- and in this particular case: it opens them up to being out-competed by the new competitor(s).
In this case those will will likely be coming out of china and be state backed, so theyll likely operate at a loss for maximum damage to get as much of the market as they can get.
in 5 years, Micron is likely going to go cry for state support to socialize their upcoming losses.
and before you say "but there are other competitors already": you should be aware that theyve previously been convicted of running a cartel. And the way theyve been behaving is exactly how they were behaving back then. While unproven, it is more then just likely that theyre still price fixing (and have been for years)
the price didnt just go up for consumers, they themselves have deeply dipped into the opportunity to maximize profits.
its so hilariously outlandish that eg SK Hynix has to pay out >$450k to union employees (per employee - not in total!) because they have a contract that a percentage of profits get shared as a bonus across the company. this payout is usually not particularly high.
Would you prefer the money goes to middlemen? When supply is constrained and the manufacturer doesn't price to match, all that happens is scalping. Even if the memory die manufacturers gave away their products for free it wouldn't budge consumer RAM prices in this market environment.
youre taking a very consumer oriented look, while we're explicitly talking about the perspective of the producer in this thread.
the consumer price barely matters for the perspective of the company evaluating wherever they can enter the market, because thats just a tiny fraction of it. And the largest piece of the market buys directly from the producer, SK Hynex, Samsung and Micron.
For consumers wanting to buy RAM sticks the difference is academic, i give you that. But for the capital that decides wherever to invest millions if not billions into getting a factory up and running - the price they can set for the b2b sales is the more important factor.
If it wasnt already proven to be basically whatever number they feel like setting... the opportunity would be a lot less obvious.
Large tech companies like cloudflare are spending developer hours lowering memory usage because they feel the impact too.
The idea that companies should have priority price controlled access to memory puts us even deeper into a situation where we can never afford local compute ever again.
The price is up because demand is way above supply (and will be for a long time because it takes years to expand supply to match the current level of demand).
If the manufacturers decided to keep the price constant that would NOT stop the price that most people pay from going up. It would just mean that the people who managed to buy from the manufacturer before the supply ran out would resell on the secondary market for a giant profit.
"would resell on the secondary market for a giant profit."
But you've no evidence that that "giant profit" would be more than the increase that the suppliers would apply.
Arbitrage allows the market to find an agreeable price; a middleman arbiter with a warehouse of RAM has an incentive to agree a price with a buyer because he's stuck with that inventory if he doesn't shift it, and he has costs related to financing it.
A supplier has no such incentive, they can just jack the price up and if sales drop off they run the machines at a lower rate, or sack employees. But sales aren't going to drop off, because the baseline for demand has been lifted
Once this "RAM Crisis" is over, what reason would manufacturers have to reduce prices?
They have to cover their fixed costs somehow. Collusion and cartels only get you so far. OPEC and Mexican drug cartels are still exposed to market pressures.
Exactly. Demand won't be going down for quite some time, so prices will stay high unless supply goes up. So where is the new competition entering the market?
If there's no competition entering the market, wouldn't that be a clear sign that this is not a free market but effectively a cartel?
They are not prioritizing extremely high prices. TSMC has a similar waiting list, so does ever other tool manufacturer. Memory capacity is being increased approximately as fast as it can be.
You can find public statements in the last 12 months from Samsung and Hynix about their aversion to scaling out production or increasing supply because they are concerned about profits.
Hard to know who to believe, on one side there are the absurdly high prices and statements from companies and on the other hand there are strangers posting on HN that it's actually all fine.
The memory business has always been extremely cyclical, and I doubt this time will be any different. The manufacturers have learnt this, and therefore to avoid boom followed by bust they try build for what they perceive to be longer-term more sustainable demand, not just knee-jerk increase demand to meet an immediate shortage.
The risk to any of the manufacturers, especially those with most market share, would seem to be if they are not all acting in sync. Micron's consumer brand, Crucial, had a great reputation, but now they have exited that business in favor or devoting all their capacity to currently higher margin products... will this come back to bite them later if they want to re-enter the consumer business?
What's different this time is that LLMs require orders of magnitude more memory than we could have ever used before. And I think it's getting obvious by now that inference will move to local compute, So everyone's laptops and phones would need a lot of memory.
The question the memory manufacturers have is, sure, we have all these orders out to the next three years... but will they actually be there to pay when the memory is delivered?
The memory manufacturers have been through bubbles before.
I don't deny that AI is "real", in that there is certainly something there, but I would hate to be the guy betting billions or even trillions of dollars that we're not in a demand bubble well in excess of what is justified by that tech at the moment and expanding capacity is a great idea. Of course, I would also hate to be the guy saying "no we shouldn't expand capacity" when it turns out that, yes, we should have, but the staggering profits being made in the meantime would cushion that blow pretty well.
> LLMs require orders of magnitude more memory than we could have ever used before
That's true. But will anyone have any money to pay for the LLMs? The AI market is currently being heavily subsidised by, ultimately, everyone else. But the economy in general is looking extremely dire at the moment, and that seems unlikely to last.
That's what people thought about a year ago, but with the amazing strides that smaller models have taken over the past year, people are now starting to question that.
> And I think it's getting obvious by now that inference will move to local compute
From the bottom of my heart, I hope that's the future.
I'm not convinced that will be the case. The AI companies don't want you to have local control. They want you to subscribe to a service that they can change at any time.
I grit my teeth when I type this, but (god help us) I think Apple is maybe the best (least bad?) hope here. They are the only big player with the hardware chops and without a current vested interest in getting you addicted to monthly AI subscriptions. I'm not saying this is highly likely... I'm just saying that out of the current major players, they're the ones with the ability and motivation to move in this direction in the near future.
The next best hope is probably just nVidia or AMD catering to the consumer market once again, after the AI bubble bursts or the datacenter market reaches saturation.
The outside hope is that some startup makes a business out of burning open weight LLMs to silicon like ChatJimmy... although ChatJimmy was bought up by AMD AFAIK.
It doesn't really matter what the AI companies want, if they misjudge the market somebody will just start a competitor and take it.
The relevant questions are: 1) Where are the economies of scale in the technology stack? 2) What's "good enough" to consumers, and how does that stack up with the relevant computing power needed? 3) What are the transaction costs along various system boundaries?
I think that the biggest force keeping inference in large centralized services is simply that provides a better product for the average user who doesn't care about local control (and the average user doesn't care about local control; indeed, for most people it's a misfeature, as then they have to administer their own hardware). HN is full of nerds that want to own their own stack; they're willing to put up with a little loss of capability to run Qwen 3.8 locally. But from the folks I know that have tried it vs. Claude vs. Codex vs. Antigravity, the local models are still pretty weak compared to what you can get by paying for a service. Most people will just pay for the service until the performance becomes indistinguishable and the price becomes less.
That is not true. Semiconductor industry saw a similar supply crunch during covid and spent heavily for capacity. And when the crunch tapered off, they were left holding the bag.
Micron would probably not even exist, or be a sticker brand for some Chinese conglomerate if not for this supply shock.
It has honestly gotten frustrating to even read anything on the internet these days. It’s just conspiracies upon conspiracies all the time, and it’s constantly in your face.
If only they were good conspiracies with some weight to them, but no, they fall apart if you have a rudimentary understanding of the subject.
Which was caused by the exact problem they’re trying to avoid by not going on a spending spree to increase manufacturing capacity.
They had built way too much capacity during the 90s and were losing money on every chip because they couldn’t run the fabs at full capacity. That’s why they colluded to increase the price to save their collective hides.
A new competitor wouldn’t be able to enter the market and lower the prices without also losing money. That’s not the case today, the Chinese are trying hard to do just that.
It's easier to bear that there might be a conspiracy, than that this outcome is the result of chaos and stupidity and greed. Also it makes you think you are smarter than anyone else.
Fundamentally, it comes down to whether or not you think "AI/ML" can disappear tomorrow and the world would continue to run as normal.
From what I have seen, it cannot. It has become foundational the same way Internet 1.0 (eg. Email, Static HTML, Web Directories, SSL) became foundational for a significant portion of the global economy in the 1990s and 2000s.
AL/ML isn't going away, but what that means for demand for various types of memory remains to be seen. LLM are clearly a commodity, and once they are "good enough" then it'll just be about price, meaning that smaller and less memory hungry models will win.
It's a bit like the Sun/etc workstation market vs PCs, and high end expensive PCs vs cheap ones. Once the cheap PCs became "good enough" then they naturally dominated.
Not only could the world run as normal without AI as we have it today, it would run better. The tech we have is a net negative, slowing things down and making things harder without providing value.
This is a bit like complaining that toilet paper manufacturers did not dramatically scale up production in the first months of COVID-19. But had they invested in additional factories and production lines, they would be now holding the bag.
The memory market isn't all that different, except it's even more capital-intensive. Roughly half of HN is convinced that the current AI boom is unsustainable even though the technology itself is amazing. So why should memory makers take the bullet here?
Ultimately, as much as this sucks, having an inexpensive gaming rig is not a human right. People with money decided that all that money should go to AI, and we have to suffer through the downstream consequences of that.
I think neither CEOs nor boards of the public companies care. They want to maximize their paychecks and bonuses in the short term before they leave to other companies.
Point well taken. Same issue as with shareholders since it's not like companies really belong to a family anymore with a reputation on the line, like their name being in the company name.
I don't think the semiconductor business is so much like that - it's become more ingrained in them that you need to manage the business for long-term sustainability.
Except that in this case it's no longer 'collect money, move on to the next one'. It's 'collect money, become dynastically-rich, retire in 3 quarters from now'. After that, who cares.
This seems like a distinction without a difference. In the context of CEOs sacrificing the greater good for their bonus, [basically] nobody has done that for a $250k bonus. We're often talking 8 figures, tens of millions of dollars.
Is this really a categorically different thing if we're talking about $85 million vs. $12 million?
It's worse, sometimes even governments fail due to overconfidence.
Brazil and the UK (well, technically Japan) caused 2 natural rubber price spikes that first led to the UK smuggling rubber tree seeds to be imported to Malaysia, where the UK took over global natural rubber production, marginalizing Brazil.
Then Japan conquered the Malaysia during WW2, at which point everyone started developing artificial rubber and natural rubber was reduced to a much smaller market.
Micron has several fabs and fab upgrades coming online or under construction right now. An expansion in Boise and Virginia. Plus a huge megafab project in New York that's going to be the biggest in the world AFAIK.
All the DRAM makers have new fabs or plant expansions underway right now - indicating they believe the demand increase to be sustainable.
How many years ago did they start construction on these projects? How many years before that did they greenlight the project? I'm quite skeptical the timelines are short enough to line up with the AI boom.
Oil is sky high, a recession might be near. Also, optimizations (like the current KV one) can yield a drastic reduction in RAM needs. It's a risk.
If I was trying so stabilize (just stabilize) funding for humongously expensive fabs: I'd be giving markets reassurances that my business will continue to be high margins for the mid-future.
Wouldn’t shortages produce basically the same incentive structure regarding competition or national security requirements? Like the demand for RAM is actually way up, so if they don’t raise prices enough the inventory will just quickly become depleted.
How much of this issue is self-inflicted? Micron is building a massive fab in Syracuse. They've spent like 4 years seeking approval, lobbying politicians, doing BS "environmental impact studies" (which are mostly just rent seeking and political handouts). They finally started building, but if they had just been able to put shovel in the ground we would already have this fab be producing memory.
It took just over 3 years to get approved, and the reason it took so long is that it is massive project (1400 acres) and has enormous infrastructure requirements that needed comprehensive study by reviewing agencies to make sure the area could handle them.
The first two fabs there will require 17 million gallons perday of water and when fully operations in the early 2040s the facility will need 48 million gallons per day. That is more than existing infrastructure can handle so the project also includes a new pipeline extension to Lake Ontario.
That water requires extensive treatment before it can be discharged. It will be pretreated on site, then go to a new $1 billion industrial wastewater treatment plant being for this project, and then finally discharged into the Oneida river.
The energy requirements when fully operation are 1850 MW drawn continuously 24/7 every day of the year. That's 16 TWh a year.
For comparison that is a little above the annual electricity use of Ft. Worth, TX or Charlotte, NC, and little below Indianapolis, IN. It is about 14% under San Francisco, CA. A little over half of Chicago, IL, about 1/3 of Los Angeles, CA, and about 30% of NYC.
That's way beyond the existing grid capacity, so lots of infrastructure upgrades there are taking place.
If only we didn't have 100+ years of factories shitting where we eat we might not have thousands of governments wanting assurances that companies don't harm people in their area.
Silicon Valley is littered with SuperFund sites of bankrupted companies who conveniently couldn't afford to clean up the toxic mess they left behind when they became the vessel full of debt after the corporate shell game moved on.
Do these environmental impact studies effectively stop that? could they effectively stop this issue with a more efficient process?
What happens now is that there are a large amount of studies, that pay consultants and organizations to generate thousands of pages of documentation. They then turn around, have some niche issues that they pay to go away. For example was Micron having to purchase a few acres of land 25 miles away as a park for some owls effectively helping stop superfund sites?
This is basically environmentalism security theater and political grifting.
Maybe if they tried to build some of these on existing dilapidated commercial or industrial plots that are vacant and languishing they wouldn't have to jump through so many procedural and political hoops. I'm told these exist all over rural america.
Instead they want to build their 100 acre Data-Center/Technology Industrial Park adjacent to the burrowing owl habitats or up against Grandma Martha's backyard.
Building on vacant industrial land is more expensive because you have to clean it up first. It might even be a superfund site, no one is interested in actually finding out. There hasn't been any room on compromise or cleanup assistance in most cases.
There is also additional risk here. If company X made an unknown superfund site, then company Y develops on it. Is company Y then liable if the superfund site becomes known?
All this speculation is pointless. Superfund sites haven't had their cleanup funded by the companies doing the pollution since 1995, when congress decided that the tax on companies to fund such cleanup (which had funded 70% of the cleanup of superfund sites up to that point) no longer needed to exist, and since then the taxpaying public of you and me have been paying every single dollar for cleaning up the pollutants these companies emit.
You didn't have to pay to cleanup a site before using it, because the expectation was that you paid while running your business and the site would be cleaned before you wanted to utilize it.
But now the "Superfund" has been underfunded for like 20 years. Biden's IRA set up a new tax for ten years but, not sure how well that's going.
We literally had the system set up well and working fine, but it cost companies a few dollars so it had to go when the "Greed is good" folks came along.
If someone enters as competitor because of high prices/profit, they'll want for them to stay that way. It won't make it better for the consumer if the supply is constricted in such a way.
I think this is a point where governments should intervene and perhaps start fabs that would produce RAM at cost for working class and SMEs to use.
Well it would depend how much higher prices and for how long until competition could arrive. Any business that could sell stuff at 10x prices for 10 years would make enough extra money that it would be worth it even if they knew bankruptcy would happen in year 11.
This is a very difficult supply chain in which to compete, even nation states mostly can’t. The machines that build the chips are really hard to come by and even China is just hoping they can start to make them in 2030 and they likely cannot. Meanwhile demand is accelerating.
History does not drop financial gifts like this in one industry’s lap often. From a sheer numbers standpoint, what they’re doing absolutely is the only logical choice.
It had mostly come down to 3 (Samsung, SK Hynix, Micron), but the Chinese manufacture's market share is growing rapidly, especially as they ramp up due to sanctions. CXMT is currently 10% of global DRAM, having seen previous YOY growth of 1%->4%->8%. YMTC is now global #3 in NAND.
It wouldn't be surprising to also see Japan make a comeback in memory - they are investing heavily (both privately & government) in semiconductor manufacturing.
For now, there are only 3 that matter, but the reason is purely because the US government has sabotaged their competition as soon as it became apparent that the incumbents would lose market share.
Without what the US government did and still does, the prices of memory would have never increased so much and all the world would not have been forced to pay so much for memory.
« Without what the US government did and still does, the prices of memory would have never increased so much and all the world would not have been forced to pay so much »
If that is true (and given the reasons you provide below, and the general quality of your commenting, I assume it is) then the situation is similar (if less militarized) to that of the oil sector, where the cost increase is likely higher by perhaps three orders of magnitude.
I assume that some Americans have downvoted what I have written, but this is a fact that is true beyond any reasonable doubt.
A few years ago, the US government has added the Chinese vendors of DRAM and of flash memory on their sanctioned entity list exactly at the time when Apple and other major computer manufacturers were evaluating the replacement of products from Micron and the like with the Chinese alternatives. This was prevented by the "sanctions".
There is absolutely no doubt that the so-called sanctions did not have any other purpose than removing the competition for Micron.
The official reason is absolutely ridiculous, i.e. that they are among the companies that provide products to the Chinese military.
If that would have been the reason, then 100% of all existing Chinese companies from any domain of activity would have to be put on the "sanctioned entity" list, because any of them would sell to the military of their country, if given an opportunity, like all companies from USA will provide products and services to the US military, given the opportunity.
While the Chinese memory makers will obviously also sell to the military, almost all their production goes into consumer products, like smartphones and laptops, which are the main products affected by the US "sanctions" (which are no true sanctions, because true sanctions against China would have been accompanied and conditioned by some political requests, which is not the case for any of the US "sanctions").
There is also no doubt that without the US "sanctions" the Chinese memory makers would have bought the latest semiconductor manufacturing equipment and they would have had the production capacity to flood the market with their products when Micron, Samsung and Hynix stopped providing enough memory for anyone who is not among their top 5 customers.
Thus their is no doubt that the US government has stolen a lot of money from my own pocket when I was forced to update a couple of old computers this year, by artificially restricting the amount of memory that is produced and preventing competition in this market.
As I see it, any US citizen who supports the actions of their government to restrict the production around the world of various kinds of goods and to prevent competition in various global markets, actions that have increased the prices of many kinds of consumer products in all countries, is an accomplice to theft from a very large number of people all over the world, who are forced to pay inflated prices for such products, resulting in money that goes from many countries into the pockets of the shareholders of a few big transnational companies, including Qualcomm, Micron, Samsung and Hynix.
> I assume that some Americans have downvoted what I have written, but this is a fact that is true beyond any reasonable doubt.
I would guess that the reason for any downvotes is that even if what you wrote is completely true it isn't really relevant, because the current problem is not lack of competition. The current problem is a huge increase in demand over a short time.
Even if there were no restrictions on China and they had latest generation fabs, they would not have had latest generation fabs just sitting around idle. They would be unable to meet the current increased demand for exactly the same reason everybody else can't.
If I can sell my things at a higher volume for longer vs higher price and less volume now, I'll go with the first, but not shareholders focused on quarterly numbers.
Is your claim that businesses that have to spend billions or tens of billions of dollars and years to bring facilities online to make the products they sell are owned (and influenced) by shareholders focused on quarterly numbers?
This “quarterly, short term” reddit-ism or internet-ism is baffling since the businesses that have earned the most money for shareholders (to the tune of trillions of dollars, eclipsing all other businesses), all have leadership making very expensive, very long term bets.
> Is your claim that businesses that have to spend billions or tens of billions of dollars and years to bring facilities online to make the products they sell are owned (and influenced) by shareholders focused on quarterly numbers?
Yes? That doesn't mean they can't spend billions on R&D. If Apple didn't sell iPods like hotcakes, they wouldn't be able to R&D the iPhone. That doesn't mean nobody at Apple had long-term vision, quite the opposite.
Whether they did this or not, I think the exponential demand for memory would still be there. So there would still be conditions that encourage new competing manufacturers.
I honestly expected that there would be more competition entering the memory market by now. I know it takes a lot of time and capital, but Europe has plenty of semiconductor know-how with ASML and ARM, and a strong desire to be less dependent on other parts of the world, so investment in a European semiconductor industry would make a lot of sense to me. And these high memory prices sound like the perfect opportunity.
Or it just be that demand really does seriously exceed supply. It's not fast to bring supply online, it's costly and risky to do so if the demand will not be sustained for a long time. IMO, there's no conspiracy. I have been telling folks for the last 3 years that the price of AI compute is not coming down for a good 5+ years. Possibly 10 years too. Every human in the world will need AI, the same way we all got on the internet and then mobile. However, outside of humans, for every human there's going to be ten or hundreds of agents also all demanding compute.
> Or it just be that demand really does seriously exceed supply. It's not fast to bring supply online, it's costly and risky to do so if the demand will not be sustained for a long time
This is exactly it. There's a lot of conspiracy theory in this thread without realizing that it's just what happens when an insanely large amount of capital is deployed: market distortion.
It's not just RAM, it's things like gas turbines and power transformers. I've seen suggestions that it's even affecting housing starts because the construction effort is pulling in workers, especially electricians.
However unlike you I'm not of the opinion that all that can be built, in that short timeframe. Even less so that it can be operated without pushing us over the 2C global warming threshold.
What is the cost of AI tokens? You can't just calculate cost of inference. There is a cost to train, there is a cost for staff to build it all, the money investors provided for it all. When you run a business, all those costs must be recovered. Sure, it takes $2 in material cost to make a pizza, but what's the cost of pizza? You have to take into account, energy, rent, staff, insurance, and profit too. Tokens/$ is subsidized if you are talking about APIs
The big AI companies like OpenAI and Anthropic may have rushed into it too fast, and in effect wasted a lot of money on early model generations that never paid for themselves, early model architectures that were not cost-efficient, experiments that never panned out, etc.
The AI pure-play companies like OpenAI and Anthropic are presumably in worst financial position, since others like Google, Microsoft, Amazon and Meta (also Alibaba, Baidu, Bytedance, Tencent, Xiaomi) have generally been more conservative and are treating AI as an incremental revenue source not a highly leveraged all-in bet.
> because I prioritized extremely high prices for a few years that might have the effect of changing the arithmetic for potential competitors that wouldn't have done it before.
Or maybe they believe the demand is not sustainable, and they don't want to fund $10B ghost fabs.
> extremely high prices for a few years that might have the effect of changing the arithmetic for potential competitors that wouldn't have done it before.
The big problem is, competitors need money. Say a fab costs 10 billion $ a piece, that is a big chunk of investment needed that absolutely needs to be paid back because even a big bank consortium will have a hard time shouldering this kind of single risk.
Now, the fab needs around three years to build... which means if there suddenly comes a huge amount of new supply or alternatively, the AI bubble pops, prices will crash, the companies won't be able to service the loans, and the banks will be sitting on a very expensive piece of real estate and machinery.
Particularly in semiconductors, this "bust and boom" cycle, "pork cycle" or however you want to call it, is very very well known. Banks and other investors have been through that one more often than you can count, that's the reason why there are so few producers left after all.
The only place I think can reasonably pull it off to start a competitor is China because their economic policy is focusing on decades in the future and the CCP is willing (and able) to shoulder the risk - however China can't acquire EUV machinery due to sanctions and will likely take a few years until they can pull it off on their own, by the time TSMC et al will already be at the next generation.
Not enough people are prepared if this isn't a bubble. I think he's betting on this being a bubble which would imply building more supply would be a mistake, because they'll end up with a factory and no more customers.
It's starting to look more and more like we will always need more memory.
I mean, yes, but they are also right. They benefit from the market conditions, and contribute to the price increase, but it’s pretty clear there won’t be that much available shovels for a very long time
Of course, because there was a HOA that became financially so big (on paper), that it secured 80% of the shovel supply for the next two years. Now everyone is fighting over the remaining 20%.
Shouldn't this be affected by the diggers from the Far Lands recently telling everyone how to angle the backhoe blade to dig 470x as much earth in one swing?
CXMT has entered the market, but for now they cannot increase their production fast enough to influence significantly the global prices, due to the US "sanctions", which prevent them to buy modern fabrication equipment.
So they must use older equipment, which has low productivity for state-of-the-art memories. Because of the "sanctions" there are now Chinese companies that have progressed significantly in semiconductor manufacturing equipment, but the effect of this will also take some more time to manifest.
Nonetheless, if the 3 big memory producers will not be able to increase the availability of memory until 2028, then until then CXMT will grab with certainty a major part of the market (they have already grown quickly until 10% of the market, from a negligible percent previously).
The greed and shortsightedness from both the memory makers and their big customers trying to lock out competitors from memory purchases is palpable. The first act of a Shakespearean or Greek Tragedy is where the characters take the actions that lock in the circumstances that precede their downfall. And this sets up everything for the next act where CXMT has everything it needs to establish itself on the market with buyers that would perhaps would not have considered it in other circumstances.
So if capitalism resulted in higher prices that is causing consternation among small-scale buyers, what -ism is responsible for the investment in factories that increased supply of components that resulted in lower priced electronics for the past few decades?
Why is it bait? It's literally making the world worse were the gains only benefit an extremely small minority of people at the expense of everyone else.
I thought your price for 32g was you getting ripped off. Holy crap. The price is super high now. Now I am lamenting missing out on getting 128GB ram when it was $700, thinking it was too high. It is outrageously expensive now.
Everyone, and I mean everyone, is gated by ASML machines. They can't make nearly enough EUV machines to satisfy the demand. ASML has also not scaled their production nearly as much because they're quite far away from the AGI-pilled companies in the supply chain.
Well, CXMT is not gated by ASML machines because they can't buy them. They can raise their capacity because they have access to the domestically produced steppers. They are not as good as the ASML ones, and if the memory prices were not bonkers, they'd never make a profit using them, but as it is the low yields and high die sizes don't matter.
They are. They are using ASML DUV machines for memory. Samsung, SK, and Micron have moved onto EUV machines for memory because they are better. So CXMT not only has to rely on ASML, they have to rely on a worse machine to make modern memory chips.
Depends on what kind of memory you are talking about.
For DRAM, CXMT were only 1% of the global supply 3 years ago, and are now already 10%. They are growing extremely rapidly.
If you are concerned about consumer memory - smartphones, laptops, desktops, then this is what CXMT are making. CXMT do make HBM too, for AI accelerators, but their volume there is held back by sanctions.
They're 10% of the market now, and they've shown the ability to scale up manufacturing rapidly. They certainly won't singlehandedly meet demand, but they might at least be able to temper the price growth quite a bit.
Yeah, if anything, this makes it more clear to me that all this wonky supply/demand stuff will correct itself sooner rather than later. I've been wanting to upgrade my workstation but the DDR5 RDIMM sticks are unbelievably expensive, last few weeks I've almost pulled the trigger anyway, now I think I'll continue wait at least for the beginning of next year.
Don't be too hard on the CEO. It will be unavoidable and he will be deeply sorry and humbled by their dedication throughout the years. Also, people will receive 2 months of benefits and FREE job search consulting (through an AI agent).
Anthropic is expected to spend 500B of money it doesnt have. Based on these commitments, data-centers have ordered equipment which includes memory. So, a lot of demand for memory is built on a speculative foundation.
> Anthropic is expected to spend 500B of money it doesnt have.
... yet.
That is why the big AI corps all went public this year or are trying to do so. They are valued large enough that they will be included in the popular indices (NASDAQ, S&P 500, ...) from the start, which means an awful lot of money will flow into them each month automatically from all the retirement savings.
And that unfortunately completely prevents the core function that stock markets should offer - that bad actors get punished. Can't get punished when there is so, so much "dumb money" floating around and entering the fray every month.
I absolutely loathe Nvidia at this point. They've completely abandoned the core consumer that built Jensen's empire. Why not offer pre-orders of 5090s and MSRP? Why has every single drop at Best Buy gone primarily to botters and scalpers? Why not give end users half a fighting chance like EVGA used to by letting end users getinline before Nvidia crushed them?
When the AI bubble bursts, Nvidia is going to be Enron.
Because it would immediately go to scalpers anyway. Like, say the 5090 - I'm seeing prices of almost 7000€ for that thing [1]. Assuming without AI it would be priced at 1500€ - I could make about 3 months of rent just by immediately selling the GPU to the next reseller who then peddles it to some AI training farm. And in this economy, oh hell yes I would.
> When the AI bubble bursts, Nvidia is going to be Enron.
Nah. NVIDIA was a money printer way before AI was a thing. Post-collapse they will still be a money printer, just at lower speed.
The ones who are going to get fucked over hard when the AI bubble pops is pensioners, the generation who is just entering the workforce (2007ff had an aftereffect in wage depression lasting for up to a decade), and everyone who took up investments to service the AI demand (utilities, construction companies and the likes).
>> Because it would immediately go to scalpers anyway.
No they wouldn't, tens of thousands of unique users would be in line with dozens or hundreds of scalpers, if they're all allowed to buy one every 180 days per payment method, the end users actually get a fighting chance. Today they have no chance.
And it's not just a few people. The sophisticated scalping operations have hundreds of straw buyers in their network. For items that generate far less profit than a 5090 currently does.
I've watched vans dropping of an endless stream of people in the parking lot of my local Costco to buy out all the cases of Pokemon cards within 20 minutes of the "random" drop they put on the floor. They go in, buy the max quantity of the item with cash provided by their keeper, bring it back to the van with a receipt and change, and get the $20-30 per item pay they were promised. There were 2 or 3 'legit' buyers out of hundreds of obvious straw buyers.
If the profit per item is $4-5k, expect this to go into turbo mode and be done in a marketplace/automated fashion and go viral. Just sign up to your favorite scalper's platform, submit your information, get a quote and a prepaid label and drop the box you got from nVidia off at USPS the next day. That "tens of thousands" of individuals will turn into "millions" really quick once it gets known there is rent money involved by clicking a few buttons and it goes viral on all the social media platforms.
The only way out from that is manufacturer enough cards to meet demand, and at that point the retail channel doesn't really matter.
Everyone I know who signed up for EVGA cards for the 30 series got one eventually, even if it took a couple months of waiting. I don't know anyone with a 5090 FE at MSRP.
Yeah, I will never buy an Nvidia GPU again. I assume many of their former customers feel the same way. When the bubble pops, I think Nvidia is going to feel the pain as they will have pushed many of their former customers into the arms of AMD.
That's the one silver lining. I've always kept a lean desktop of mostly terminal based programs, and I've heard one too many times "just buy more RAM" as a defense for resource intensive graphical programs using Electron or modern browsers in general.
I doubt it will change much, inference (not training) is very profitable and demand for inference is quite high. See: Mistral serving GLM on their own servers.
They are probably too big to fail already (and too friendly with the current US gov). And even if they fail, open-weight models will take over as the usefulness of the tech behind has been proven.
The catchup models are all basically distillations of the sota models. Without the next training cycle things are going to stagnate. And as all those companies you mentioned are all linked to OpenAI and Anthropic and relying on hosting deals and things they are all going to be in the ringer when things to go south.
So on the one hand you have all the sota model makers doing investor expectation management in saying wet need a slowdown for safety (may or may not be true, but also means they don’t spend on the next training cycle before IPO? Could be making their books look better too?) and on the other we have a sense that the models aren’t yet at the stopping place where we can just not train another cycle and use distillations of the current generation?
I expect them to sell everything if they go bust to recoup what little they can for investors. That would double whack hardware manufacturers are their final consumers are now both leaving the markets as buyers and entering as competitors.
Only last year Microsoft admitted to having GPUs in inventory that they couldn't power, due to a lack of electricity. So much of this production capacity could very well go into making memory chips for GPUs sitting in a warehouse.
The amount of money spend on the AI hype train is crazy. Meanwhile we're wasting fab time making chips that might never be powered on. It's absolutely insane that there are more money to be made on hardware for AI that may never be used, rather than producing a product that consumers and businesses need right now.
Micron profited immensely by exiting the retail RAM / SSD markets. All the big manufacturers used Crucial RAM. Apple, Dell, HP, Lenovo, etc. They are the number one reason RAM is so expensive. They decided it was more important to make trillions selling to the A.I. hyped data center buildouts. They weren't wrong, they made serious money. I'm still rather pissed off about it.
> Acer CEO says memory makers are hyping 2030 shortage fears to protect margins — PC prices set to decline by late 2027, cheaper Chinese capacity coming online delivers lower memory prices
One thing is certain: in that world, we would not have to brace for a future where pretty much any form of human labor is at risk of getting replaced by just having the machines oxidize even more carbon and telling those humans to just eat cake if they fail to sell any their skills for bread.
This is why I (actually/literally) just purchased a Commodore 64; I miss the days of crazy optimization and hardware hacking to fit so much into so little :).
Micron stock has gone up 10x in the past 2 years in a sector where the barrier to entry is lower than GPU/TPUs. CEO will do everything he can to keep stock price from returning to the mean.
Kudos to the memory supply-industry on converting their market in a way that a handful of large-scale customers moved from mere supply-forecasting to outbidding themselves to BUY future production of chips for years to come.
I would now like to open the floor to investigations in this industry to determine whether this is hindering free-market forces and is ripe for regulation, as no-one is able to actually compete with these handful of companies anymore.
...anyone?
...ah yeah, right, I forgot. They also found a circular financing scheme which enslaved the entire global economy and organically prevents governments from properly governing their industry.
I thought that the bulk of memory is already "technically bought" by the AI hyperscalers in the form of the big (not so) "hidden" debt? As in: the supply should already be known.
Micron reportedly sold $100bn worth of DRAM last financial year, and reportedly has $40bn long term commitments. $40bn is more than their entire fiscal 2025 revenue, so it's a lot, but it's clear it'll be a minority of their available supply.
As an end user it’s difficult to not be bitter about the situation, particularly when you have execs coming out and saying, “yep these prices sure are terrible, better buy now before they get even worse!”
I’ve seen people say, “well that’s just the free market, there’s a customer that’s willing to pay more than you,” but that argument doesn’t hold water when industry incumbents are actively obstructing entrance of new competitors into their primary markets. Micron, etc can’t both refuse to carve off more of their capacity for consumer-destined NAND and also refuse to allow others to fill the vacuum they’ve so conveniently created. Either you’re serving the market or you’re not; you don’t get to have your cake and eat it too under properly functioning, healthy capitalism.
If you follow the money though much of this future “demand” is on fulling orders from the AI labs and at the moment the AI labs don’t have the cash to pay that bill. A rather important detail in this whole mix.
So either the labs need to start printing money, now, or there’s going to be a whole bunch of excess chips hitting the market in 2027-28.
Someone in the middle is going to get left taking delivery of all these chips but unable to collect payment for them. And someone else is going to get left holding the bag on data center loans to house those chips. That’s the storm ahead.
Do you not believe that Anthropic and/or OpenAI are going to be able to IPO? Once they do, that's a huge source of capital for them that could absolutely be used to fund hardware purchases.
Based on current reporting the IPO wouldn’t generate anywhere near enough cash to pay for the bills coming due. Just between those two they have over a trillion $ of commitments coming due that need cash payment. Thats actual dollars they need to pay and neither the IPO nor current cash flows appear to be generating that kind of money to pay these bills when they come due.
It’s a big problem which neither big lab has a great answer for right now.
That's today. You have to think about what the industry is going to look like in a decade.
Building a DRAM company from scratch is hard, expensive, and risky. You're burning a fortune to get started, and the result is a commodity product. But the AI bubble allows CXMT to have terrible yields, sell a legacy product, and still make a healthy profit! This is literally a once-in-a-lifetime opportunity to catch up.
And yes, right now that means selling DRAM for 10% below the crazy AI-inflated prices the incumbents charge. But sooner or later either demand will drop or supply will catch up. CXMT, like many other Chinese companies, is undoubtedly willing to operate at razor-thin margins to increase market share. Either the other manufacturers move down as well, or they'll be made irrelevant by CXMT stealing all their customers.
Oh sure, they'll take profits while they can, but the supply increase will start pulling the market down. It's how price signals work.
Only way to keep prices this high would be a multinational cartel of RAM makers agreeing never to compete on price. One defector kills it. Not likely you could keep a cartel like this given that the players are all on different sides of geopolitical tensions. China's not going to want to help keep Taiwan, Japan, Germany, or the USA in the money.
And People believing that everyone will have a robot at home.. until they realize that a human is much cheaper to maintain, a bread and a liter of water is enough...
One factor constraining supply for RAM in the short-to-medium term is that memory manufacturers is that DDR5 (and assumedly DDR6) capacity is being moved to the much more profitable HBM.
I think supply will be tight until at least the AI market crashes, which could take years or happen within months. Nobody can really predict when this will happen but it's fairly clear (IMHO) that the revenue projections needed to justify the investments by OpenAI, Anthropic and SpaceX simply don't exist.
Without the AI boom, the economy is in recession and has been for awhile. We're in an affordability crisis and the energy crunch is coming.
I guess those estimations based on projection for data Center build out, which include 30GW+ in 2027 alone, more then 3 previous years combined. Surely every human on earth will start token-maxing tomorrow and bring all of their money to their AI labs overlords to justify that explosion in spending, right?
Honestly, FF became similar worse:
On my 16 GB machine, when surfing some hours FF has allocated around 10-11 GB and for whatever reason it does not free them, unless I exit and restart it
On linux do something like `systemd-run --user --scope -p MemoryHigh=XG -p MemoryMax=X+2G firefox` to constrain it since the firefox people refuse to implement the memory limits logic that say Edge has..
But at the same time, this isn't just a Firefox issue, although they may be worse than most. Its a fundamental tenant of GC languages. You trade CPU (for the garbage collection) for RAM utilization. IIRC This was apparent by the late 70s with Dijkstra, but very clearly indicated in say Hertz where they are explicitly scaling GC overhead vs memory footprint to find that it takes ~5x the ram to approach the efficiency of an explicit allocate/deallocate model. Lower footprints are achievable but the GC overhead goes way up just to reach 2x the ram footprint such that the GC tends to dominate the CPU utilization.
And there are lots of papers like this for long running processes. GC works well if your model is basically allocate as much as you like, exit the process before actually needing to do a proper GC pass. Especially for contended systems where the memory is returned to the OS. This is why say PHP tended not to have this problem, because the memory was largely freed at the end of every request.
The New Tab Suspender plugin has my 50+ Firefox tabs at 2.2GB of ram usage right now. Having every tab ready and waiting for you is of course going to have increased memory usage.
- the described behaviour is the one I experience on my Win10 notebook (Lenovo X1)
- Firefox wasnt always that, thats what Im refering to
- I can see in ProcessExplorer how many threads it starts & keeps, and for whatever reason this is always a lot, even if I open only 1 tab after coming from new start
Perhaps we should blame this on shitty website design. So many of them load huge assets for no good reason. They get away with it because modern processors are that good, bandwidth is cheap, and until now, RAM has also been cheap.
There’s always going to be consumer products, even if the value proposition is worse.
If there’s a silver lining, I hope it leads to more optimisation, less Electron, and less bloat.
Typed from my 8GB MacBook Neo; which is honestly plenty fast enough. It “feels” like a 16GB windows laptop, even tho of course I know it’s not, but there’s something about optimisation.
Lots of more niche products than Apple’s laptop won’t exist for a while due to the price of hardware. At a smaller scale the inflation hardware companies experience is really, really massive
While I definitely agree that there will be a slow down in purchase decisions for both consumers and businesses I struggle with this idea that there will be “no consumer products” in the market. There will be.
You’re making what seems like a zero sum assumption. I am still using my M1 MacBook for work. I have a first version Mac Studio at home and countless other devices laying around. The world will continue to move forward and yes purchasing will slow down but folks will still be using their existing phones, laptops and other devices.
The future is starting to resemble smartphones that use predominantly RAM for local compute and inference while all persistent storage is managed by the cloud.
I like to tell people that "AI" is the "last bubble." It was VR, the metaverse, crypto, NFTs, AR... AI is the Last Great Hype. There's really nothing beyond it. When this bubble pops it'll be remembered for decades to come because nothing will replace it.
The LLM bubble may fizzle rather than pop in any dramatic fashion, but it's certainly not the last word in AI - much more the exact opposite.
We've had AI "bubbles" / hype-fests before (expert systems, Japanese 5th generation systems), and I don't expect this will be the last.
There will also be technology bubbles and hype-fests in the future outside of AI - it's human nature. Hard to predict what they will be of course (the future is like that).
Until governments stop printing money and sending it directly to people that have nothing to do with it but investing, people will keep inventing random useless stuff to invest into.
Man whose compensation package is strongly tied to the economic performance of his company says company's economic performance will be great in 2027 and 2028 (so people should invest now to benefit from that bump)
Make no mistake here: they also plan to retain these high prices. It's like the mafia now. There should be instant-jail time to cure these CEOs of their greed. Like, go to prison for a week, to help refresh your mind and stop thinking in terms of milking the customers dry.
If/when the bubble pops demand will fall so hard they'll have little ability to keep prices too high. Especially with Chinese companies pushing out a lot more product by then.
Micron reported full year revenue of $133bn, up 256%, $100bn of which was DRAM, with non-GAAP earnings last quarter of their financial year of $37.7bn on $54.23bn of revenue. Seems pretty healthy to me. Any reason to think they'll go out of business?
But only in 2028 because all the wafers rotting away in the warehouses are HBM which are too expensive to package or integrate into consumer electronics with tighter margins. Looking forward to having enthousiast-grade GPUs with HBM again though.
I'm not a business guy, but I think I would be very worried if I created any opening (even on the very long term) for competition to justify itself being built up to meet demand (or national security requirements of other countries) on an industry I mostly control, because I prioritized extremely high prices for a few years that might have the effect of changing the arithmetic for potential competitors that wouldn't have done it before.
It makes me consider whether there would be retaliation in later years against the US intellectual property system in countries other than China. While RAM is a tangible product, the areas it serves aren't really.
If I understand this comment correctly, it's saying that Micron and the others would be better off selling RAM at below the price they could get, in order to keep competitors from deciding to enter the market.
Such collusion might well be a violation of anti-trust law, but in any case, it wouldn't work. If they decide to sell at below-market price, they must (by definition) be preventing some customers from buying by some non-price mechanism (eg, only selling to companies run by other members of the CEO's family). Potential competitors would then see an opportunity to sell to these excluded customers.
Not exactly, I think it's saying that Micron would be better off increasing supply themselves (and thus lowering prices) than waiting for a competitor to come and provide more supply to meet the higher demand.
If there was enough existing competition, that might be the right move, because if they don't increase capacity, a competitor probably would in order to gain more market share. But I think the barrier of entry for making RAM is high enough that Micron can probably get away with keeping supply low (and thus prices high) for at least a few years before a new competitor appears. Assuming demand stays high that long.
They aren't keeping supply low.
They have two massive DRAM fabs (56000 m^2 cleanroom size each) that they started construction on in 2022 and 2023 in Idaho, with production starting in 2027 and 2028.
Yeah there is no such thing as selling a commodity below its market price on the open market. Someone else will come and arbitrage that away, or it’s not an open market.
Supply is severely limited and there is not really any competition making RAM chips, so it is kind of not a commodity and not a market.
But you are right someone will arbitrage the price, like scalpers selling concert tickets.
Well, that's blatantly false...
A well-known anticompetitive tactic is for a big player with a vast bank account to move into an area and eat losses while waiting for their competitors to starve. Well observed in the 90's movie rental market, so certainly real.
The statement further up should have qualified it as "scarce commodity". Then it is correct.
To successfully perform dumping, you have to have access to excess supply capable of disrupting that market.
Also why anti-dumping laws exist
Do those solve the problem just outlined?
(Legitimately asking: I don't know the answer ... but based on most US business law my strong suspicion is ... no, they don't.)
No, because they're hardly enforced. China has been blatantly dumping a buttload of products for decades and the U.S. has been asleep at the wheel as it continues to hollow out our domestic manufacturing industries even further.
It also ignores the giant CAPEX and OPEX required for any competition. This isn't banana stands or book publishing, or whatever.
These are billion dollar+ funded operations that take multi-years just to see if you can compete at the levels required.
All these comments show up every time, like there's a memory faerie land where you just put on your memory faerie hat and walla! Memory!
So bizarre.
Does 87% gross margins sound like that them lowering prices is tantamount to dumping?
> Such collusion might well be a violation of anti-trust law
The Memory cartel do not care about silly things like laws
Yes, one of those markets with infinite demand where supply has no impact on price. Those ones.
The argument I've seen about why someone else doesn't start selling RAM is it takes a year or two to ramp production. But here's a CEO saying he's going to make sure prices stay high enough, long enough that you can spin up a competitor
> But here's a CEO saying he's going to make sure prices stay high enough, long enough that you can spin up a competitor
2 years is not remotely enough time to spin up a competitor. It's not even enough time for a current leading competitor to spin up another fab.
If you are a newcomer you are talking a decade or more before mass production. If you are HK Hynix perhaps 5 years or so.
The majors all have large fabs under construction, but the majority of new production from those facilities won't be coming fully on-line until 2028 at the earliest. Even from the date of first wafer shipped most of these facilities take 6-12mo to reach mass production level output.
Chinese DRAM is interesting only because they started building capacity (expertise) a decade ago. Only now are the expected to have any material impact on the total volume of the market. And if they want to gain even more market share, they will be under the same ~5 years to spin up a brand new fabrication plant. Perhaps a bit less because they are China, but still multiple years.
Then there is risk; who is to say that the current demand will be around in five to ten years by the time you ramp up.
Imagine being the sucker to go and do a big capex build out for a hypothetical demand in two years. Have fun explaining that to the investors who supported you. Also you probably need 5 years to cover your expenses at whatever the current costs are. If the volatile prices collapse you are in a world of hurt.
Someone will certainly take this bet - but it is a high risk one.
> But here's a CEO saying he's going to make sure prices stay high enough, long enough that you can spin up a competitor
Where does he say he's going to make sure prices stay high?
Micron is a trillion dollar company. The CEO would never say something like that directly. He's talking in the "business dialect" of English and you have to read between the lines a bit.
The CEO is saying nothing that everyone who analyzes the situation and knows at least something about semiconductor production wouldn't say. Demand is way up, supply cannot keep up, it will take some time to increase supply.
Micron is working on increasing that supply. The started building a massive fab for DRAM in 2022 in Idaho. It should start production in 2027. They started a second massive fab for DRAM next to it in 2023 with production scheduled for 2028.
This is the info that people should be looking at. Building these facilities takes time. I'm guessing they are thinking that demand is not going to decline anytime soon to justify this buildout. EDIT both SKHynix and Samsung are also expanding their DRAM production lines and new plants. So they are all working on adding new capacity.
"We will produce as many Oreo's as we can, but soon Oreo supply will be much tighter than ever before"
- Oreo CEO, suggesting you to buy every Oreo you can get
Not to be snarky, but the CEO is saying that the supply will be tight for years. I know Econ 101 is over simplified but I do recall that when you reduce supply and demand stays constant, or increases, the price goes up.
I also recall some Econ 101, but I seem to recall a little but more than you since I also recall that the price goes up when the supply stays constant or even increases but the demand increases faster than the supply increases.
The CEO is saying that that is the situation we are in.
Demand has increased massively over a short time. Supply cannot increase as rapidly because for big demand increases it involves building new factories and equipment which takes significant time.
The CEO says that their new stuff will start coming online in 2028 but they can't forecast when supply will catch up.
> but I seem to recall a little but more than you
or less, as you seem to forget what this whole discussion is about.
If they dont make sure the prices dont go up, they go up.
Once theyre up, and expected to stay up for the foreseeable future, competitors see a gigantic opportunity. Suddenly, the large amount of investment necessary to the ball rolling is worth it.
Once this opportunity is taken advantage of, the original market position of the company being able to freely set whatever price they wanted is eroded forever -- and in this particular case: it opens them up to being out-competed by the new competitor(s).
In this case those will will likely be coming out of china and be state backed, so theyll likely operate at a loss for maximum damage to get as much of the market as they can get.
in 5 years, Micron is likely going to go cry for state support to socialize their upcoming losses.
and before you say "but there are other competitors already": you should be aware that theyve previously been convicted of running a cartel. And the way theyve been behaving is exactly how they were behaving back then. While unproven, it is more then just likely that theyre still price fixing (and have been for years)
I'm curious what you think they could do to make sure prices don't up?
dont increase the price of the product?
the price didnt just go up for consumers, they themselves have deeply dipped into the opportunity to maximize profits.
its so hilariously outlandish that eg SK Hynix has to pay out >$450k to union employees (per employee - not in total!) because they have a contract that a percentage of profits get shared as a bonus across the company. this payout is usually not particularly high.
Would you prefer the money goes to middlemen? When supply is constrained and the manufacturer doesn't price to match, all that happens is scalping. Even if the memory die manufacturers gave away their products for free it wouldn't budge consumer RAM prices in this market environment.
youre taking a very consumer oriented look, while we're explicitly talking about the perspective of the producer in this thread.
the consumer price barely matters for the perspective of the company evaluating wherever they can enter the market, because thats just a tiny fraction of it. And the largest piece of the market buys directly from the producer, SK Hynex, Samsung and Micron.
For consumers wanting to buy RAM sticks the difference is academic, i give you that. But for the capital that decides wherever to invest millions if not billions into getting a factory up and running - the price they can set for the b2b sales is the more important factor.
If it wasnt already proven to be basically whatever number they feel like setting... the opportunity would be a lot less obvious.
Large tech companies like cloudflare are spending developer hours lowering memory usage because they feel the impact too.
The idea that companies should have priority price controlled access to memory puts us even deeper into a situation where we can never afford local compute ever again.
The price is up because demand is way above supply (and will be for a long time because it takes years to expand supply to match the current level of demand).
If the manufacturers decided to keep the price constant that would NOT stop the price that most people pay from going up. It would just mean that the people who managed to buy from the manufacturer before the supply ran out would resell on the secondary market for a giant profit.
"would resell on the secondary market for a giant profit."
But you've no evidence that that "giant profit" would be more than the increase that the suppliers would apply.
Arbitrage allows the market to find an agreeable price; a middleman arbiter with a warehouse of RAM has an incentive to agree a price with a buyer because he's stuck with that inventory if he doesn't shift it, and he has costs related to financing it.
A supplier has no such incentive, they can just jack the price up and if sales drop off they run the machines at a lower rate, or sack employees. But sales aren't going to drop off, because the baseline for demand has been lifted
Once this "RAM Crisis" is over, what reason would manufacturers have to reduce prices?
They have to cover their fixed costs somehow. Collusion and cartels only get you so far. OPEC and Mexican drug cartels are still exposed to market pressures.
Exactly. Demand won't be going down for quite some time, so prices will stay high unless supply goes up. So where is the new competition entering the market?
If there's no competition entering the market, wouldn't that be a clear sign that this is not a free market but effectively a cartel?
It takes 3-5 years to build a new fab for current generation DRAM.
> year or two to ramp production
More like 5-10
What they need to do is all raise prices for 3 years, dump below cost for 4-6 months and repeat.
Congrats, you just guaranteed that the startup can easily lock in contracts for memory production in order hedge against volatility.
They are not prioritizing extremely high prices. TSMC has a similar waiting list, so does ever other tool manufacturer. Memory capacity is being increased approximately as fast as it can be.
You can find public statements in the last 12 months from Samsung and Hynix about their aversion to scaling out production or increasing supply because they are concerned about profits.
Hard to know who to believe, on one side there are the absurdly high prices and statements from companies and on the other hand there are strangers posting on HN that it's actually all fine.
The memory business has always been extremely cyclical, and I doubt this time will be any different. The manufacturers have learnt this, and therefore to avoid boom followed by bust they try build for what they perceive to be longer-term more sustainable demand, not just knee-jerk increase demand to meet an immediate shortage.
The risk to any of the manufacturers, especially those with most market share, would seem to be if they are not all acting in sync. Micron's consumer brand, Crucial, had a great reputation, but now they have exited that business in favor or devoting all their capacity to currently higher margin products... will this come back to bite them later if they want to re-enter the consumer business?
What's different this time is that LLMs require orders of magnitude more memory than we could have ever used before. And I think it's getting obvious by now that inference will move to local compute, So everyone's laptops and phones would need a lot of memory.
The question the memory manufacturers have is, sure, we have all these orders out to the next three years... but will they actually be there to pay when the memory is delivered?
The memory manufacturers have been through bubbles before.
I don't deny that AI is "real", in that there is certainly something there, but I would hate to be the guy betting billions or even trillions of dollars that we're not in a demand bubble well in excess of what is justified by that tech at the moment and expanding capacity is a great idea. Of course, I would also hate to be the guy saying "no we shouldn't expand capacity" when it turns out that, yes, we should have, but the staggering profits being made in the meantime would cushion that blow pretty well.
> LLMs require orders of magnitude more memory than we could have ever used before
That's true. But will anyone have any money to pay for the LLMs? The AI market is currently being heavily subsidised by, ultimately, everyone else. But the economy in general is looking extremely dire at the moment, and that seems unlikely to last.
That's what people thought about a year ago, but with the amazing strides that smaller models have taken over the past year, people are now starting to question that.
> And I think it's getting obvious by now that inference will move to local compute
From the bottom of my heart, I hope that's the future.
I'm not convinced that will be the case. The AI companies don't want you to have local control. They want you to subscribe to a service that they can change at any time.
I grit my teeth when I type this, but (god help us) I think Apple is maybe the best (least bad?) hope here. They are the only big player with the hardware chops and without a current vested interest in getting you addicted to monthly AI subscriptions. I'm not saying this is highly likely... I'm just saying that out of the current major players, they're the ones with the ability and motivation to move in this direction in the near future.
The next best hope is probably just nVidia or AMD catering to the consumer market once again, after the AI bubble bursts or the datacenter market reaches saturation.
The outside hope is that some startup makes a business out of burning open weight LLMs to silicon like ChatJimmy... although ChatJimmy was bought up by AMD AFAIK.
It doesn't really matter what the AI companies want, if they misjudge the market somebody will just start a competitor and take it.
The relevant questions are: 1) Where are the economies of scale in the technology stack? 2) What's "good enough" to consumers, and how does that stack up with the relevant computing power needed? 3) What are the transaction costs along various system boundaries?
I think that the biggest force keeping inference in large centralized services is simply that provides a better product for the average user who doesn't care about local control (and the average user doesn't care about local control; indeed, for most people it's a misfeature, as then they have to administer their own hardware). HN is full of nerds that want to own their own stack; they're willing to put up with a little loss of capability to run Qwen 3.8 locally. But from the folks I know that have tried it vs. Claude vs. Codex vs. Antigravity, the local models are still pretty weak compared to what you can get by paying for a service. Most people will just pay for the service until the performance becomes indistinguishable and the price becomes less.
That is not true. Semiconductor industry saw a similar supply crunch during covid and spent heavily for capacity. And when the crunch tapered off, they were left holding the bag.
Micron would probably not even exist, or be a sticker brand for some Chinese conglomerate if not for this supply shock.
They are a lot more reticent this time around.
Nobody is holding any post-COVID bags right now. Every fab and factory is either running balls-out or waiting on something.
There's no point bringing this up.
Whenever anyone does, there are dozens of posts acting conspiratorial on HN.
It has honestly gotten frustrating to even read anything on the internet these days. It’s just conspiracies upon conspiracies all the time, and it’s constantly in your face.
If only they were good conspiracies with some weight to them, but no, they fall apart if you have a rudimentary understanding of the subject.
https://en.wikipedia.org/wiki/DRAM_industry_price_fixing
Which was caused by the exact problem they’re trying to avoid by not going on a spending spree to increase manufacturing capacity.
They had built way too much capacity during the 90s and were losing money on every chip because they couldn’t run the fabs at full capacity. That’s why they colluded to increase the price to save their collective hides.
A new competitor wouldn’t be able to enter the market and lower the prices without also losing money. That’s not the case today, the Chinese are trying hard to do just that.
It's easier to bear that there might be a conspiracy, than that this outcome is the result of chaos and stupidity and greed. Also it makes you think you are smarter than anyone else.
Fundamentally, it comes down to whether or not you think "AI/ML" can disappear tomorrow and the world would continue to run as normal.
From what I have seen, it cannot. It has become foundational the same way Internet 1.0 (eg. Email, Static HTML, Web Directories, SSL) became foundational for a significant portion of the global economy in the 1990s and 2000s.
AL/ML isn't going away, but what that means for demand for various types of memory remains to be seen. LLM are clearly a commodity, and once they are "good enough" then it'll just be about price, meaning that smaller and less memory hungry models will win.
It's a bit like the Sun/etc workstation market vs PCs, and high end expensive PCs vs cheap ones. Once the cheap PCs became "good enough" then they naturally dominated.
Not only could the world run as normal without AI as we have it today, it would run better. The tech we have is a net negative, slowing things down and making things harder without providing value.
This is a bit like complaining that toilet paper manufacturers did not dramatically scale up production in the first months of COVID-19. But had they invested in additional factories and production lines, they would be now holding the bag.
The memory market isn't all that different, except it's even more capital-intensive. Roughly half of HN is convinced that the current AI boom is unsustainable even though the technology itself is amazing. So why should memory makers take the bullet here?
Ultimately, as much as this sucks, having an inexpensive gaming rig is not a human right. People with money decided that all that money should go to AI, and we have to suffer through the downstream consequences of that.
I think neither CEOs nor boards of the public companies care. They want to maximize their paychecks and bonuses in the short term before they leave to other companies.
Like termites, moving on to the next tree. One day we'll figure out how to be rid of these parasites, then we'll have healthier trees.
Say the creatures that depend on termites for habitat.
What eats CEO's?
The SEC?
Point well taken. Same issue as with shareholders since it's not like companies really belong to a family anymore with a reputation on the line, like their name being in the company name.
I don't think the semiconductor business is so much like that - it's become more ingrained in them that you need to manage the business for long-term sustainability.
Yeah CAPEX for semiconductors is terrifying. They cannot just handwave away large fractions of a decade, especially with the lead time for equipment.
Except that in this case it's no longer 'collect money, move on to the next one'. It's 'collect money, become dynastically-rich, retire in 3 quarters from now'. After that, who cares.
This seems like a distinction without a difference. In the context of CEOs sacrificing the greater good for their bonus, [basically] nobody has done that for a $250k bonus. We're often talking 8 figures, tens of millions of dollars.
Is this really a categorically different thing if we're talking about $85 million vs. $12 million?
It's worse, sometimes even governments fail due to overconfidence.
Brazil and the UK (well, technically Japan) caused 2 natural rubber price spikes that first led to the UK smuggling rubber tree seeds to be imported to Malaysia, where the UK took over global natural rubber production, marginalizing Brazil.
Then Japan conquered the Malaysia during WW2, at which point everyone started developing artificial rubber and natural rubber was reduced to a much smaller market.
> They want to maximize their paychecks and bonuses in the short term before they leave to other companies.
You could say that about pretty much any employee - and you'd be completely wrong. What makes you right in the case of CEOs and boards?
> You could say that about pretty much any employee - and you'd be completely wrong. What makes you right in the case of CEOs and boards?
https://www.cnbc.com/2026/04/30/us-ceo-pay-grew-20-times-fas...
Micron has several fabs and fab upgrades coming online or under construction right now. An expansion in Boise and Virginia. Plus a huge megafab project in New York that's going to be the biggest in the world AFAIK.
All the DRAM makers have new fabs or plant expansions underway right now - indicating they believe the demand increase to be sustainable.
How many years ago did they start construction on these projects? How many years before that did they greenlight the project? I'm quite skeptical the timelines are short enough to line up with the AI boom.
The Boise fab was a result of the CHIPS act (so tech sovereignty rather than because of AI), and they recently tacked on an R&D expansion to that due to the AI boom. https://boisedev.com/news/2026/08/20/micron-to-build-10-bill...
Oil is sky high, a recession might be near. Also, optimizations (like the current KV one) can yield a drastic reduction in RAM needs. It's a risk.
If I was trying so stabilize (just stabilize) funding for humongously expensive fabs: I'd be giving markets reassurances that my business will continue to be high margins for the mid-future.
> prioritized extremely high prices
Wouldn’t shortages produce basically the same incentive structure regarding competition or national security requirements? Like the demand for RAM is actually way up, so if they don’t raise prices enough the inventory will just quickly become depleted.
How much of this issue is self-inflicted? Micron is building a massive fab in Syracuse. They've spent like 4 years seeking approval, lobbying politicians, doing BS "environmental impact studies" (which are mostly just rent seeking and political handouts). They finally started building, but if they had just been able to put shovel in the ground we would already have this fab be producing memory.
It took just over 3 years to get approved, and the reason it took so long is that it is massive project (1400 acres) and has enormous infrastructure requirements that needed comprehensive study by reviewing agencies to make sure the area could handle them.
The first two fabs there will require 17 million gallons per day of water and when fully operations in the early 2040s the facility will need 48 million gallons per day. That is more than existing infrastructure can handle so the project also includes a new pipeline extension to Lake Ontario.
That water requires extensive treatment before it can be discharged. It will be pretreated on site, then go to a new $1 billion industrial wastewater treatment plant being for this project, and then finally discharged into the Oneida river.
The energy requirements when fully operation are 1850 MW drawn continuously 24/7 every day of the year. That's 16 TWh a year.
For comparison that is a little above the annual electricity use of Ft. Worth, TX or Charlotte, NC, and little below Indianapolis, IN. It is about 14% under San Francisco, CA. A little over half of Chicago, IL, about 1/3 of Los Angeles, CA, and about 30% of NYC.
That's way beyond the existing grid capacity, so lots of infrastructure upgrades there are taking place.
If only we didn't have 100+ years of factories shitting where we eat we might not have thousands of governments wanting assurances that companies don't harm people in their area.
Silicon Valley is littered with SuperFund sites of bankrupted companies who conveniently couldn't afford to clean up the toxic mess they left behind when they became the vessel full of debt after the corporate shell game moved on.
Do these environmental impact studies effectively stop that? could they effectively stop this issue with a more efficient process?
What happens now is that there are a large amount of studies, that pay consultants and organizations to generate thousands of pages of documentation. They then turn around, have some niche issues that they pay to go away. For example was Micron having to purchase a few acres of land 25 miles away as a park for some owls effectively helping stop superfund sites?
This is basically environmentalism security theater and political grifting.
Maybe if they tried to build some of these on existing dilapidated commercial or industrial plots that are vacant and languishing they wouldn't have to jump through so many procedural and political hoops. I'm told these exist all over rural america.
Instead they want to build their 100 acre Data-Center/Technology Industrial Park adjacent to the burrowing owl habitats or up against Grandma Martha's backyard.
Building on vacant industrial land is more expensive because you have to clean it up first. It might even be a superfund site, no one is interested in actually finding out. There hasn't been any room on compromise or cleanup assistance in most cases.
There is also additional risk here. If company X made an unknown superfund site, then company Y develops on it. Is company Y then liable if the superfund site becomes known?
All this speculation is pointless. Superfund sites haven't had their cleanup funded by the companies doing the pollution since 1995, when congress decided that the tax on companies to fund such cleanup (which had funded 70% of the cleanup of superfund sites up to that point) no longer needed to exist, and since then the taxpaying public of you and me have been paying every single dollar for cleaning up the pollutants these companies emit.
You didn't have to pay to cleanup a site before using it, because the expectation was that you paid while running your business and the site would be cleaned before you wanted to utilize it.
But now the "Superfund" has been underfunded for like 20 years. Biden's IRA set up a new tax for ten years but, not sure how well that's going.
We literally had the system set up well and working fine, but it cost companies a few dollars so it had to go when the "Greed is good" folks came along.
If someone enters as competitor because of high prices/profit, they'll want for them to stay that way. It won't make it better for the consumer if the supply is constricted in such a way.
I think this is a point where governments should intervene and perhaps start fabs that would produce RAM at cost for working class and SMEs to use.
Well it would depend how much higher prices and for how long until competition could arrive. Any business that could sell stuff at 10x prices for 10 years would make enough extra money that it would be worth it even if they knew bankruptcy would happen in year 11.
This is a very difficult supply chain in which to compete, even nation states mostly can’t. The machines that build the chips are really hard to come by and even China is just hoping they can start to make them in 2030 and they likely cannot. Meanwhile demand is accelerating.
History does not drop financial gifts like this in one industry’s lap often. From a sheer numbers standpoint, what they’re doing absolutely is the only logical choice.
There is 3 companies that make memory - they ALL want to keep memory prices high for as long as possible.
It had mostly come down to 3 (Samsung, SK Hynix, Micron), but the Chinese manufacture's market share is growing rapidly, especially as they ramp up due to sanctions. CXMT is currently 10% of global DRAM, having seen previous YOY growth of 1%->4%->8%. YMTC is now global #3 in NAND.
It wouldn't be surprising to also see Japan make a comeback in memory - they are investing heavily (both privately & government) in semiconductor manufacturing.
For now, there are only 3 that matter, but the reason is purely because the US government has sabotaged their competition as soon as it became apparent that the incumbents would lose market share.
Without what the US government did and still does, the prices of memory would have never increased so much and all the world would not have been forced to pay so much for memory.
« Without what the US government did and still does, the prices of memory would have never increased so much and all the world would not have been forced to pay so much »
If that is true (and given the reasons you provide below, and the general quality of your commenting, I assume it is) then the situation is similar (if less militarized) to that of the oil sector, where the cost increase is likely higher by perhaps three orders of magnitude.
I assume that some Americans have downvoted what I have written, but this is a fact that is true beyond any reasonable doubt.
A few years ago, the US government has added the Chinese vendors of DRAM and of flash memory on their sanctioned entity list exactly at the time when Apple and other major computer manufacturers were evaluating the replacement of products from Micron and the like with the Chinese alternatives. This was prevented by the "sanctions".
There is absolutely no doubt that the so-called sanctions did not have any other purpose than removing the competition for Micron.
The official reason is absolutely ridiculous, i.e. that they are among the companies that provide products to the Chinese military.
If that would have been the reason, then 100% of all existing Chinese companies from any domain of activity would have to be put on the "sanctioned entity" list, because any of them would sell to the military of their country, if given an opportunity, like all companies from USA will provide products and services to the US military, given the opportunity.
While the Chinese memory makers will obviously also sell to the military, almost all their production goes into consumer products, like smartphones and laptops, which are the main products affected by the US "sanctions" (which are no true sanctions, because true sanctions against China would have been accompanied and conditioned by some political requests, which is not the case for any of the US "sanctions").
There is also no doubt that without the US "sanctions" the Chinese memory makers would have bought the latest semiconductor manufacturing equipment and they would have had the production capacity to flood the market with their products when Micron, Samsung and Hynix stopped providing enough memory for anyone who is not among their top 5 customers.
Thus their is no doubt that the US government has stolen a lot of money from my own pocket when I was forced to update a couple of old computers this year, by artificially restricting the amount of memory that is produced and preventing competition in this market.
As I see it, any US citizen who supports the actions of their government to restrict the production around the world of various kinds of goods and to prevent competition in various global markets, actions that have increased the prices of many kinds of consumer products in all countries, is an accomplice to theft from a very large number of people all over the world, who are forced to pay inflated prices for such products, resulting in money that goes from many countries into the pockets of the shareholders of a few big transnational companies, including Qualcomm, Micron, Samsung and Hynix.
> I assume that some Americans have downvoted what I have written, but this is a fact that is true beyond any reasonable doubt.
I would guess that the reason for any downvotes is that even if what you wrote is completely true it isn't really relevant, because the current problem is not lack of competition. The current problem is a huge increase in demand over a short time.
Even if there were no restrictions on China and they had latest generation fabs, they would not have had latest generation fabs just sitting around idle. They would be unable to meet the current increased demand for exactly the same reason everybody else can't.
>There is 3 companies
There are 3 companies
Thanks for you're help
There be 3 companies
(Who said that we can only talk like a pirate one day a year?)
I also like to keep prices high for as long as possible for the things I sell. I bet most people I ask would answer the same.
If I can sell my things at a higher volume for longer vs higher price and less volume now, I'll go with the first, but not shareholders focused on quarterly numbers.
Is your claim that businesses that have to spend billions or tens of billions of dollars and years to bring facilities online to make the products they sell are owned (and influenced) by shareholders focused on quarterly numbers?
This “quarterly, short term” reddit-ism or internet-ism is baffling since the businesses that have earned the most money for shareholders (to the tune of trillions of dollars, eclipsing all other businesses), all have leadership making very expensive, very long term bets.
> Is your claim that businesses that have to spend billions or tens of billions of dollars and years to bring facilities online to make the products they sell are owned (and influenced) by shareholders focused on quarterly numbers?
Yes? That doesn't mean they can't spend billions on R&D. If Apple didn't sell iPods like hotcakes, they wouldn't be able to R&D the iPhone. That doesn't mean nobody at Apple had long-term vision, quite the opposite.
Whether they did this or not, I think the exponential demand for memory would still be there. So there would still be conditions that encourage new competing manufacturers.
Building capacity with looming bust around the corner has its own drawbacks. Damned if you do damned if you dont situation for them.
I honestly expected that there would be more competition entering the memory market by now. I know it takes a lot of time and capital, but Europe has plenty of semiconductor know-how with ASML and ARM, and a strong desire to be less dependent on other parts of the world, so investment in a European semiconductor industry would make a lot of sense to me. And these high memory prices sound like the perfect opportunity.
It takes too long! It's like all the people going "why don't we just build nuclear", without looking at the construction times of recent plants.
First line of your post was enough.
Or it just be that demand really does seriously exceed supply. It's not fast to bring supply online, it's costly and risky to do so if the demand will not be sustained for a long time. IMO, there's no conspiracy. I have been telling folks for the last 3 years that the price of AI compute is not coming down for a good 5+ years. Possibly 10 years too. Every human in the world will need AI, the same way we all got on the internet and then mobile. However, outside of humans, for every human there's going to be ten or hundreds of agents also all demanding compute.
> Or it just be that demand really does seriously exceed supply. It's not fast to bring supply online, it's costly and risky to do so if the demand will not be sustained for a long time
This is exactly it. There's a lot of conspiracy theory in this thread without realizing that it's just what happens when an insanely large amount of capital is deployed: market distortion.
It's not just RAM, it's things like gas turbines and power transformers. I've seen suggestions that it's even affecting housing starts because the construction effort is pulling in workers, especially electricians.
However unlike you I'm not of the opinion that all that can be built, in that short timeframe. Even less so that it can be operated without pushing us over the 2C global warming threshold.
> I have been telling folks for the last 3 years that the price of AI compute
What does that even mean ?
The cost of AI itself (tokens/$ for a given level of intelligence) has been falling rapidly, and shows no sign of stopping.
What is the cost of AI tokens? You can't just calculate cost of inference. There is a cost to train, there is a cost for staff to build it all, the money investors provided for it all. When you run a business, all those costs must be recovered. Sure, it takes $2 in material cost to make a pizza, but what's the cost of pizza? You have to take into account, energy, rent, staff, insurance, and profit too. Tokens/$ is subsidized if you are talking about APIs
The big AI companies like OpenAI and Anthropic may have rushed into it too fast, and in effect wasted a lot of money on early model generations that never paid for themselves, early model architectures that were not cost-efficient, experiments that never panned out, etc.
The AI pure-play companies like OpenAI and Anthropic are presumably in worst financial position, since others like Google, Microsoft, Amazon and Meta (also Alibaba, Baidu, Bytedance, Tencent, Xiaomi) have generally been more conservative and are treating AI as an incremental revenue source not a highly leveraged all-in bet.
they operate at a loss (they pretend to profit by excluding key costs in financial reports). they won't do it forever.
> because I prioritized extremely high prices for a few years that might have the effect of changing the arithmetic for potential competitors that wouldn't have done it before.
Or maybe they believe the demand is not sustainable, and they don't want to fund $10B ghost fabs.
> extremely high prices for a few years that might have the effect of changing the arithmetic for potential competitors that wouldn't have done it before.
The big problem is, competitors need money. Say a fab costs 10 billion $ a piece, that is a big chunk of investment needed that absolutely needs to be paid back because even a big bank consortium will have a hard time shouldering this kind of single risk.
Now, the fab needs around three years to build... which means if there suddenly comes a huge amount of new supply or alternatively, the AI bubble pops, prices will crash, the companies won't be able to service the loans, and the banks will be sitting on a very expensive piece of real estate and machinery.
Particularly in semiconductors, this "bust and boom" cycle, "pork cycle" or however you want to call it, is very very well known. Banks and other investors have been through that one more often than you can count, that's the reason why there are so few producers left after all.
The only place I think can reasonably pull it off to start a competitor is China because their economic policy is focusing on decades in the future and the CCP is willing (and able) to shoulder the risk - however China can't acquire EUV machinery due to sanctions and will likely take a few years until they can pull it off on their own, by the time TSMC et al will already be at the next generation.
Not enough people are prepared if this isn't a bubble. I think he's betting on this being a bubble which would imply building more supply would be a mistake, because they'll end up with a factory and no more customers.
It's starting to look more and more like we will always need more memory.
Shovel seller says shovels will be expensive in winter so make sure to buy as many as you can today.
Exactly. Memory seller says memory prices will go higher and remain high forever - got it.
I mean have you looked at housing for the last decade? Im glad I didn't wait for it to come down lower than it started the decade...
Just because he is the one selling it doesn't mean he isn't telling the truth.
and please all invest in the shovel making company!
I mean, yes, but they are also right. They benefit from the market conditions, and contribute to the price increase, but it’s pretty clear there won’t be that much available shovels for a very long time
Of course, because there was a HOA that became financially so big (on paper), that it secured 80% of the shovel supply for the next two years. Now everyone is fighting over the remaining 20%.
I mean they already ate all the shovel supply for this year, so unless the bubble pops now, the shovel supply for next year will be used by that HOA.
Especially when the equipment the shovel seller uses to produce shovels has been retooled to produce backhoes instead because of a digging bubble.
Shouldn't this be affected by the diggers from the Far Lands recently telling everyone how to angle the backhoe blade to dig 470x as much earth in one swing?
It would be severely affected if Jevon's paradox weren't terrorizing the globe right now.
I have huge hopes fox CXMT entering the market and at least offsetting this nightmare. Just this week i've paid ~$1k USD for 2x32G DDR5 ECC, insane.
CXMT has entered the market, but for now they cannot increase their production fast enough to influence significantly the global prices, due to the US "sanctions", which prevent them to buy modern fabrication equipment.
So they must use older equipment, which has low productivity for state-of-the-art memories. Because of the "sanctions" there are now Chinese companies that have progressed significantly in semiconductor manufacturing equipment, but the effect of this will also take some more time to manifest.
Nonetheless, if the 3 big memory producers will not be able to increase the availability of memory until 2028, then until then CXMT will grab with certainty a major part of the market (they have already grown quickly until 10% of the market, from a negligible percent previously).
The greed and shortsightedness from both the memory makers and their big customers trying to lock out competitors from memory purchases is palpable. The first act of a Shakespearean or Greek Tragedy is where the characters take the actions that lock in the circumstances that precede their downfall. And this sets up everything for the next act where CXMT has everything it needs to establish itself on the market with buyers that would perhaps would not have considered it in other circumstances.
yay capitalism!
So if capitalism resulted in higher prices that is causing consternation among small-scale buyers, what -ism is responsible for the investment in factories that increased supply of components that resulted in lower priced electronics for the past few decades?
Was that also capital looking for returns?
Don't take the reddit bait
Why is it bait? It's literally making the world worse were the gains only benefit an extremely small minority of people at the expense of everyone else.
> Just this week i've paid ~$1k USD for 2x32G DDR5 ECC, insane.
https://pcpartpicker.com/trends/price/memory/#ram.ddr5.5600....
I thought your price for 32g was you getting ripped off. Holy crap. The price is super high now. Now I am lamenting missing out on getting 128GB ram when it was $700, thinking it was too high. It is outrageously expensive now.
Everyone, and I mean everyone, is gated by ASML machines. They can't make nearly enough EUV machines to satisfy the demand. ASML has also not scaled their production nearly as much because they're quite far away from the AGI-pilled companies in the supply chain.
Well, CXMT is not gated by ASML machines because they can't buy them. They can raise their capacity because they have access to the domestically produced steppers. They are not as good as the ASML ones, and if the memory prices were not bonkers, they'd never make a profit using them, but as it is the low yields and high die sizes don't matter.
They are. They are using ASML DUV machines for memory. Samsung, SK, and Micron have moved onto EUV machines for memory because they are better. So CXMT not only has to rely on ASML, they have to rely on a worse machine to make modern memory chips.
You don't need ASML machines to make RAM. BS.
All modern DDR5 and HBM are made using EUV machines.
The exception is CXMT, which uses ASML DUV machines in a less efficient process.
They don't have the infrastructure to meet global demand.
I would never bet against a Chinese company ramping up production quickly.
They'll probably join the party and hype about tight demand by that time.
In communist China, the party joins you.
Depends on what kind of memory you are talking about.
For DRAM, CXMT were only 1% of the global supply 3 years ago, and are now already 10%. They are growing extremely rapidly.
If you are concerned about consumer memory - smartphones, laptops, desktops, then this is what CXMT are making. CXMT do make HBM too, for AI accelerators, but their volume there is held back by sanctions.
They're 10% of the market now, and they've shown the ability to scale up manufacturing rapidly. They certainly won't singlehandedly meet demand, but they might at least be able to temper the price growth quite a bit.
Yet. Maybe they will by 2028, making this prediction incorrect.
doesn't seem unlikely, i'd probably ask someone who won't massively benefit from people believing that it will be tighter though
Yeah he doesn't want people delaying purchasing decisions
Yeah, if anything, this makes it more clear to me that all this wonky supply/demand stuff will correct itself sooner rather than later. I've been wanting to upgrade my workstation but the DDR5 RDIMM sticks are unbelievably expensive, last few weeks I've almost pulled the trigger anyway, now I think I'll continue wait at least for the beginning of next year.
Exactly - this kind of borders on market influence.
Effectively: "Now's the time to invest..."
The war on general purpose computing is ramping up. They are coming for your computer....get ready.
How are you getting ready?
Is there nothing we can do but pay the absurd prices and be happy about it? There is no hope left?
I'm genuinely afraid.
remind me in a few years when the same CEO is writing long post on Linkedin explaining why they need to let go half of the company.
Don't be too hard on the CEO. It will be unavoidable and he will be deeply sorry and humbled by their dedication throughout the years. Also, people will receive 2 months of benefits and FREE job search consulting (through an AI agent).
And it will be "the hardest thing he's ever done"
...and he will send many thanks for the great work all of you did throughout all the hard years!
In the past, when you were family!
Anthropic is expected to spend 500B of money it doesnt have. Based on these commitments, data-centers have ordered equipment which includes memory. So, a lot of demand for memory is built on a speculative foundation.
> Anthropic is expected to spend 500B of money it doesnt have.
... yet.
That is why the big AI corps all went public this year or are trying to do so. They are valued large enough that they will be included in the popular indices (NASDAQ, S&P 500, ...) from the start, which means an awful lot of money will flow into them each month automatically from all the retirement savings.
And that unfortunately completely prevents the core function that stock markets should offer - that bad actors get punished. Can't get punished when there is so, so much "dumb money" floating around and entering the fray every month.
I absolutely loathe Nvidia at this point. They've completely abandoned the core consumer that built Jensen's empire. Why not offer pre-orders of 5090s and MSRP? Why has every single drop at Best Buy gone primarily to botters and scalpers? Why not give end users half a fighting chance like EVGA used to by letting end users get in line before Nvidia crushed them?
When the AI bubble bursts, Nvidia is going to be Enron.
> Why not offer pre-orders of 5090s and MSRP?
AI bots (probably powered by NVIDIA chips) would gobble those up in seconds.
> Why not offer pre-orders of 5090s and MSRP?
Because it would immediately go to scalpers anyway. Like, say the 5090 - I'm seeing prices of almost 7000€ for that thing [1]. Assuming without AI it would be priced at 1500€ - I could make about 3 months of rent just by immediately selling the GPU to the next reseller who then peddles it to some AI training farm. And in this economy, oh hell yes I would.
> When the AI bubble bursts, Nvidia is going to be Enron.
Nah. NVIDIA was a money printer way before AI was a thing. Post-collapse they will still be a money printer, just at lower speed.
The ones who are going to get fucked over hard when the AI bubble pops is pensioners, the generation who is just entering the workforce (2007ff had an aftereffect in wage depression lasting for up to a decade), and everyone who took up investments to service the AI demand (utilities, construction companies and the likes).
[1] https://www.pccomponentes.de/msi-geforce-rtx-5090-ventus-3x-...
>> Because it would immediately go to scalpers anyway.
No they wouldn't, tens of thousands of unique users would be in line with dozens or hundreds of scalpers, if they're all allowed to buy one every 180 days per payment method, the end users actually get a fighting chance. Today they have no chance.
Scalpers use other people to purchase high demand items to then scalp.
There is enough profit to pay people to buy stuff and resell it.
And it's not just a few people. The sophisticated scalping operations have hundreds of straw buyers in their network. For items that generate far less profit than a 5090 currently does.
I've watched vans dropping of an endless stream of people in the parking lot of my local Costco to buy out all the cases of Pokemon cards within 20 minutes of the "random" drop they put on the floor. They go in, buy the max quantity of the item with cash provided by their keeper, bring it back to the van with a receipt and change, and get the $20-30 per item pay they were promised. There were 2 or 3 'legit' buyers out of hundreds of obvious straw buyers.
If the profit per item is $4-5k, expect this to go into turbo mode and be done in a marketplace/automated fashion and go viral. Just sign up to your favorite scalper's platform, submit your information, get a quote and a prepaid label and drop the box you got from nVidia off at USPS the next day. That "tens of thousands" of individuals will turn into "millions" really quick once it gets known there is rent money involved by clicking a few buttons and it goes viral on all the social media platforms.
The only way out from that is manufacturer enough cards to meet demand, and at that point the retail channel doesn't really matter.
Everyone I know who signed up for EVGA cards for the 30 series got one eventually, even if it took a couple months of waiting. I don't know anyone with a 5090 FE at MSRP.
Yeah, I will never buy an Nvidia GPU again. I assume many of their former customers feel the same way. When the bubble pops, I think Nvidia is going to feel the pain as they will have pushed many of their former customers into the arms of AMD.
I guess it is back to the old days, when home computers had the memory they had and that was about it.
When are we getting the wave from REIN (Rewrite Electron In Native)?
I look forward to memory optimizations in software design.
You joke but I don't see why mass optimization shouldn't be possible given the cost of mass refactoring went to effectively zero at this point.
Mass refactoring will always compete with mass new product launches and mass new feature production, so it's likely to always lose.
This has absolutely been a dream of mine. We act like it's the 80s-90s again and optimize all the software.
That's the one silver lining. I've always kept a lean desktop of mostly terminal based programs, and I've heard one too many times "just buy more RAM" as a defense for resource intensive graphical programs using Electron or modern browsers in general.
If I made a similar statement in my industry, I would be jailed or at least heavily fined for market manipulation.
It'd be a shame if their two main sources of income (openai and anthropic) were to go bust...
They're too big to fail at this point. US taxpayers will bail them out if push comes to shove.
I doubt it will change much, inference (not training) is very profitable and demand for inference is quite high. See: Mistral serving GLM on their own servers.
They are probably too big to fail already (and too friendly with the current US gov). And even if they fail, open-weight models will take over as the usefulness of the tech behind has been proven.
In that unlikely case, open-weight hosting providers (and Google and Meta and SpaceXAI) would pick up the slack.
The only chance of memory demand going down would be breakthroughs in model size reduction.
The catchup models are all basically distillations of the sota models. Without the next training cycle things are going to stagnate. And as all those companies you mentioned are all linked to OpenAI and Anthropic and relying on hosting deals and things they are all going to be in the ringer when things to go south.
So on the one hand you have all the sota model makers doing investor expectation management in saying wet need a slowdown for safety (may or may not be true, but also means they don’t spend on the next training cycle before IPO? Could be making their books look better too?) and on the other we have a sense that the models aren’t yet at the stopping place where we can just not train another cycle and use distillations of the current generation?
Sure, and they'll be cognizant of that risk when considering expansion. The lessons of the dotcom fiber boom aren't that distant in memory.
If AI companies have allocation of memory, can't they just sell the memory allocation if they are tight on cash?
I expect them to sell everything if they go bust to recoup what little they can for investors. That would double whack hardware manufacturers are their final consumers are now both leaving the markets as buyers and entering as competitors.
I don’t think they will. There is too much money in it now.
Only last year Microsoft admitted to having GPUs in inventory that they couldn't power, due to a lack of electricity. So much of this production capacity could very well go into making memory chips for GPUs sitting in a warehouse.
The amount of money spend on the AI hype train is crazy. Meanwhile we're wasting fab time making chips that might never be powered on. It's absolutely insane that there are more money to be made on hardware for AI that may never be used, rather than producing a product that consumers and businesses need right now.
Don't worry, the Trump administration is addressing this by lifting pollution limits for data centers.
But wait, I thought we all agreed that capitalism is the most efficient way to distribute goods in an economy!
I'd argue that this is a form of financial engineering that is somewhat removed from "true" capitalism.
By goods you mean wealth vertically to the oligarchs, then yes.
Micron profited immensely by exiting the retail RAM / SSD markets. All the big manufacturers used Crucial RAM. Apple, Dell, HP, Lenovo, etc. They are the number one reason RAM is so expensive. They decided it was more important to make trillions selling to the A.I. hyped data center buildouts. They weren't wrong, they made serious money. I'm still rather pissed off about it.
> Acer CEO says memory makers are hyping 2030 shortage fears to protect margins — PC prices set to decline by late 2027, cheaper Chinese capacity coming online delivers lower memory prices
The ripple effects are going to be big. Its going to be rough for any company building products with RAM in it. People will hold on to what they got.
If only we'd all made do with 640k!
One thing is certain: in that world, we would not have to brace for a future where pretty much any form of human labor is at risk of getting replaced by just having the machines oxidize even more carbon and telling those humans to just eat cake if they fail to sell any their skills for bread.
This is why I (actually/literally) just purchased a Commodore 64; I miss the days of crazy optimization and hardware hacking to fit so much into so little :).
This but unironically.
Micron stock has gone up 10x in the past 2 years in a sector where the barrier to entry is lower than GPU/TPUs. CEO will do everything he can to keep stock price from returning to the mean.
Kudos to the memory supply-industry on converting their market in a way that a handful of large-scale customers moved from mere supply-forecasting to outbidding themselves to BUY future production of chips for years to come.
I would now like to open the floor to investigations in this industry to determine whether this is hindering free-market forces and is ripe for regulation, as no-one is able to actually compete with these handful of companies anymore.
...anyone?
...ah yeah, right, I forgot. They also found a circular financing scheme which enslaved the entire global economy and organically prevents governments from properly governing their industry.
I thought that the bulk of memory is already "technically bought" by the AI hyperscalers in the form of the big (not so) "hidden" debt? As in: the supply should already be known.
Why the need for speculation?
Micron reportedly sold $100bn worth of DRAM last financial year, and reportedly has $40bn long term commitments. $40bn is more than their entire fiscal 2025 revenue, so it's a lot, but it's clear it'll be a minority of their available supply.
As an end user it’s difficult to not be bitter about the situation, particularly when you have execs coming out and saying, “yep these prices sure are terrible, better buy now before they get even worse!”
I’ve seen people say, “well that’s just the free market, there’s a customer that’s willing to pay more than you,” but that argument doesn’t hold water when industry incumbents are actively obstructing entrance of new competitors into their primary markets. Micron, etc can’t both refuse to carve off more of their capacity for consumer-destined NAND and also refuse to allow others to fill the vacuum they’ve so conveniently created. Either you’re serving the market or you’re not; you don’t get to have your cake and eat it too under properly functioning, healthy capitalism.
How they refuse competitors to enter the market?
Micron has been lobbying to ban CXMT from the US market after Apple was entertaining using them as a supplier.
Memory production is restricted by patents. CXMT only exists because they bought patents from another company.
I think as a manufacturer I'd be less worried about competition than about vertical integration by large players.
It makes sense to de-risk your supply chain and at this point memory is a key supply risk.
If you follow the money though much of this future “demand” is on fulling orders from the AI labs and at the moment the AI labs don’t have the cash to pay that bill. A rather important detail in this whole mix.
So either the labs need to start printing money, now, or there’s going to be a whole bunch of excess chips hitting the market in 2027-28.
Someone in the middle is going to get left taking delivery of all these chips but unable to collect payment for them. And someone else is going to get left holding the bag on data center loans to house those chips. That’s the storm ahead.
Do you not believe that Anthropic and/or OpenAI are going to be able to IPO? Once they do, that's a huge source of capital for them that could absolutely be used to fund hardware purchases.
Based on current reporting the IPO wouldn’t generate anywhere near enough cash to pay for the bills coming due. Just between those two they have over a trillion $ of commitments coming due that need cash payment. Thats actual dollars they need to pay and neither the IPO nor current cash flows appear to be generating that kind of money to pay these bills when they come due.
It’s a big problem which neither big lab has a great answer for right now.
They can IPO all they want it's not gonna save them from the Chinese labs selling equivalent models at 80% discount
These labs made a bold bet that cost trillions, but those trillions in research are a box of concrete around their feet now
CXMT is coming for this market, and this creates a huge opening for it.
> Chinese CXMT DRAM doesn't look like the budget savior many were expecting — new modules enter the market, but prices still track the big three
https://www.tomshardware.com/pc-components/dram/chinese-cxmt...
CXMT isn't going to just magically price memory like it is 5 years ago. Maybe 10-20% lower, but not some integer multiple lower.
That's today. You have to think about what the industry is going to look like in a decade.
Building a DRAM company from scratch is hard, expensive, and risky. You're burning a fortune to get started, and the result is a commodity product. But the AI bubble allows CXMT to have terrible yields, sell a legacy product, and still make a healthy profit! This is literally a once-in-a-lifetime opportunity to catch up.
And yes, right now that means selling DRAM for 10% below the crazy AI-inflated prices the incumbents charge. But sooner or later either demand will drop or supply will catch up. CXMT, like many other Chinese companies, is undoubtedly willing to operate at razor-thin margins to increase market share. Either the other manufacturers move down as well, or they'll be made irrelevant by CXMT stealing all their customers.
Oh sure, they'll take profits while they can, but the supply increase will start pulling the market down. It's how price signals work.
Only way to keep prices this high would be a multinational cartel of RAM makers agreeing never to compete on price. One defector kills it. Not likely you could keep a cartel like this given that the players are all on different sides of geopolitical tensions. China's not going to want to help keep Taiwan, Japan, Germany, or the USA in the money.
per yahoo finance:
MICRON INSIDER TRANSACTIONS (LAST 6 MOS)
Purchases 887
Sales 337,619
Seems like the Execs aren't seeing this as a good thing for their company
And People believing that everyone will have a robot at home.. until they realize that a human is much cheaper to maintain, a bread and a liter of water is enough...
I just got some windfall. Maybe I will pickup the Macbook Pro I so desperately need!
One factor constraining supply for RAM in the short-to-medium term is that memory manufacturers is that DDR5 (and assumedly DDR6) capacity is being moved to the much more profitable HBM.
I think supply will be tight until at least the AI market crashes, which could take years or happen within months. Nobody can really predict when this will happen but it's fairly clear (IMHO) that the revenue projections needed to justify the investments by OpenAI, Anthropic and SpaceX simply don't exist.
Without the AI boom, the economy is in recession and has been for awhile. We're in an affordability crisis and the energy crunch is coming.
makes sense. large backlog + sustained demand + constant manufacture time = larger, faster-filling backlog. i'm sure this has a fancy economics term
I guess those estimations based on projection for data Center build out, which include 30GW+ in 2027 alone, more then 3 previous years combined. Surely every human on earth will start token-maxing tomorrow and bring all of their money to their AI labs overlords to justify that explosion in spending, right?
Obviously, because they are making a killing.
So instead of consumer's not being able to buy memory, consumers won't be able to buy memory?
In the short term, what `Neil44` mentioned "Yeah he doesn't want people delaying purchasing decisions" makes sense.
In the long term, the big comapnies are pushign to have consumers to adopt "terminals" back in old days.
- we use crappy devices, while cloud got beefy machines.
No one will use AI products if there won't be consumer products because of RAM shortage.
The plan is to make us all use shitty hardware like a chromebook and rent compute from the cloud for anything heavier than a web browser.
> anything heavier than a web browser
The way Chrome feasts on RAM, might need the cloud for that too.
Honestly, FF became similar worse: On my 16 GB machine, when surfing some hours FF has allocated around 10-11 GB and for whatever reason it does not free them, unless I exit and restart it
On linux do something like `systemd-run --user --scope -p MemoryHigh=XG -p MemoryMax=X+2G firefox` to constrain it since the firefox people refuse to implement the memory limits logic that say Edge has..
But at the same time, this isn't just a Firefox issue, although they may be worse than most. Its a fundamental tenant of GC languages. You trade CPU (for the garbage collection) for RAM utilization. IIRC This was apparent by the late 70s with Dijkstra, but very clearly indicated in say Hertz where they are explicitly scaling GC overhead vs memory footprint to find that it takes ~5x the ram to approach the efficiency of an explicit allocate/deallocate model. Lower footprints are achievable but the GC overhead goes way up just to reach 2x the ram footprint such that the GC tends to dominate the CPU utilization.
And there are lots of papers like this for long running processes. GC works well if your model is basically allocate as much as you like, exit the process before actually needing to do a proper GC pass. Especially for contended systems where the memory is returned to the OS. This is why say PHP tended not to have this problem, because the memory was largely freed at the end of every request.
The New Tab Suspender plugin has my 50+ Firefox tabs at 2.2GB of ram usage right now. Having every tab ready and waiting for you is of course going to have increased memory usage.
I do not get why this gets so many downvotes:
- the described behaviour is the one I experience on my Win10 notebook (Lenovo X1)
- Firefox wasnt always that, thats what Im refering to
- I can see in ProcessExplorer how many threads it starts & keeps, and for whatever reason this is always a lot, even if I open only 1 tab after coming from new start
Perhaps we should blame this on shitty website design. So many of them load huge assets for no good reason. They get away with it because modern processors are that good, bandwidth is cheap, and until now, RAM has also been cheap.
But the cloud is becoming unaffordable as well…
There’s always going to be consumer products, even if the value proposition is worse.
If there’s a silver lining, I hope it leads to more optimisation, less Electron, and less bloat.
Typed from my 8GB MacBook Neo; which is honestly plenty fast enough. It “feels” like a 16GB windows laptop, even tho of course I know it’s not, but there’s something about optimisation.
And a 4gb Linux machine.
Lots of more niche products than Apple’s laptop won’t exist for a while due to the price of hardware. At a smaller scale the inflation hardware companies experience is really, really massive
While I definitely agree that there will be a slow down in purchase decisions for both consumers and businesses I struggle with this idea that there will be “no consumer products” in the market. There will be.
There will be, but the question who will be able to afford it.
It’s like saying that there is no housing crysis in several countries because the market is full of houses, apartments, etc.
You’re making what seems like a zero sum assumption. I am still using my M1 MacBook for work. I have a first version Mac Studio at home and countless other devices laying around. The world will continue to move forward and yes purchasing will slow down but folks will still be using their existing phones, laptops and other devices.
The future is starting to resemble smartphones that use predominantly RAM for local compute and inference while all persistent storage is managed by the cloud.
They can sell the AI products to write memory-optimized software to replace React apps.
Tragedy of the commons.
Neither consumer products nor RAM are really commons?
https://en.wikipedia.org/wiki/Tragedy_of_the_commons
If anything, it's the tragedy of econ 101.
The AI companies will sell those products to us. Locked down and all.
and here I hoped to suspect that my DRAM prices were all fake news run by my MITM ... goood, damn it
this would be the time to revive and evolve some of that Made In Germany Engineering ...
- i have the exact opposite to say
- one of those "frontier" model IPOs s gonna tank badly and take out the entire AI hype with it
can't tank if you keep pushing the IPO lol
Not good. Prices are never going down
Of course they will come down. Supply will rise to meet any sustained demand - it always does.
Gonna be crazy to watch this bubble pop.
I like to tell people that "AI" is the "last bubble." It was VR, the metaverse, crypto, NFTs, AR... AI is the Last Great Hype. There's really nothing beyond it. When this bubble pops it'll be remembered for decades to come because nothing will replace it.
Biotech has a lot of potential there, at least in principle.
Everyone has said this about every bubble while in the midst of it though.
"Crypto is the last 'big thing' because it'll revolutionize currency and everyday transactions"
"Metaverse is the last 'big thing' because everything you own will be virtual in the future'
Realistically I see AI as no different.
It wasn't the first SV-techbro hype technology, and it won't be the last.
The LLM bubble may fizzle rather than pop in any dramatic fashion, but it's certainly not the last word in AI - much more the exact opposite.
We've had AI "bubbles" / hype-fests before (expert systems, Japanese 5th generation systems), and I don't expect this will be the last.
There will also be technology bubbles and hype-fests in the future outside of AI - it's human nature. Hard to predict what they will be of course (the future is like that).
Until governments stop printing money and sending it directly to people that have nothing to do with it but investing, people will keep inventing random useless stuff to invest into.
Well like the very short 3D-TV fad, I can see a big sudden goldrush into AI powered robots (more than companies are in now).
It is also possible they all pivot to copying Neural Link and upselling the whole world on brain implants that the oligarchs can control.
Man whose compensation package is strongly tied to the economic performance of his company says company's economic performance will be great in 2027 and 2028 (so people should invest now to benefit from that bump)
Sounds like the gov needs to spin up another “Project Warp Speed” like they did during covid.
Can we get the South American Cartels on it ..
They are milking the market now.
Make no mistake here: they also plan to retain these high prices. It's like the mafia now. There should be instant-jail time to cure these CEOs of their greed. Like, go to prison for a week, to help refresh your mind and stop thinking in terms of milking the customers dry.
If/when the bubble pops demand will fall so hard they'll have little ability to keep prices too high. Especially with Chinese companies pushing out a lot more product by then.
That's probably planned but it will probably be in agreement with other producers.
Micron may be out of business by then.
Micron reported full year revenue of $133bn, up 256%, $100bn of which was DRAM, with non-GAAP earnings last quarter of their financial year of $37.7bn on $54.23bn of revenue. Seems pretty healthy to me. Any reason to think they'll go out of business?
How? They weren't doing poorly before 2026, and as far as I can tell, their profits have risen dramatically.
What if Oracle, Anthropic and OpenAI can't pay their infrastructure bill?
Then memory goes back to pre-2026 pricing and memory is still profitable with a cartel market of less than 5 manufacturers.
But only in 2028 because all the wafers rotting away in the warehouses are HBM which are too expensive to package or integrate into consumer electronics with tighter margins. Looking forward to having enthousiast-grade GPUs with HBM again though.