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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.

Are you seriously not aware of the existing history of the memory cartel? https://en.wikipedia.org/wiki/DRAM_industry_price_fixing

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.

Micron started as the outsider busting in during a past RAM crunch. They more than any manufacturer should understand this.

Does 87% gross margins sound like that them lowering prices is tantamount to dumping?

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.

> 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.

> 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.

> 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?

> 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.

You seem to be adding a lot of intentionality to price swings that seem expected when supply is relatively fixed while demand fluctuates. (Maybe you’re right, but it’s not the simpler explanation.)

Exactly this. Unfortunately, this strategy has become standard practice in every area of the economy and it's a huge corrupting force.

Google and Amazon have tied up all their capital (and then some) in data centre investments, they don’t have more money to spend on fabrication. Plus they have a lot of experience running data centres, and zero experience running fabs.

Even if they hold the same opinion as Micron’s CEO, spinning up such a fab to reasonable yields would take a couple of years.

It’s a known dilemma in farming. Your crops are losing, so you decide to switch them to crops that are profitable, but so do your six neighbors and by the time the new crops start producing, you have flooded the market and everyone’s losing again.

> A large DRAM fab costs around $25 billion

$50B for Micron.

> Why aren't they building two of them?

They don't have in-house expertise to do that.

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.

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.

There's no point bringing this up.

Whenever anyone does, there are dozens of posts acting conspiratorial on HN.

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.

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.

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?

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.

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.

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.

>There is 3 companies

There are 3 companies

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.

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.

> 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.

There will be new competitors. And there will be one or two companies that will take it (memory) in house and eliminate the memory companies out of the picture.

The three greedy memory companies are changing the equations in tech industry and it won’t be in their favor in the long term.

Maybe I'm missing something but this doesn't really make sense? Right now it's more profitable to sell to datacenters because they're less price sensitive. Consumers and consumer PC manufacturers don't really care who they're buying RAM from -- they'll just buy it for the cheapest price. When it's no longer as profitable to sell to datacenters, they'll just switch to selling for consumers and will then compete against each other. Why would any RAM manufacturer choose to handicap themselves by selling to consumers today when they can earn much more selling to datacenters?

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.

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%.

Especially when the equipment the shovel seller uses to produce shovels has been retooled to produce backhoes instead because of a digging bubble.

The rest of the world won’t care. They will use whatever memory they can get, and if the Chinese are willing to supply it over the next 5 to 10 years, they end up on top…

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.

You don't need ASML machines to make RAM. BS.

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.

I would never bet against a Chinese company ramping up production quickly.

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.

Right now, but that’s gonna change rapidly over the next five years. Once again, they didn’t have a space station. now they do…

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.

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!

> 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.

Installing linux on old hw is helpful. I got lucky and hoarded a few hundred GB of RAM before prices went up.

> How are you getting ready?

Finding out how to make the best use of the large amount of DDR3 RAM I have.

Those Chinese C612-based boards for the E5-2696v3, et al. (which support DDR3 and DDR4) seem OK with the custom BIOSen out there.

build the biggest beowulf cluster you can!

Because the LLMs were trained on average software which doesn't give a shit about performance and they'll revert to the mean for sufficiently complicated projects. While they can help with searching for performance improvements, they also are liable to cheat if you aren't reviewing them for correctness of any algorithmic changes. Also you need to be responsible for teaching them the right benchmarks to use, since, again, performance optimization has been niche and not the standard.

Mass refactoring will always compete with mass new product launches and mass new feature production, so it's likely to always lose.

I certainly won't be. The US Government that allocates my tax dollars might though.

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?

Also gpu speedup. If vera Rubin is 7x faster then to serve same number of tokens you need 1/7 the memory. Did I get that right?

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.

Well, but to who? And for pennies on the dollar, most likely. Also not all ram is made equal. HBM for AI cards isn't LPDDR5 in iPhones.

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.

Do you run LLMs locally?

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.

That’s not the point. You’re speeding up the progress of them becoming a competitor, a relentless competitor worldwide.

And you are now encouraging other large pocket tech companies inside and outside China to give thought to taking memory in-house if that means making and selling devices at a reasonable price in a timely manner.

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.

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

> anything heavier than a web browser

The way Chrome feasts on RAM, might need the cloud for that too.

But the cloud is becoming unaffordable as well…

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

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.

Neither consumer products nor RAM are really commons?

https://en.wikipedia.org/wiki/Tragedy_of_the_commons

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.

That's probably planned but it will probably be in agreement with other producers.

What if Oracle, Anthropic and OpenAI can't pay their infrastructure bill?