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.
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
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.
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.
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?
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.
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.
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.
> 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.
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.
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.
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.
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.
Much lighter options would be say ban stock based compensation. Or if given in lieu of money treat it as income taxed under income tax. Second one is to fully ban stock buybacks.
Which is what? Because if your solution is "get rid of all C-suite executives", obviously some new person (or some new group) has to be given the final say on decisions in the company and what's to stop them from becoming corrupt or otherwise problematic?
I assume that GP speaks of reducing the salaries for C-suite to the levels they had before Reaganism? I personally suspect that this would be pretty good for companies.
Or perhaps they're thinking of nationalization, which leaves me a bit more skeptical.
100% wealth tax rate past e.g. $999M -- capping wealth like a Zelda wallet -- would address a certain number of issues around the many externalities of unbounded, bottomless greed.
Mind you, I don't think that's ever happening, considering that one such issue is there's currently nothing to keep a dishonest actor who ended up beyond that threshold from spending mountains of cash (still a small fraction of the total there) toward convincing those susceptible to such that a system which permits such dishonest actors is good akshyually.
I believe they're insinuating that if we were to punish these people publicly and harshly for their crimes against the rest of humanity, then the rest of them would get a much needed reminder that they are subject to the rule of law and/or that they are made of meat.
The crime against humanity of commenting on the supply and demand curve movements of a product so complicated and with such a long production lead-time that a handful of nations can even produce it.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
> 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?
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.
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?
Depends on what kind of memory you are talking about.
For DRAM, CXMT were only 1% of the global suppy 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.
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.
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.
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.
> 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
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.
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.
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 :).
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.
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.
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.
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?
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.
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.
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.
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.
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.
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.
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.
Where does he say he's going to make sure prices stay high?
- Oreo CEO, suggesting you to buy every Oreo you can get
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?
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.
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.
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 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?
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.
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.
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.
Whenever anyone does, there are dozens of posts acting conspiratorial on HN.
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.
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.
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.
All the DRAM makers have new fabs or plant expansions underway right now - indicating they believe the demand increase to be sustainable.
Simple and easy moves to start with.
Or perhaps they're thinking of nationalization, which leaves me a bit more skeptical.
Mind you, I don't think that's ever happening, considering that one such issue is there's currently nothing to keep a dishonest actor who ended up beyond that threshold from spending mountains of cash (still a small fraction of the total there) toward convincing those susceptible to such that a system which permits such dishonest actors is good akshyually.
Is this really a categorically different thing if we're talking about $85 million vs. $12 million?
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.
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...
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.
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 wouldn't be surprising to also see Japan make a comeback in memory - they are investing heavily (both privately & government) in semiconductor manufacturing.
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.
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.
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.
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.
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.
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.
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 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.
Or maybe they believe the demand is not sustainable, and they don't want to fund $10B ghost fabs.
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.
It's starting to look more and more like we will always need more memory.
Effectively: "Now's the time to invest..."
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).
Was that also capital looking for returns?
For DRAM, CXMT were only 1% of the global suppy 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.
The exception is CXMT, which uses ASML DUV machines in a less efficient process.
... 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.
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).
[1] https://www.pccomponentes.de/msi-geforce-rtx-5090-ventus-3x-...
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.
There is enough profit to pay people to buy stuff and resell it.
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
The only chance of memory demand going down would be breakthroughs in model size reduction.
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.
It makes sense to de-risk your supply chain and at this point memory is a key supply risk.
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.
Why the need for speculation?
- one of those "frontier" model IPOs s gonna tank badly and take out the entire AI hype with it
https://www.tomshardware.com/pc-components/dram/chinese-cxmt...
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.
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.
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.
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.
It’s a big problem which neither big lab has a great answer for right now.
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.
this would be the time to revive and evolve some of that Made In Germany Engineering ...
The way Chrome feasts on RAM, might need the cloud for that too.
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.
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.
It’s like saying that there is no housing crysis in several countries because the market is full of houses, apartments, etc.
https://en.wikipedia.org/wiki/Tragedy_of_the_commons
It is also possible they all pivot to copying Neural Link and upselling the whole world on brain implants that the oligarchs can control.
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.