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Micron CEO Says Memory Supply Will Be Much Tighter in 2027 and 2028 Than in 2026

394 points · 443 comments · speckx

  1. ocd · · focus · HN ↗
    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.

    1. pllbnk · · focus · HN ↗
      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.
      1. __MatrixMan__ · · focus · 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.
        1. r14c · · focus · HN ↗

          [dead]

          1. thenewnewguy · · focus · HN ↗
            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?
            1. Yoric · · focus · HN ↗
              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.

            2. Tadpole9181 · · focus · HN ↗
              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.
              1. lotsofpulp · · focus · HN ↗
                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.
                1. __MatrixMan__ · · focus · HN ↗
                  Markets exist to meet the needs of the people who use them. Subverting them such that it's a negative sum game where profits improve marginally while material conditions deteriorate rapidly is in fact antisocial behavior.

                  It's probably not time to build a guillotine for the memory company CEO's and top shareholders but their behavior does resemble other more problematic moves. Consider United Healthcare denying claims in contradiction with their own policies just because they've realized they can get away with it. It has the same shape relative to the adjacent incentives.

            3. Balinares · · focus · HN ↗
              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.

              1. __MatrixMan__ · · focus · HN ↗
                Not sure why you're being downvoted. This is a very reasonable proposal. Once you're beyond a certain level of rich, you should be constrained by whether the people around you consent to your behavior, not how much money you have.
              2. Yoric · · focus · HN ↗
                Worth investigating, but I suspect that it's more complicated: as far as I understand, many billionaires are billionaires in valuation, but own relatively little currency.
            4. r14c · · focus · HN ↗
              The short version is Chinese style socialism. Most of our problems stem from the fact that we are historically unable to consistently lay down the law when it comes to large business interests and very wealthy individuals.

              I'm not opposed to markets, but this radical market based domination shit is getting old and it isn't benefiting anyone except the already wealthy.

              Its pretty obvious that corporations are either unwilling or unable to reign themselves in or regulate their behavior in a way that benefits the majority of society. So we need to make the economy more democratic so it can actually benefit the majority of people.

          2. Ekaros · · focus · HN ↗
            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.

            Simple and easy moves to start with.

          3. [deleted] · · focus · HN ↗

            [deleted]

        2. TeMPOraL · · focus · HN ↗
          Say the creatures that depend on termites for habitat.
          1. __MatrixMan__ · · focus · HN ↗
            What eats CEO's?
            1. TeMPOraL · · focus · HN ↗
              The SEC?
              1. NamlchakKhandro · · focus · HN ↗
                When
          2. fugalfervor · · focus · HN ↗
            But didn't in generations past and therefore do not need to now.
        3. m4rtink · · focus · HN ↗
          I think thats rude for the termites. :(
      2. ocd · · focus · HN ↗
        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.
      3. oblio · · focus · HN ↗
        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.

      4. aenis · · focus · HN ↗
        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.
        1. pc86 · · focus · HN ↗
          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?

          1. aenis · · focus · HN ↗
            I've met dozens of ~$20M net worth people, they are just normal folks - in rich countries thats not even upper class money, thats "a nice home but thats it" kind of cash. $100M+ is "i can retire at will", while $500M are like a different species, surrounded by yes-men and usually quite damaged mentally from all the ass-kissing. So yeah, i think there is a meaningful distinction.
            1. raizer88 · · focus · HN ↗
              Stop smoking the stash
            2. RivieraKid · · focus · HN ↗
              This is just nonsense, nice house in a rich country is $2-4M. $10M is enough to FatFIRE as a family.
            3. pc86 · · focus · HN ↗
              Even if this absolute nonsense is accurate (it's not), you're agreeing with me. I said there's not a category difference between $12M and $85M in this context. And you're saying $100M is where it starts being different.
      5. nickpp · · focus · HN ↗
        > 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?

        1. GuinansEyebrows · · focus · HN ↗
          > 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?

          <a href="https:&#x2F;&#x2F;www.cnbc.com&#x2F;2026&#x2F;04&#x2F;30&#x2F;us-ceo-pay-grew-20-times-faster-than-workers-wages-in-2025-oxfam.html" rel="nofollow">https:&#x2F;&#x2F;www.cnbc.com&#x2F;2026&#x2F;04&#x2F;30&#x2F;us-ceo-pay-grew-20-times-fas...

      6. HarHarVeryFunny · · focus · HN ↗
        I don&#x27;t think the semiconductor business is so much like that - it&#x27;s become more ingrained in them that you need to manage the business for long-term sustainability.
        1. a34729t · · focus · HN ↗
          Yeah CAPEX for semiconductors is terrifying. They cannot just handwave away large fractions of a decade, especially with the lead time for equipment.
    2. pelotron · · focus · HN ↗
      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.
    3. wewewedxfgdf · · focus · HN ↗
      There is 3 companies that make memory - they ALL want to keep memory prices high for as long as possible.
      1. lotsofpulp · · focus · HN ↗
        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.
        1. Matl · · focus · HN ↗
          If I can sell my things at a higher volume for longer vs higher price and less volume now, I&#x27;ll go with the first, but not shareholders focused on quarterly numbers.
          1. lotsofpulp · · focus · HN ↗
            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.

            1. Matl · · focus · HN ↗
              &gt; 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&#x27;t mean they can&#x27;t spend billions on R&amp;D. If Apple didn&#x27;t sell iPods like hotcakes, they wouldn&#x27;t be able to R&amp;D the iPhone. That doesn&#x27;t mean nobody at Apple had long-term vision, quite the opposite.

              1. lotsofpulp · · focus · HN ↗
                &gt;Yes? That doesn&#x27;t mean they can&#x27;t spend billions on R&amp;D

                How can business leaders and shareholders spend money on long term R&amp;D and still be accused of focusing on the short term and next quarter? If they were focusing on making the next few quarters look good, they would reduce expenses, which include R&amp;D, and make profits higher for the next few quarters.

                &gt;If Apple didn&#x27;t sell iPods like hotcakes, they wouldn&#x27;t be able to R&amp;D the iPhone. That doesn&#x27;t mean nobody at Apple had long-term vision, quite the opposite.

                I can’t parse these statements. Are you or are you not claiming businesses like Apple and Micron shareholders are focused on the short term?

                &gt;If I can sell my things at a higher volume for longer vs higher price and less volume now, I&#x27;ll go with the first, but not shareholders focused on quarterly numbers.

                What if a business is maxed out on production capacity? What if a business can sell things for a higher price now, and sell things at a lower price later?

                1. Matl · · focus · HN ↗
                  &gt; How can business leaders and shareholders spend money on long term R&amp;D and still be accused of focusing on the short term and next quarter?

                  Because these two groups are not the same? My argument is, if a company overperforms to the point that some of the profits can be allocated to longer-term development without upsetting shareholders because the QbyQ profits are great, (like Apple did with the iPod), but if you can either only increase quarterly profits and not do long-term R&amp;D or keep profits the same but do the R&amp;D then no R&amp;D it is.

                  In other words, Apple had to start with the iPod because that didn&#x27;t require massive long-term R&amp;D and then once that became such a success that Apple could not only satisfy shareholders on a short term basis, but also set money aside for long-term R&amp;D was the iPhone possible.

      2. adrian_b · · focus · HN ↗
        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.

        1. adrian_b · · focus · HN ↗
          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 &quot;sanctions&quot;.

          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 &quot;sanctioned entity&quot; 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 &quot;sanctions&quot; (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 &quot;sanctions&quot;).

          There is also no doubt that without the US &quot;sanctions&quot; 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.

          1. tzs · · focus · HN ↗
            &gt; 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&#x27;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&#x27;t.

        2. Lumich · · focus · HN ↗
          « 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.

      3. HarHarVeryFunny · · focus · HN ↗
        It had mostly come down to 3 (Samsung, SK Hynix, Micron), but the Chinese manufacture&#x27;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%-&gt;4%-&gt;8%. YMTC is now global #3 in NAND.

        It wouldn&#x27;t be surprising to also see Japan make a comeback in memory - they are investing heavily (both privately &amp; government) in semiconductor manufacturing.

      4. GeoAtreides · · focus · HN ↗
        &gt;There is 3 companies

        There are 3 companies

        1. [deleted] · · focus · HN ↗

          [deleted]

        2. tzs · · focus · HN ↗
          There be 3 companies

          (Who said that we can only talk like a pirate one day a year?)

        3. shoobiedoo · · focus · HN ↗
          Thanks for you&#x27;re help
    4. malfist · · focus · HN ↗
      The argument I&#x27;ve seen about why someone else doesn&#x27;t start selling RAM is it takes a year or two to ramp production. But here&#x27;s a CEO saying he&#x27;s going to make sure prices stay high enough, long enough that you can spin up a competitor
      1. genxy · · focus · HN ↗
        What they need to do is all raise prices for 3 years, dump below cost for 4-6 months and repeat.
        1. cookingmyserver · · focus · HN ↗
          Congrats, you just guaranteed that the startup can easily lock in contracts for memory production in order hedge against volatility.
      2. tzs · · focus · HN ↗
        &gt; But here&#x27;s a CEO saying he&#x27;s going to make sure prices stay high enough, long enough that you can spin up a competitor

        Where does he say he&#x27;s going to make sure prices stay high?

        1. zehaeva · · focus · HN ↗
          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.
          1. mcv · · focus · HN ↗
            Exactly. Demand won&#x27;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&#x27;s no competition entering the market, wouldn&#x27;t that be a clear sign that this is not a free market but effectively a cartel?

            1. tzs · · focus · HN ↗
              It takes 3-5 years to build a new fab for current generation DRAM.
              1. mcv · · focus · HN ↗
                Better to get started then, instead of remaining dependent on a cartel that is now learning that people will pay anything.
          2. tzs · · focus · HN ↗
            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&#x27;t forecast when supply will catch up.

            1. ffsm8 · · focus · HN ↗
              &gt; 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 &quot;but there are other competitors already&quot;: 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)

              1. tzs · · focus · HN ↗
                I&#x27;m curious what you think they could do to make sure prices don&#x27;t up?
                1. ffsm8 · · focus · HN ↗
                  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 &gt;$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.

                  1. rcxdude · · focus · HN ↗
                    Would you prefer the money goes to middlemen? When supply is constrained and the manufacturer doesn&#x27;t price to match, all that happens is scalping. Even if the memory die manufacturers gave away their products for free it wouldn&#x27;t budge consumer RAM prices in this market environment.
                    1. ffsm8 · · focus · HN ↗
                      youre taking a very consumer oriented look, while we&#x27;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.

                      1. selectodude · · focus · HN ↗
                        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.

                        1. tombert · · focus · HN ↗
                          For stuff I wrote that I run on my server, I have been converting from Clojure to Rust. Sometimes mechanically, often by hand.

                          I actually like Clojure more but even with GraalVM AOT it still tends to take significantly more memory than even naive Rust code (e.g. using Clone everywhere). If you’re looking willing to spend time abusing the borrow checker you can often get memory usage down to like 5% of what you’d get out of Java stuff.

                  2. tzs · · focus · HN ↗
                    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.

                    1. dingaling · · focus · HN ↗
                      &quot;would resell on the secondary market for a giant profit.&quot;

                      But you&#x27;ve no evidence that that &quot;giant profit&quot; 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&#x27;s stuck with that inventory if he doesn&#x27;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&#x27;t going to drop off, because the baseline for demand has been lifted

                      Once this &quot;RAM Crisis&quot; is over, what reason would manufacturers have to reduce prices?

                      1. selectodude · · focus · HN ↗
                        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.
                  3. mr_toad · · focus · HN ↗
                    &gt; dont increase the price of the product?

                    Literal empty shelves. And resellers on Ebay making bank.

                    1. ffsm8 · · focus · HN ↗
                      Again, consumer perspective is essentially meaningless for this discussion about a foreign company evaluating wherever the billions of $ investment to get a factory build is worth it.

                      You may be sad about it, but consumers are a tiny fraction of the market. It&#x27;s not nothing, but the risk&#x2F;reward would be super bad for such a tiny market cap.

        2. nvme0n1p1 · · focus · HN ↗
          Micron is a trillion dollar company. The CEO would never say something like that directly. He&#x27;s talking in the &quot;business dialect&quot; of English and you have to read between the lines a bit.
          1. tzs · · focus · HN ↗
            The CEO is saying nothing that everyone who analyzes the situation and knows at least something about semiconductor production wouldn&#x27;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.

            1. vondur · · focus · HN ↗
              This is the info that people should be looking at. Building these facilities takes time. I&#x27;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.
        3. rickdeckard · · focus · HN ↗
          &quot;We will produce as many Oreo&#x27;s as we can, but soon Oreo supply will be much tighter than ever before&quot;

          - Oreo CEO, suggesting you to buy every Oreo you can get

      3. veqq · · focus · HN ↗
        &gt; year or two to ramp production

        More like 5-10

        1. Geof25 · · focus · HN ↗
          If that would be true, everyone would be still using DDR3 and waiting on DDR4 production to finally spin up.
      4. phil21 · · focus · HN ↗
        &gt; But here&#x27;s a CEO saying he&#x27;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&#x27;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&#x27;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.

        1. kazinator · · focus · HN ↗
          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.
          1. boringg · · focus · HN ↗
            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.

        2. palmotea · · focus · HN ↗
          &gt; 2 years is not remotely enough time to spin up a competitor. It&#x27;s not even enough time for a current leading competitor to spin up another fab.

          But it is enough time for customers to consider competitors they may have avoided before.

          So maybe their priced-out customers give Chinese DRAM a serious look, make some compromises, and never go back to Micron.

        3. cogman10 · · focus · HN ↗
          And it&#x27;s important to point out how long these fabs have been under construction.

          Micron started building it&#x27;s new fab in 2022. They are expecting their first chips to be out by 2027 (maybe). The projected cost, $50B.

          This is a fundamental problem which the free market cannot handle. It takes multiple years and billions for competitors to spin up. No sane bank or business person would try and get into cutting edge memory fabrication. That means the players we have are the players we&#x27;ll likely always have (With MAYBE china entering the arena).

          The free market only works when the required upfront capital for a new player to enter a business is relatively low. In industries where the players are static or shrinking, you have a free market failure.

          1. anthonypasq · · focus · HN ↗
            correct, which is why industrial policy is important.
        4. rtpg · · focus · HN ↗
          &gt; 2 years is not remotely enough time to spin up a competitor. It&#x27;s not even enough time for a current leading competitor to spin up another fab.

          A thing I heard from a friend who works in at one of the largest providers of production machines in this space: they have the machines and for some slices of the market they could basically ship them to a new fab next week. The problem is more in the installation (since the installs themselves are complicated), where they&#x27;re basically limited by not having enough people to go around and _do the installs_.

          It&#x27;s really funny to think about how the bottleneck is so deep in the chain.

    5. ecshafer · · focus · HN ↗
      How much of this issue is self-inflicted? Micron is building a massive fab in Syracuse. They&#x27;ve spent like 4 years seeking approval, lobbying politicians, doing BS &quot;environmental impact studies&quot; (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.
      1. thephyber · · focus · HN ↗
        If only we didn&#x27;t have 100+ years of factories shitting where we eat we might not have thousands of governments wanting assurances that companies don&#x27;t harm people in their area.

        Silicon Valley is littered with SuperFund sites of bankrupted companies who conveniently couldn&#x27;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.

        1. ecshafer · · focus · HN ↗
          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.

          1. nullocator · · focus · HN ↗
            Maybe if they tried to build some of these on existing dilapidated commercial or industrial plots that are vacant and languishing they wouldn&#x27;t have to jump through so many procedural and political hoops. I&#x27;m told these exist all over rural america.

            Instead they want to build their 100 acre Data-Center&#x2F;Technology Industrial Park adjacent to the burrowing owl habitats or up against Grandma Martha&#x27;s backyard.

            1. ryathal · · focus · HN ↗
              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&#x27;t been any room on compromise or cleanup assistance in most cases.
              1. ecshafer · · focus · HN ↗
                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?
                1. mrguyorama · · focus · HN ↗
                  All this speculation is pointless. Superfund sites haven&#x27;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&#x27;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 &quot;Superfund&quot; has been underfunded for like 20 years. Biden&#x27;s IRA set up a new tax for ten years but, not sure how well that&#x27;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 &quot;Greed is good&quot; folks came along.

                2. thephyber · · focus · HN ↗
                  No, this is not an issue.

                  A &quot;SuperFund Site&quot; specifically exists because the previous company no longer exists in a form that any assets can be extracted from the legal entity. There&#x27;s no point in suing something which can&#x27;t pay damages. It&#x27;s not just &quot;a business with a toxic piece of land&quot;. The term &quot;SuperFund&quot; means the EPA has taken over the responsibility of managing the cleanup after the previous company is gone (eg. The legal entity split off some of their their albatross debts&#x2F;liabilities such as toxic land that no longer can be used for revenue onto a disposable company that they spun off)

                  Also land doesn&#x27;t come with a warranty when it is transferred. So long as the previous owner disclosed all of the relevant information about any hazards known to the seller that is legally required, the old owner is off the hook. If you sell a house with lead paint which was built on landfill that exists near high voltage power lines and the seller described those facts in the escrow period to the buyer (usually in a mass of paperwork), you can&#x27;t be held liable if the buyer&#x27;s family develops health issues in that house.

                  Please don&#x27;t try to speculate yourself into non-existent legal scenarios.

          2. thephyber · · focus · HN ↗
            Welcome the Abundance Agenda. There are entire books being written about how we need to streamline the bureaucracy and policies to actually accomplish the goals of the environmental movement, not just create a self-licking-ice-cream-cone of Vogons, forms&#x2F;checklists, and tit-for-tat lawsuits.

            Your concern, while well intentioned, is a red herring. At best it can highlight that enforcement of negative externalities is imperfect, but then again everything is.

      2. tzs · · focus · HN ↗
        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&#x2F;7 every day of the year. That&#x27;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&#x2F;3 of Los Angeles, CA, and about 30% of NYC.

        That&#x27;s way beyond the existing grid capacity, so lots of infrastructure upgrades there are taking place.

    6. jgalt212 · · focus · HN ↗
      &gt; because I prioritized extremely high prices for a few years that might have the effect of changing the arithmetic for potential competitors that wouldn&#x27;t have done it before.

      Or maybe they believe the demand is not sustainable, and they don&#x27;t want to fund $10B ghost fabs.

      1. Danox · · focus · HN ↗
        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.

        1. jgalt212 · · focus · HN ↗
          The counterpoint is that that new, and existing, mortgage originators did not fare so well after the mortgage market collapsed in the GFC. During large parts of the housing boom deep in the money mortgages could not be refinanced as quickly as borrowers would like due to capacity constraints at the originator level. Obv, not including subprime originators, where there was arguably 10X the needed capacity.
    7. Tuna-Fish · · focus · HN ↗
      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.
      1. alephnerd · · focus · HN ↗
        There&#x27;s no point bringing this up.

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

        1. martin8412 · · focus · 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.

          1. kuerbel · · focus · HN ↗
            It&#x27;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.
            1. alephnerd · · focus · HN ↗
              Fundamentally, it comes down to whether or not you think &quot;AI&#x2F;ML&quot; 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.

              1. HarHarVeryFunny · · focus · HN ↗
                AL&#x2F;ML isn&#x27;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 &quot;good enough&quot; then it&#x27;ll just be about price, meaning that smaller and less memory hungry models will win.

                It&#x27;s a bit like the Sun&#x2F;etc workstation market vs PCs, and high end expensive PCs vs cheap ones. Once the cheap PCs became &quot;good enough&quot; then they naturally dominated.

              2. bigstrat2003 · · focus · HN ↗
                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.
              3. jorvi · · focus · HN ↗
                All the big techs have accelerated zilch in actual features released or user-facing bugs fixed. All that seems to have accelerated is cybersecurity offense and defense.

                And these are supposedly the most brilliant corporations around, so other companies are seeing even less gain.

                I stick with my theory that LLMs are GPU-like, not CPU-like. They will rarely solve a problem like an adept, but they can solve 1 000 000 million low-hanging fruit problems within a second in a way that there was just not enough eyeballs for before. They can also brute force problems.

          2. foltik · · focus · HN ↗
            <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;DRAM_industry_price_fixing" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;DRAM_industry_price_fixing
            1. martin8412 · · focus · HN ↗
              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.

            2. rnd0 · · focus · HN ↗
              Yes, that.

              Conspiracies have been documented enough times that it is totally valid to surmise that there&#x27;s one in place at any given time, about any given field.

              A quick inquiry to google on &#x27;proven conspiracy theories&#x27; returned ten results just on google&#x27;s AI. And it left out Iran-contra -presumably for the sake of brevity.

              Sorry, to think there&#x27;s a conspiracy isn&#x27;t so whacky and unhinged as people want to make it out to be.

      2. nullocator · · focus · HN ↗
        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&#x27;s actually all fine.

        1. HarHarVeryFunny · · focus · HN ↗
          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&#x27;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?

          1. creativeSlumber · · focus · HN ↗
            What&#x27;s different this time is that LLMs require orders of magnitude more memory than we could have ever used before. And I think it&#x27;s getting obvious by now that inference will move to local compute, So everyone&#x27;s laptops and phones would need a lot of memory.
            1. jerf · · focus · HN ↗
              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&#x27;t deny that AI is &quot;real&quot;, in that there is certainly something there, but I would hate to be the guy betting billions or even trillions of dollars that we&#x27;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 &quot;no we shouldn&#x27;t expand capacity&quot; when it turns out that, yes, we should have, but the staggering profits being made in the meantime would cushion that blow pretty well.

            2. booty · · focus · HN ↗
              &gt; And I think it&#x27;s getting obvious by now that inference will move to local compute

              From the bottom of my heart, I hope that&#x27;s the future.

              I&#x27;m not convinced that will be the case. The AI companies don&#x27;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&#x27;m not saying this is highly likely... I&#x27;m just saying that out of the current major players, they&#x27;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.

              1. nostrademons · · focus · HN ↗
                It doesn&#x27;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&#x27;s &quot;good enough&quot; 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&#x27;t care about local control (and the average user doesn&#x27;t care about local control; indeed, for most people it&#x27;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&#x27;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.

                1. famouswaffles · · focus · HN ↗
                  &gt;It doesn&#x27;t really matter what the AI companies want, if they misjudge the market somebody will just start a competitor and take it.

                  The vast majority of people are uninterested in local vs non-local models (not just LLMs but ANNs in general), only the services the models are providing. Even if performant local models can actually be served on device quickly, if the frontier labs don&#x27;t want to go that way, they simply can and there&#x27;s little threat the market can be taken from them that way.

                  If you can serve local models, the &#x27;advantage&#x27; is that they can be run on the users device without that incurring any cost to you thus allowing flexibilty in pricing, but if such models can be made then whatever cost would be incurred to labs running on their own servers would be a rounding error and also inconsequential to them. That is to say, they can also compete with you on pricing. So unless someone comes along with something the frontier labs can&#x27;t figure out or replicate, then it doesn&#x27;t matter. Open AI might be &#x27;forced&#x27; to drum down prices but only in situations where costs have also been drummed down.

                2. booty · · focus · HN ↗

                      It doesn&#x27;t really matter what the AI companies 
    want, if they misjudge the market somebody will 
    just start a competitor and take it.
                  This kind of &quot;free markets solve everything&quot; magical thinking is cool when we&#x27;re talking about lemonade stands, but unfortunately it just isn&#x27;t reality when we&#x27;re talking about markets with a really big moat such AI model training.

                  Even if you made the US the freest market ever, you have the small problem of your free-market hero startups needing to compete with state-sponsored models from China.

                  (Also, free markets depend on savvy consumers to function properly. We assume that consumers will not choose lemonade that poisons them, for instance. This works well for lemonade stands -- one assumes consumers will steer clear of the lemonade stand ringed by corpses -- but works less well when the product is more complex and people don&#x27;t understand it. You know, like AI.)

            3. nicoburns · · focus · HN ↗
              &gt; LLMs require orders of magnitude more memory than we could have ever used before

              That&#x27;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.

              1. sssilver · · focus · HN ↗
                &gt; the economy in general is looking extremely dire at the moment

                Can you elaborate on this? What about the economy is looking dire?

                1. nicoburns · · focus · HN ↗
                  Basically everyone I know who doesn&#x27;t have a tech job is struggling for money &#x2F; feels like the world is unaffordable for them atm. Those without jobs are struggling to get them. And those with jobs are scared to change even if they don&#x27;t like them.

                  And from what I read in the media, a lot of the economic indicators are backing this up: discretionary spending is down, private debt levels are rising, etc. All signs that the slack in the system is disappearing.

            4. kube-system · · focus · HN ↗
              That&#x27;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.
        2. [deleted] · · focus · HN ↗

          [deleted]

      3. muddi900 · · focus · HN ↗
        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.

        1. CamperBob2 · · focus · HN ↗
          Nobody is holding any post-COVID bags right now. Every fab and factory is either running balls-out or waiting on something.
    8. segmondy · · focus · HN ↗
      Or it just be that demand really does seriously exceed supply. It&#x27;s not fast to bring supply online, it&#x27;s costly and risky to do so if the demand will not be sustained for a long time. IMO, there&#x27;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&#x27;s going to be ten or hundreds of agents also all demanding compute.
      1. HarHarVeryFunny · · focus · HN ↗
        &gt; 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&#x2F;$ for a given level of intelligence) has been falling rapidly, and shows no sign of stopping.

        1. ShinyLeftPad · · focus · HN ↗
          they operate at a loss (they pretend to profit by excluding key costs in financial reports). they won&#x27;t do it forever.
        2. segmondy · · focus · HN ↗
          What is the cost of AI tokens? You can&#x27;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 $2 in material cost to make a pizza, but what&#x27;s the cost of pizza? You have to take into account, energy, rent, staff, insurance, and profit too. Tokens&#x2F;$ is subsidized if you are talking about APIs
          1. HarHarVeryFunny · · focus · HN ↗
            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.

      2. pjc50 · · focus · HN ↗
        &gt; Or it just be that demand really does seriously exceed supply. It&#x27;s not fast to bring supply online, it&#x27;s costly and risky to do so if the demand will not be sustained for a long time

        This is exactly it. There&#x27;s a lot of conspiracy theory in this thread without realizing that it&#x27;s just what happens when an insanely large amount of capital is deployed: market distortion.

        It&#x27;s not just RAM, it&#x27;s things like gas turbines and power transformers. I&#x27;ve seen suggestions that it&#x27;s even affecting housing starts because the construction effort is pulling in workers, especially electricians.

        However unlike you I&#x27;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.

        1. fragmede · · focus · HN ↗
          Aren&#x27;t we already at 2.5 C?
    9. mschuster91 · · focus · HN ↗
      &gt; extremely high prices for a few years that might have the effect of changing the arithmetic for potential competitors that wouldn&#x27;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&#x27;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 &quot;bust and boom&quot; cycle, &quot;pork cycle&quot; 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&#x27;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&#x27;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.

    10. mattmaroon · · focus · HN ↗
      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.

    11. xenadu02 · · focus · HN ↗
      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&#x27;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.

      1. hn_go_brrrrr · · focus · HN ↗
        How many years ago did they start construction on these projects? How many years before that did they greenlight the project? I&#x27;m quite skeptical the timelines are short enough to line up with the AI boom.
        1. arrowleaf · · focus · HN ↗
          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&amp;D expansion to that due to the AI boom. <a href="https:&#x2F;&#x2F;boisedev.com&#x2F;news&#x2F;2026&#x2F;08&#x2F;20&#x2F;micron-to-build-10-billion-research-lab-in-boise&#x2F;" rel="nofollow">https:&#x2F;&#x2F;boisedev.com&#x2F;news&#x2F;2026&#x2F;08&#x2F;20&#x2F;micron-to-build-10-bill...
        2. xenadu02 · · focus · HN ↗
          That&#x27;s the death trap of silicon boom-bust cycles that have claimed so many in the industry. Demand surges, you start expanding, the bust arrives, you go out of business.

          Micron is putting up over $100 billion for this expansion wave IIRC. You can&#x27;t afford that unless you are certain the increase in demand is sustainable.

          You want to assure investors that investment will pay off so you want to talk up your order book and market outlook.

          You also want to take as much profit as you can now so if things turn against you it doesn&#x27;t mean bankruptcy. A pile of cash fixes many problems :)

    12. gizajob · · focus · HN ↗
      First line of your post was enough.
    13. BenoitP · · focus · HN ↗
      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&#x27;s a risk.

      If I was trying so stabilize (just stabilize) funding for humongously expensive fabs: I&#x27;d be giving markets reassurances that my business will continue to be high margins for the mid-future.

    14. guywithahat · · focus · HN ↗
      Not enough people are prepared if this isn&#x27;t a bubble. I think he&#x27;s betting on this being a bubble which would imply building more supply would be a mistake, because they&#x27;ll end up with a factory and no more customers.

      It&#x27;s starting to look more and more like we will always need more memory.

    15. mcv · · focus · HN ↗
      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.
      1. pjc50 · · focus · HN ↗
        It takes too long! It&#x27;s like all the people going &quot;why don&#x27;t we just build nuclear&quot;, without looking at the construction times of recent plants.
        1. Danox · · focus · HN ↗
          What are those construction times in China? Not just for nuclear, but also memory or semiconductor plants, probably less than what it is in the West.

          The three-headed A memory cartel should enjoy their brief moment in the sun. Because for the five years it will be over, and when I say over, it’ll be over for good…

        2. stubish · · focus · HN ↗
          If you want supply independence, you have to start sometime. It is unlikely that Taiwan joins the EU and solves the problem that way.
      2. matwood · · focus · HN ↗
        It takes money and time. I think it’s telling we haven’t seen additional investment yet. Maybe those with the money also see this bubble ending soon? Otherwise a commodity with 80%+ margins would have competitors coming in from all sides.
    16. radford-neal · · focus · HN ↗
      If I understand this comment correctly, it&#x27;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&#x27;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&#x27;s family). Potential competitors would then see an opportunity to sell to these excluded customers.

      1. christina97 · · focus · HN ↗
        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.
        1. fmbb · · focus · HN ↗
          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.

        2. sdenton4 · · focus · HN ↗
          Well, that&#x27;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&#x27;s movie rental market, so certainly real.

          1. DaSHacka · · focus · HN ↗
            Also why anti-dumping laws exist
            1. hungryhobbit · · focus · HN ↗
              Do those solve the problem just outlined?

              (Legitimately asking: I don&#x27;t know the answer ... but based on most US business law my strong suspicion is ... no, they don&#x27;t.)

              1. DaSHacka · · focus · HN ↗
                No, because they&#x27;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.
                1. guelo · · focus · HN ↗
                  Silicon Valley and other venture backed enterprises also regularly dump into various markets without consequences.
                2. Dylan16807 · · focus · HN ↗
                  Like what? Everything I&#x27;ve seen is that parts are legitimately much cheaper in China and they&#x27;re making good money selling to the US.
                3. tpm · · focus · HN ↗
                  &gt; China has been blatantly dumping a buttload of products for decades

                  By that account China would be bankrupt by now because subsidizing a &quot;buttload&quot; for &quot;decades&quot; does cost a lot of money.

                  I think the reality is much more subtle - they force their way into a new market if needed and then stop and let the market forces do their thing.

                4. TitaRusell · · focus · HN ↗
                  The US has tens of millions of poor people who are kept alive because of cheap shit from China.
                5. tancop · · focus · HN ↗
                  Dumping means losing money. China is winning because they give businesses low interest loans from a state owned bank (or invest capital from a state fund) to expand production. Factories are profitable the whole time, they just don&#x27;t waste money and time getting private loans.

                  America can&#x27;t do that because the government takes bribes from banks and believes in Friedmanite ideology where state investment is evil. It&#x27;s a great opportunity for Europe to copy China and become independent.

          2. saltcured · · focus · HN ↗
            The statement further up should have qualified it as &quot;scarce commodity&quot;. Then it is correct.

            To successfully perform dumping, you have to have access to excess supply capable of disrupting that market.

          3. mr_toad · · focus · HN ↗
            You don’t lower your prices on the off chance a competitor might enter the market in the future. You wait until they have invested capital but before they start making profits and are at their most vulnerable.
            1. vanviegen · · focus · HN ↗
              I don&#x27;t think that would work. They wouldn&#x27;t demolish the competitor&#x27;s factory when it goes bankrupt. Instead the factory, being an asset, gets sold for cheap, and another company gets a shot at competing while having much lower debts. This process could repeat a few times until the debt is low enough to profitability compete.

              So if that&#x27;s the expected outcome, it might be better to prevent competitors from building factories in the first place.

              1. tyromaniac · · focus · HN ↗
                In any case these fans would take fae longer to get into production than the projection of when the price falls anyway
              2. m4rtink · · focus · HN ↗
                I would not single out doing just that - buying the competitor and making the factory unusable.

                A similar thing happened in the railway world, where two state owned railway companies colluded to have used rail cars scrapped so that their privately owned competitors can&#x27;t buy them: <a href="https:&#x2F;&#x2F;www.railway-technology.com&#x2F;news&#x2F;ec-cd-obb-antitrust-concerns" rel="nofollow">https:&#x2F;&#x2F;www.railway-technology.com&#x2F;news&#x2F;ec-cd-obb-antitrust-...

          4. mcmcmc · · focus · HN ↗
            Selling below market price != selling below cost, which is a prerequisite for it to be anticompetitive
      2. thayne · · focus · HN ↗
        Not exactly, I think it&#x27;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&#x27;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.

        1. tzs · · focus · HN ↗
          They aren&#x27;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.

          1. zamalek · · focus · HN ↗
            Which are exactly the two years they are threatening tighter supply.
            1. guelo · · focus · HN ↗
              He&#x27;s not threatening. Demand is exploding and supply just can&#x27;t keep up.
            2. jazzyjackson · · focus · HN ↗
              Production starts != maxing out capacity of the fab
            3. tzs · · focus · HN ↗
              He&#x27;s &quot;threatening&quot; tighter supply the same way a weather forecaster &quot;threatens&quot; heavy rain.
          2. fakedang · · focus · HN ↗
            The point they were stating was that if they kept up the high prices, that leaves room for a low priced competitor, likely from China, to occupy the lower end (and larger) share of the market. Like what BYD did to the EV market everywhere except the US. Or what Chinese mobiles did to the smartphone market. Eventually they become so powerful that they start going upmarket, trying to catch everyone in the higher end segments too. And by the time the Western companies think they can retaliate, too bad, China&#x27;s got them by the bollocks on raw material.
            1. mandevil · · focus · HN ↗
              But the reason that semiconductors are so vulnerable to boom&#x2F;bust cycles (going back decades) is that takes a very long time to build the fab- you have nothing for years, and then the fab completes and enormous numbers of chips get made. So if you get demand wrong either direction you have problems. Either you flood the market or prices go way up.

              I don&#x27;t think it is possible to beat the fab construction delays. This isn&#x27;t about things being slow in the US: TSMC took four years to go from site selection to some production at their Fab 22 plant in Taiwan (it is currently only 60% built out, is my understanding). And TSMC is best in the world at getting frontier (logic) semiconductor fabs built, it took them slightly longer (five years) for Fab 21 in Arizona. Logic fabs are not the same as memory fabs, but they are close enough to be a good comparison for timeline.

              Basically, unless you started fab construction (specifically to make memory chips) in 2023 you cannot change production for 2027 and 2028. The only thing that will affect prices between now and 2028 is demand, production can&#x27;t go up because the fabs to make those chips don&#x27;t exist. If you started now you might get memory chips in 2031, and can you bet 40 billion dollars that the demand will still be there? (A current generation logic fab costs about 20 billion. By 2031 a new frontier logic fab will cost about 40 billion). I don&#x27;t have prices for a current memory fab, but as I understand it they are comparable.)

              1. locknitpicker · · focus · HN ↗
                &gt; (...) that takes a very long time to build the fab- you have nothing for years, and then the fab completes and enormous numbers of chips get made. So if you get demand wrong either direction you have problems. Either you flood the market or prices go way up.

                The problem is that if you do not expand your output, others will. When that happens, you will gain a competitor. Then when the crunch happens, your competitor may survive but you may not.

                Therefore, if you do not increase output to meet demand them you might very well be signing the end of your company.

                1. EA-3167 · · focus · HN ↗
                  You’re missing their point: by the time competition “catches up” and starts to compete the odds are that demand will have shifted.
                  1. locknitpicker · · focus · HN ↗
                    &gt; You’re missing their point: by the time competition “catches up” and starts to compete the odds are that demand will have shifted.

                    That&#x27;s besides the point, because demand shifter for everyone in the market. You included.

                    So your inability to supply that demand resulted in you creating the conditions for competition to show up, and that competition can very likely outcompete you out of the market.

                    1. phil21 · · focus · HN ↗
                      &gt; So your inability to supply that demand resulted in you creating the conditions for competition to show up, and that competition can very likely outcompete you out of the market.

                      Doubtful. Your competition started building out additional production roughly when you did. Lets say you got a 1 year head start on shovels in the ground.

                      Those competitors have decades of experience producing RAM. You do not. Even if you get your facility on-line to first wafer a year earlier than the incumbents, it&#x27;s unlikely you will beat them to full production output as even extremely experienced operators take 6-18mo to get a fab from first production to expected nominal output.

                      The only way to &quot;win&quot; this is to have started before the supply crunch happened back in 2021 or 2022 - or more likely much earlier. Like CXMT did.

                      If you were able to find a bunch of investors to give you $40-50B today, already had a site ready to start construction literally tomorrow, by the time you are on-line you will be competing with new capacity currently being built by Samsung, Micron, and SK Hynix - not to mention CXMT. The only way you will be profitable is if the current demand exists through 2031 and beyond.

                      I know I certainly wouldn&#x27;t be investing in such a project, since the entire bet is that RAM prices 5 years from now will still be at roughly what they are today. Which is simply a bet that the current AI bubble and infrastructure build-out is still ongoing.

                      1. fakedang · · focus · HN ↗
                        You wouldn&#x27;t be investing, because you&#x27;re looking at ROI, while China will be, because they&#x27;re looking at autarkic self-sufficiency.
                2. mandevil · · focus · HN ↗
                  Fortunately for those companies, they understand this and are taking steps to address the shortage. It&#x27;s just that the physical reality of our universe prevents any production increase for the next two or so years. Let&#x27;s say you start a fab today. By the time it gets online, and is able to produce commercial quantities of RAM- let&#x27;s say you get lucky and it&#x27;s 2030- you will be competing against at least two brand new fabs from Micron, at least three more brand new ones from SK Hynix, and I&#x27;m not even sure how many from Samsung. By the time your new fab is online there will be much more production from all of the existing players who have already mastered the process of producing RAM and so will have an advantage over you, who is learning. The supply crunch is entirely short term, for which there are no fixes in a universe where the laws of causality apply. The only solution to the immediate supply crunch is to have started building a new memory fab back in 2021 or 2022.
            2. mcmcmc · · focus · HN ↗
              Lowering their prices would result in supply running out sooner. Their competitors would still get the same bite at the apple but would have a longer window where they are the only option. Or resellers would just arbitrage the surplus left on the table.
              1. m4rtink · · focus · HN ↗
                Its not about lowering their prices - they shouldn&#x27;t have abandoned their regular long term customers (e.g. normal people) to just chase AI fever drem money bullshit.

                They would still make a lot of money but without making a lot of bad blood &amp; making a massive opening for chinese competition.

                But greed is greed...

          3. m4rtink · · focus · HN ↗
            &quot;Sorry, we will stop selling food for the next 3 years - but worry not, those few cannibals that survive till 2029 will have the best &amp; most affordable food from our brand new factory that we are building!&quot;
        2. GeekyBear · · focus · HN ↗
          &gt; I think it&#x27;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.

          It&#x27;s a bit too late. Chinese manufacturers have finally started making DDR5 and have raised enough cash in an IPO to start ramping up production in a major way.

          &gt; Shares of chipmaker Changxin Technology Group soared nearly 466% Monday in their debut on Shanghai’s tech-heavy STAR Market, making CXMT the most valuable China-listed company.

          The Hefei-based firm had raised 57.92 billion yuan ($8.6 billion) after pricing its IPO at 8.66 yuan per share, making it Asia’s biggest so far this year.

          <a href="https:&#x2F;&#x2F;www.cnbc.com&#x2F;2026&#x2F;07&#x2F;27&#x2F;cxmt-china-market-debut-chipmaker-ipo.html" rel="nofollow">https:&#x2F;&#x2F;www.cnbc.com&#x2F;2026&#x2F;07&#x2F;27&#x2F;cxmt-china-market-debut-chip...

        3. HWR_14 · · focus · HN ↗
          It costs massive amounts (billions) for Micron to build the factories to increase production and would take years.
      3. deadbunny · · focus · HN ↗
        &gt; Such collusion might well be a violation of anti-trust law

        The Memory cartel do not care about silly things like laws

      4. idiotsecant · · focus · HN ↗
        Yes, one of those markets with infinite demand where supply has no impact on price. Those ones.
        1. bigbadfeline · · focus · HN ↗
          &gt; Yes, one of those markets with infinite demand where supply has no impact on price. Those ones.

          In economics, &quot;demand&quot; doesn&#x27;t mean &quot;I want this&quot;, it means paid, funded demand. 100s of millions of &quot;free&quot; LLM users aren&#x27;t funded demand, they&#x27;re subsidized. This leads to front-running and scalping the silicon market at an unreal scale, it also monopolizes access to silicon and compute. Nothing happens by chance here.

          1. m4rtink · · focus · HN ↗
            Yeah, there once was an insatiable demand for pick axes, mining supplies, saloons and &quot;related services&quot; - until one day it was not.

            Eventually we got the same ghost town after this AI bubble madness.

      5. hnav · · focus · HN ↗
        Does 87% gross margins sound like that them lowering prices is tantamount to dumping?
      6. cyanydeez · · focus · HN ↗
        It also ignores the giant CAPEX and OPEX required for any competition. This isn&#x27;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&#x27;s a memory faerie land where you just put on your memory faerie hat and walla! Memory!

        So bizarre.

        1. kylestanfield · · focus · HN ↗
          Everything is a conspiracy. The elites refuse to wave their increase-manufacturing-capacity-instantly wands.
          1. cyanydeez · · focus · HN ↗
            I mean, we can assume the people who make the memory love getting huge prices for it. But beyond that, I just dont see why someone who invest several multi billion dollars to squeeze into a potential window that may or may not last 3 years. Especially with how volatile the whole AI bubble is.
            1. bigbadfeline · · focus · HN ↗
              &gt; Especially with how volatile the whole AI bubble is.

              There&#x27;s nothing volatile about the AI bubble, it&#x27;s been going on for a while regardless of cost and that will continue because of politics - which is rather transparent.

              &gt; I just don&#x27;t see why someone who invest several multi billion dollars to squeeze into a potential window that may or may not last 3 years.

              Interesting, Chinese companies don&#x27;t seem to know this, they&#x27;re investing bigly in RAM and other silicon despite being sanctioned and tariffed up the wazoo. Should we tell them that it&#x27;s a crunch for no more that 3 years so they don&#x27;t waste themselves for nothing?

              The more interesting question is why Chinese RAM is hugely tariffed, if not for preserving the crunch and its monopoly pricing?

              &gt; I mean, we can assume the people who make the memory love getting huge prices for it.

              Your mistake is to think of the RAM makers instead of the systemic reasons for the problem, these would have to include tariffs, sanctions, subsidies, etc that drive market pricing, RAM manufacturers and their potential competitors.

              1. rx342q · · focus · HN ↗
                &gt; Interesting, Chinese companies don&#x27;t seem to know this, they&#x27;re investing bigly in RAM and other silicon despite being sanctioned and tariffed up the wazoo.

                It&#x27;s also possible they&#x27;re preparing for the possibility that they get cut-off and so profit is not the primary motivation. As you mention, they&#x27;re already sanctioned...

                Also, CMXT started in 2016 so that gives some indication of the timelines involved. Even in Taiwan it&#x27;s like a year and a half just to get the building made and these are experts operating in their own country working 24&#x2F;7. That timelines doesn&#x27;t include equipment into it, which is also in shortage, and getting lines qualified.

                <a href="https:&#x2F;&#x2F;www.tomshardware.com&#x2F;tech-industry&#x2F;building-a-chipmaking-fab-in-the-us-costs-twice-as-much-takes-twice-as-long-as-in-taiwan" rel="nofollow">https:&#x2F;&#x2F;www.tomshardware.com&#x2F;tech-industry&#x2F;building-a-chipma...

                1. cyanydeez · · focus · HN ↗
                  they&#x27;ve been basically building their own PC universe. They are not specifically trying to compete with America. They&#x27;re trying to disown any reliance on America.

                  While Trump and Business minds of America focus on pumping and dumping our stock market, they&#x27;re 10 to 20 years out on what they want.

                  It&#x27;s fucking myopic to think China cares two shits about America.

              2. cyanydeez · · focus · HN ↗
                Oracle just sent a force majeur to their data center in texas essentially telling them they can&#x27;t expect to get paid for several years...

                And you&#x27;re trying to say someone should go out and invest 5 years, multiple billions in investment to catch up to today memory prices?

                You arn&#x27;t paying attention.

                1. bigbadfeline · · focus · HN ↗
                  &gt; Oracle just sent a force majeur to their data center in texas essentially telling them they can&#x27;t expect to get paid for several years...

                  Is this what you&#x27;re talking about:

                  &quot;Oracle has issued a force majeure notice regarding its New Mexico AI data center project, known as Project Jupiter. This legal move is intended to allow Oracle to delay payments if the project does not meet its expected completion date in 2028.&quot;

                  This has nothing to do with memory prices and everything to do with too much cash chasing too few physical goods used in construction and power generation, which is a systemic problem upstream of RAM overpricing.

                  &gt; And you&#x27;re trying to say someone should go out and invest 5 years

                  Did I say that? Where? I talked about Chinese silicon makers who work in a very different system. As to why we have a monopolized market, check [1].

                  &gt; You arn&#x27;t paying attention.

                  Attention is all you need - not me though, I&#x27;ve got enough of it. Check again the last paragraph of my previous comment to understand why.

                  [1] <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=49927315">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=49927315

      7. CodeWriter23 · · focus · HN ↗
        Micron started as the outsider busting in during a past RAM crunch. They more than any manufacturer should understand this.
      8. ashkankiani · · focus · HN ↗
        Are you seriously not aware of the existing history of the memory cartel? <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;DRAM_industry_price_fixing" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;DRAM_industry_price_fixing
        1. zacharycohn · · focus · HN ↗
          There are nicer ways to phrase that.
          1. ashkankiani · · focus · HN ↗
            I think misleading people using confident language about an issue you don&#x27;t understand is more unkind.

            Also I was truly asking if they weren&#x27;t aware in disbelief, since I assumed it was common knowledge.

          2. NamlchakKhandro · · focus · HN ↗
            Why
      9. BobbyTables2 · · focus · HN ↗
        Does it really count when they’re big enough to impact the market price?

        Staying in the consumer market would have lowered the market price.

      10. maerF0x0 · · focus · HN ↗
        &gt; Crucial

        I mean they did stop selling to consumers

      11. KellyCriterion · · focus · HN ↗
        &gt;Such collusion might well be a violation of anti-trust law, but in any case, it wouldn&#x27;t work &lt;

        Ah, sorry, _not_ charging the highest price you could get at a market should be an antitrust case?

        Absolutely no chance. You cant force a company to optimize for its so called (in economics) &gt;producer surplus&lt;.

        How should this work? Minimum price control by gov?

    17. UpsideDownRide · · focus · HN ↗
      Building capacity with looming bust around the corner has its own drawbacks. Damned if you do damned if you dont situation for them.
    18. pfannkuchen · · focus · HN ↗
      &gt; 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.

    19. socializer · · focus · HN ↗
      This is a bit like complaining that toilet paper manufacturers did not dramatically scale up production in the first months of COVID-19. Had they invested in additional factories and production lines, they would be now holding the bag.

      The memory market isn&#x27;t all that different, except it&#x27;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.

    20. varispeed · · focus · HN ↗
      If someone enters as competitor because of high prices&#x2F;profit, they&#x27;ll want for them to stay that way. It won&#x27;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.

    21. guelo · · focus · HN ↗
      He&#x27;s not prioritizing high prices. Demand is exploding and supply can&#x27;t keep up. Everybody in the world that can is already trying to ramp up production.
    22. tikhonj · · focus · HN ↗
      What would the alternative be? If you just kept prices lower, you&#x27;d have shortages. There would still be the same motivation—if not more!—to spin up competing production.

      And to build up a large amount of new capacity yourself, you need to invest a massive amount of capital into something relatively risky.

    23. AnthonyMouse · · focus · HN ↗
      &gt; 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

      The interesting question is, why aren&#x27;t other companies looking at this from the other direction?

      For example, AMD now has a trillion dollar market cap. They make consumer and enterprise GPUs with integrated GDDR&#x2F;HBM and have got to be looking at APUs that do the same going forward. They don&#x27;t benefit from the price of their complement being high. They sold off their logic fabs at a point when they were half dead and had fallen behind, but you don&#x27;t have to be TSMC to make DRAM. A large DRAM fab costs around $25 billion, i.e. 2.5% of their market cap. Why aren&#x27;t they building two of them? Best case supply is still tight when it opens and they have a huge win, worst case the market has crashed by then but they still have a productive asset worth several billion dollars and paid for with cash from the time when it was highly available to them. And since they have internal demand, the amount the price would have to crash before the investment is a net loss is significantly more than it is for other companies.

      Likewise Apple, Google, Amazon, etc. who have even more capital. What are these companies doing? They have the option to spend an amount of money they can easily afford to write off if it goes south, to get a huge win if supply continues to be tight.

      1. flyinglizard · · focus · HN ↗
        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.

        1. AnthonyMouse · · focus · HN ↗
          Which is a huge problem for a farmer who redirected 100% of their capital to a new crop that turns out to be unprofitable. Whereas if you do that with 5% of your capital and it doesn&#x27;t work out, you shrug and hardly notice. But if it does work out, that 5% is now worth 20%.
          1. flyinglizard · · focus · HN ↗
            Market cap is not capital. AMD&#x27;s cash-on-hand is $13b, which is considerable, and they could very well bring external funding to such a project on attractive terms, but it&#x27;s not pittance. And for what, an historically low-margin commodity like DRAM? Let the boys play it out.

            If anyone should do that, though, it&#x27;s Apple. They have the money, the easy to predict need, the vertical integration in manufacturing. It could open all sorts of avenues for proprietary SoC to RAM interfaces. It makes a lot of sense for them to do.

            1. AnthonyMouse · · focus · HN ↗
              &gt; Market cap is not capital.

              Market cap is de facto capital because companies can issue their own shares.

              &gt; And for what, an historically low-margin commodity like DRAM?

              How are they enjoying paying the &quot;low&quot; margins to the incumbents right now?

              &gt; They have the money, the easy to predict need, the vertical integration in manufacturing. It could open all sorts of avenues for proprietary SoC to RAM interfaces. It makes a lot of sense for them to do.

              Which of those is supposed to not apply to AMD or Nvidia or, for that matter, Amazon or Google who are massive DRAM customers and also make the likes of Graviton and Axion?

              And &quot;proprietary interfaces&quot; are essentially nonsense in this context. When a company comes up with a better way to connect DRAM to processors, the industry is more than happy to put it in the next version of the standard, which is what you want because it allows you to source the industry standard components in the event that your own facilities can&#x27;t meet demand for any reason.

              The primary reason companies use proprietary interfaces for things like this is when they&#x27;re trying to capture the upgrade market, even then they&#x27;re still typically using standard chips with a purposely incompatible connector, and Apple solders everything now anyway.

              1. flyinglizard · · focus · HN ↗
                Nvidia and AMD do not fall in &quot;easy to predict&quot;. Half, or more, of Nvidia&#x27;s demand base is like, what, 5 hyperscalers? Which themselves are driven by OpenAI and Anthropic? It&#x27;s not a sustainable market. Meanwhile Apple&#x27;s business and demand are very easy to predict, with near constant moderate growth. Apple is also much more sensitive to margins than the hyperscalers, which is why Nvidia can get away with 75% margin.
                1. AnthonyMouse · · focus · HN ↗
                  That would be a fine argument for why Nvidia or AMD shouldn&#x27;t build DRAM fabs to supply 100% of their present-day demand. What&#x27;s the argument supposed to be for why they shouldn&#x27;t build any at all? Build enough to satisfy 25% of their current demand and they would still need all of that even if the demand crashed by 75%.
      2. mr_toad · · focus · HN ↗
        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.
        1. AnthonyMouse · · focus · HN ↗
          Google has a $4T market cap, Amazon &gt;$2.5T. How hard would it be for them to raise $50B by selling new shares?
        2. mafuy · · focus · HN ↗
          TPUs?
      3. cyberax · · focus · HN ↗
        &gt; A large DRAM fab costs around $25 billion

        $50B for Micron.

        &gt; Why aren&#x27;t they building two of them?

        They don&#x27;t have in-house expertise to do that.

        1. AnthonyMouse · · focus · HN ↗
          &gt; $50B for Micron.

          $50B for Micron to build two fabs on the same site, i.e. they&#x27;re still $25B each.

          &gt; They don&#x27;t have in-house expertise to do that.

          This is a questionable assertion to begin with. The skillset for designing logic and fabricating it are closely related enough that companies -- including AMD -- have traditionally done both, and companies like Intel and Samsung still do.

          But more than that, what if they don&#x27;t? You&#x27;re not going to reassign your existing staff who are already doing necessary work anyway, you&#x27;re going to hire new people.

    24. httpz · · focus · HN ↗
      The Big 3 (Samsung, Hynix, Micron) have been playing this game for 30+ years. There used to be many more DRAM companies but most of them went bankrupt when DRAM was cheap because the big 3 will intentionally drive the price down to bankrupt the competition. Now that they have a tri-opoly, they&#x27;re milking the profits. New competition will emerge but they don&#x27;t have the capital of the big 3 so they likely won&#x27;t survive the next DRAM winter.
      1. bigbadfeline · · focus · HN ↗
        &gt; The Big 3 (Samsung, Hynix, Micron) have been playing this game for 30+ years. There used to be many more DRAM companies but most of them went bankrupt when DRAM was cheap because the big 3 will intentionally drive the price down to bankrupt the competition. Now that they have a tri-opoly, they&#x27;re milking the profits.

        Exactly this. Unfortunately, this strategy has become standard practice in every area of the economy and it&#x27;s a huge corrupting force.

      2. seizethecheese · · focus · HN ↗
        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.)
        1. httpz · · focus · HN ↗
          The supply isn&#x27;t fixed. A new plant takes 3-5 years to build and cost tens of billions. DRAM companies don&#x27;t always know where the demand will be when the next plant completes. 2 years ago there was too much supply so DRAM price hit rock bottom. So DRAM companies held back on investing in new plants so here we are now.
          1. seizethecheese · · focus · HN ↗
            The comment said &quot;relatively fixed&quot; and a charitable reading that &quot;relatively&quot; here means in the short run.
        2. rtpg · · focus · HN ↗
          All three of those companies were convicted in a price fixing scandal.

          I feel like it&#x27;s &quot;obvious&quot; that it&#x27;s not particularly in the interests of these companies to increase production in the current environment. Except perhaps in the long term &quot;we don&#x27;t want to get nationalized&quot; or something, I suppose.

          Personally I do not think think that they are dragging their feet extremely intentionally, but I do think they are structurally incentivised to do so.

    25. stale2002 · · focus · HN ↗
      This reminds me of an economist joke.

      3 businessmen are in jail, they ask each other what they are there for.

      Businessman 1: &quot;I made my prices higher than my competitors and was jailed for price gouging!&quot;

      Businessman 2: &quot;I made my prices lower than my competitors and was jailed for price dumping!&quot;

      Businessman 3: &quot;I made my prices the same as my competitors and was jailed for price collusion!&quot;

    26. ifwinterco · · focus · HN ↗
      Historically the RAM industry has done the opposite (ramped up production aggressively due to high prices) only for that production to all come online during a glut.

      This process can be fatal for a company as your expensive fixed investment hits a demand cycle that can turn overnight.

      So it’s not about being a moustache twirling villain and conniving to keep prices high, it’s just not responsible or sensible to ramp up production massively based on a temporary AI bubble that could pop at any moment

    27. bluecheese452 · · focus · HN ↗
      There is no competition, only the illusion of it. All these big companies and owners are already invested in each other. If you have the multiple billions needed to build your own chip fab you are already getting a slice of the current pie. Why undercut yourself?
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