Thread

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

394 points · 443 comments · speckx

ocd · 1790861971 · 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. radford-neal · 1790870747 · focus · HN ↗
  If I understand this comment correctly, it's saying that Micron and the others would be better off selling RAM at below the price they could get, in order to keep competitors from deciding to enter the market.
  Such collusion might well be a violation of anti-trust law, but in any case, it wouldn't work. If they decide to sell at below-market price, they must (by definition) be preventing some customers from buying by some non-price mechanism (eg, only selling to companies run by other members of the CEO's family). Potential competitors would then see an opportunity to sell to these excluded customers.
  1. thayne · 1790872066 · focus · HN ↗
    Not exactly, I think it's saying that Micron would be better off increasing supply themselves (and thus lowering prices) than waiting for a competitor to come and provide more supply to meet the higher demand.
    If there was enough existing competition, that might be the right move, because if they don't increase capacity, a competitor probably would in order to gain more market share. But I think the barrier of entry for making RAM is high enough that Micron can probably get away with keeping supply low (and thus prices high) for at least a few years before a new competitor appears. Assuming demand stays high that long.
    tzs · 1790872887 · focus · HN ↗
    They aren't keeping supply low.
    They have two massive DRAM fabs (56000 m^2 cleanroom size each) that they started construction on in 2022 and 2023 in Idaho, with production starting in 2027 and 2028.
    zamalek · 1790880653 · focus · HN ↗
    Which are exactly the two years they are threatening tighter supply.
    guelo · 1790881844 · focus · HN ↗
    He's not threatening. Demand is exploding and supply just can't keep up.
    jazzyjackson · 1790882255 · focus · HN ↗
    Production starts != maxing out capacity of the fab
    tzs · 1790887249 · focus · HN ↗
    He's "threatening" tighter supply the same way a weather forecaster "threatens" heavy rain.
    fakedang · 1790880890 · 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's got them by the bollocks on raw material.
    mandevil · 1790884080 · focus · HN ↗
    But the reason that semiconductors are so vulnerable to boom/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't think it is possible to beat the fab construction delays. This isn'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't go up because the fabs to make those chips don'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't have prices for a current memory fab, but as I understand it they are comparable.)
    locknitpicker · 1790915891 · focus · HN ↗
    > (...) 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.
    EA-3167 · 1790920888 · 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.
    locknitpicker · 1790940495 · 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.
    That'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.
    phil21 · 1790949039 · focus · HN ↗
    > 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'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 "win" 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'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.
    fakedang · 1790950358 · focus · HN ↗
    You wouldn't be investing, because you're looking at ROI, while China will be, because they're looking at autarkic self-sufficiency.
    mandevil · 1790923972 · focus · HN ↗
    Fortunately for those companies, they understand this and are taking steps to address the shortage. It's just that the physical reality of our universe prevents any production increase for the next two or so years. Let's say you start a fab today. By the time it gets online, and is able to produce commercial quantities of RAM- let's say you get lucky and it'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'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.
    mcmcmc · 1790890965 · 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.
    m4rtink · 1790925179 · focus · HN ↗
    Its not about lowering their prices - they shouldn'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 & making a massive opening for chinese competition.
    But greed is greed...
    m4rtink · 1790950715 · focus · HN ↗
    "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 & most affordable food from our brand new factory that we are building!"
    GeekyBear · 1790908736 · focus · HN ↗
    > I think it's saying that Micron would be better off increasing supply themselves (and thus lowering prices) than waiting for a competitor to come and provide more supply to meet the higher demand.
    It'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.
    > 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://www.cnbc.com/2026/07/27/cxmt-china-market-debut-chipmaker-ipo.html" rel="nofollow">https://www.cnbc.com/2026/07/27/cxmt-china-market-debut-chip...
    HWR_14 · 1790909612 · focus · HN ↗
    It costs massive amounts (billions) for Micron to build the factories to increase production and would take years.

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