Thread

1. 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. malfist · 1790862887 · focus · HN ↗

      The argument I've seen about why someone else doesn't start selling RAM is it takes a year or two to ramp production. But here's a CEO saying he's going to make sure prices stay high enough, long enough that you can spin up a competitor

      1. phil21 · 1790874390 · focus · HN ↗

         > But here's a CEO saying he's going to make sure prices stay high enough, long enough that you can spin up a competitor

         2 years is not remotely enough time to spin up a competitor. It's not even enough time for a current leading competitor to spin up another fab.

         If you are a newcomer you are talking a decade or more before mass production. If you are HK Hynix perhaps 5 years or so.

         The majors all have large fabs under construction, but the majority of new production from those facilities won't be coming fully on-line until 2028 at the earliest. Even from the date of first wafer shipped most of these facilities take 6-12mo to reach mass production level output.

         Chinese DRAM is interesting only because they started building capacity (expertise) a decade ago. Only now are the expected to have any material impact on the total volume of the market. And if they want to gain even more market share, they will be under the same ~5 years to spin up a brand new fabrication plant. Perhaps a bit less because they are China, but still multiple years.

         1. kazinator · 1790874592 · 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 · 1790877254 · 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 · 1790880826 · focus · HN ↗

            > 2 years is not remotely enough time to spin up a competitor. It's not even enough time for a current leading competitor to spin up another fab.

            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 · 1790881281 · focus · HN ↗

            And it's important to point out how long these fabs have been under construction.

            Micron started building it'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'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 · 1790886231 · focus · HN ↗

               correct, which is why industrial policy is important.
         4. rtpg · 1790896586 · focus · HN ↗

            > 2 years is not remotely enough time to spin up a competitor. It's not even enough time for a current leading competitor to spin up another fab.

            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're basically limited by not having enough people to go around and _do the installs_.

            It's really funny to think about how the bottleneck is so deep in the chain.

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