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. AnthonyMouse · 1790882878 · focus · HN ↗

      > 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'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/HBM and have got to be looking at APUs that do the same going forward. They don'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'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'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. cyberax · 1790886698 · focus · HN ↗

         > A large DRAM fab costs around $25 billion

         $50B for Micron.

         > Why aren't they building two of them?

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

         1. AnthonyMouse · 1790887288 · focus · HN ↗

            > $50B for Micron.

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

            > They don'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't? You're not going to reassign your existing staff who are already doing necessary work anyway, you're going to hire new people.

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