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. mr_toad · 1790885195 · 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 · 1790887653 · focus · HN ↗

            Google has a $4T market cap, Amazon >$2.5T. How hard would it be for them to raise $50B by selling new shares?

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