Keeping prices at this level is precisely how one or more competitor will rise up. Making memory isn’t super hard. That’s why it is a commodity. The problem with the memory market is that up and down cycles have bankrupted the vast majority of players in the past. Now we only have 3 players left except for a few smaller ones in China.

The reason memory prices can stay high for years in this mega cycle is because the 3 players will be very cautious on overbuilding. They’d rather under build, make great profit (not maximum) and reduce the risk of going bust if this suddenly ends.

Same for TSMC in chips.

Great opportunity for Chinese companies though. This shortage is exactly what Chinese companies need to scale.

> Making memory isn’t super hard.

Then why do only 3 companies make it?

Bankruptcy risks.

When Samsung had to sell memory at a loss after COVID, no one came to save them. They buffered their memory division using profits from their other businesses. That’s how Samsung survives memory downturns.

According to some stories, this is how Samsung convinced TSMC to not enter the memory business - that you need a nation or other lines of business to prevent bankruptcies.

The market has stabilized to 3 players.

...And why do they go bankrupt?

Because it's an incredibly capital intensive process, involving billions of dollars of investment into manufacturing infrastructure.

That is to say, making memory is quite hard.

Making memory is easy in the sense that any company that makes JEDEC compliant DDR5 can sell you their product and you can put it into your mainboard (soldered or not).

You can't do that with Intel or AMD CPUs. There is no spec. Each vendor does CPU socketing and chipsets in their own unique way.

Not to mention that your design needs to be good. For DRAM manufacturers, they just need to design one really good cell design and spam it a billion times.

The problem is that DRAM is a specialised product that has a specialized process. Your fab is a one trick pony that can't take advantage of other markets. Since you're stuck with fixed costs on a single design, you're cranking up the volume to make your money back, but everyone does that and if everyone does it, then the market is flooded with cheap memory that won't recoup the costs.

Now that AI memory is something the companies can specialise in to increase the margins, they can exit the contested market with low differentiation. If anything, they will prefer it of a single company is left doing consumer DRAM, because it is one less company in the AI memory space.

You’re confusing two independent things. There are simple processes that are extremely capital intensive with long lead times and then there are complex processes that require lots of R&D and industry secrets. Memory is the former in the chip world.

Other examples from outside of tech of easy but capital intensive processes are power generation and railroads. Very easy to do, but easy to end up broken by overbuilding for demand that fails to materialize or stay stable for the duration of your financing.

The technical process of making memory is relatively easy. Hence, it is a commodity.

I didn’t say owning a memory business is easy.

Making the memory can be much easier than predicting future demand.

Placing the bet isn't as hard as making an accurate prediction.

//Making memory isn’t super hard. That’s why it is a commodity.

These two aren't related.

Dram is a commodity because the you can replace a chip from hynix with a chip from micron, the have the same behaviour.

And a price competitive Dram isn't easy manufacture, or China would have made it already.

> up and down cycles have bankrupted the vast majority of players in the past

Exactly, so what’s the incentive for anyone to sink half a billy into building out more capacity.

The existing players get to rest on their laurels and succeed whether or not the AI bubble busts.

The incentive is that your 2 competitors will build more than you and gain market share on you if you are too conservative.

Samsung, SK Hynix, and Micron all have to balance between capex spending, making as much profit as possible, and risk of bankruptcy.

So are the new competitors currently in progress of starting up? Because it takes at least several years.

Only Chinese companies have a chance. Problem is that China can’t buy EUV machines and the most advanced memory chips now use EUV.

Heck, the US is now pressuring ASML to not sell even DUV machines to China, period.

Yeqh that is a challenge. DDR5 and LPDDR5X are both manufacturable with DUV. So let's hope they still get access to that...

When costs are high enough, you can recoup that, if you have an appetite for risking the downturn.

If the collude to say make the price $1000 for a component that costs them $100(including opportunity costs), then either a new company or a greedy company in the collusion can make their price secretly $900 and get massively more profit.

Right now their opportunity cost is too high.

> risky it is to spin up a new fab

You don't need a new fab. You can build memory in 20 years old fab.

Then that's a cartel and hopefully regulators will act.

They won’t.

They will. DOJ prosecuted memory makers in the late 90s and 2000s for collusion.

This boom is magnitudes higher than before. The attention will be endless.

Current DOJ is corrupt as fuck, it will not happen. Get back to reality.

Corrupt doesn’t mean “acts without incentives”. If you assume a corrupt system, then the inputs are going to be who has influence over the DOJ. If there is more money to be made by breaking a cartel, then they would absolutely do it.

They will respond when people are loud enough. If memory stays at $1200 for 128GB for years and investigative journalists say it could be colluding, enough people will make enough noise.

I’m sure Nvidia, Elon, Tim Cook, OpenAI, Anthropic are already whispering in Trump’s ears to do something.

What journalists? People who type shit into ChatGPT and post the article as their own?

Journalism is dead. There will be no more investigative journalists like the type you describe.

Once the masses are disenfranchised network state serfs according to plan, loudness won't matter

> I’m sure Nvidia, Elon, Tim Cook, OpenAI, Anthropic are already whispering in Trump’s ears to do something

You can't expect me to believe that any of those would want any kind of antitrust action against anybody.

Sure they do. They all have money interests in this. They all want lower memory prices.

Memory prices and shortages directly impact all of their profit margins and revenue.

They have other ways of getting what they want.

What magical way do they have of getting cheaper RAM if there really is collusion?

That was a very different DOJ. They no longer work for us. They act as Trump's personal law firm.

Then China will come and eat their lunch. I for one will only buy Chinese RAM from now on, no matter the prices.

>I for one will only buy Chinese RAM from now on, no matter the prices.

Memory is a commodity, so I think you will be very lonely in your quest.