They could start manufacturing ram? Or fund startups trying to make ram?
Seriously is there no way to get out of having only 2-3 chip and memory makers?
Honestly, no. There is no fast way to spin up fabs for this stuff. A lot of lithography equipment for the top tier stuff is made by 1 supplier, stocking a shitload of fabs with the right gear just isn’t something they can do.
IMHO, the fastest way out of this mess would be for governments to regulate how supply is spilt between consumer and enterprise products.
That still might take 10y because lithography printers aren’t cheap, their location isn’t cheap, and so much more. Once you watch an Intel, TSMC, or Texas Instru… chip factory tour.
Wait, why doesn’t Texas Instrument cash in or did they offshore their production too?
Fun fact…the chip maker and the calculator company are completely seperate. Don’t really know why it’s fun but well it is a fact.
They’re already selling silicone designed twenty years ago at absurd markup, so Texas Instruments has no need to jeopardize that with the AI fad.
They’re going to start up an entire RAM company to fill a temporary shortage?
Yes, then they’ll be shortage resistant
It can’t really work the way to want it to.
You have let’s say Samsung who can make money selling a chip as long as the price > $50. And historically the price of the chip has averaged $100.
But the demand is crazy and they can’t keep up and the price of the chip is $500. They are making money hand over fist but let’s say they feel a moral obligation (hahahahaha) to lower the price by increasing capacity.
So they invest a billion dollars to increase capacity. Now that’s a huge cost that reduces their margin on all chips. Between loans and maintenance, now they have to sell a chip for $90 to break even. But that’s fine because they are making $410 per chip instead of $50!
Except now you fix the supply issue and demand falls to normal. You’ve just cut your profit from $50 to $10. You have to sell 5x the volume to make the money you were making!
Except it’s even worse, because now you have all these extra chips you’re building and nowhere to put them. Supply exceeds demand, pushing prices lower so instead of $100, they are selling for $80. Now Samsung loses $10 on every chip and they go bankrupt trying to pay back a billion in loans.
So it’s not really in their interest to build capacity to meet a temporary demand. Unfortunately.
That is not how it works at all. RAM is a necessary part for every compute device, and there is no way to recover any part of selling at a loss once it’s acquired by the final owner. Thus, they will never be sold without a profit margin. This is very different from, for example, the video game consoles market. Once you have the console, you still need games, so, whatever loss the manufacturer is assuming has a chance of being filled by the customer “buying” (renting) games.
Having said that, the rest of your logic is sound. However, I don’t see prices dropping back to what they were before this AI bullshit even if the market is suddenly flooded by triple the offer vs demand. These corporations would certainly manufacture a fictional shortage somehow, makeing people rush-purchase ram for fear of the prices going too high again, and release all the production into the market to maintain the illusion of low offer.
You don’t need to be “shortage resistant” when there’s no shortage.
There were loads of ram companies in the eighties, so many that when meager times came, half went bankrupt.
RAM making is a brutal market. It’s very different to chip making, it’s “just” billions of capacitors.
Honestly, we should probably just have a state owned and ran chip fab company. If the US is serious about security and/or innovation, that’s what needs to happen. There’s no way it’s going to happen though sadly, but that’s what should be done. >
Why state owned, when they can have privately owned and just funnel your tax money right into it, then retire to take up cushy “consultancy” positions on the board?
The “demand” is in the future. It may never be realized. There’s no money in starting a chip fab when there’s only a manufactured shortage. The chip companies aren’t adding capacity because they don’t need it.
It is an extremely long and complicated process to do so. China has been trying to enter chips manufacturing for decades and are now almost there (they don’t have the capacity to produce the most advanced chips yet, but are still working on it).
However the moment they got a decent DDR4 production going they announced they are going to “phase them out” in favour of DDR5 chips (of which they have not really perfected the process yet) so they can be used for Chinese AI-datacenters.
The lead time on new fabs is massive like truely massive. We would have to assume this bubble won’t burst for the next decade to justify it.
On the flip side ramping up production is what actually caused the current problem to a degree. The last time there was a massive bubble that caused a huge demand surge for memory. The various companies producing it all ramped up production. Then the bubble popped and 70% of the companies went bankrupt.
Its why the current companies are refusing to ramp production. They refuse to be fucked over by the bubble. And frankly I don’t blame them.
As stupid as it is it’s ALSO good for the consumer. Cause if the bubble goes pop and the few remaining big guys all go belly up. Then we are all collectively fucked.
If you think now is bad the fuck do you think would happen if one one few remaining fabs goes bankrupt and is sold off and split up.
Best case scenario is long term we have a larger number of more flexible smaller fabs. Realistically it just means we have even fewer companies making ram at all in the short term and prices go even higher for possibly years longer then they otherwise would.
So while yeah the ram companies are making money hand over fucking fist. They are also doing what is best for themselves and the customer. Shit just fucking sucks cause reality disagrees with the delusion that’s being imposed on it.
The big three producers refusal to expand will hurt them a lot, chinese producers like cxmt got a great way in and have already started producing dram that works for ddr5 6000mhz.
Yeah, they’re basically giving up future marketshare to make a quick buck. No long term thought whatsoever.
Reminds me of that time Samsung wouldn’t sell ram to Samsung because they needed to compete with the demand from Samsung.
Wait, what?
#OutOfTheLoopThe semiconductor/memory chip production side wouldn’t sell the chips to the consumer electronics side, because it’s more profitable to sell and feed to the genAI side of the business.
Episode 7893 of corporations artificially creating problems to make profit by selling the solution. Just to then fail at solving the problem of their own creation.
Brilliant economic system. You can marvel at its ingenuity and just get lost in it.
Asha Sharma standing on the glass cliff.
She and Xbox will be gone inside of two years.
I haven’t bought an XBox since the 360 because it was such a vapid upgrade path.
The Xbox Series X is a really nice deisgned Console tho. I actually think its the best console hardware to date. But software and games are the problem
There’s no software or games problem on Xbox. It gets 99% of all the games the PlayStation 5 does, and most of them play and look better unless you’ve got a PS5 pro.
Asha was absolutely put in place to be glass cliffed.
Not sure Xbox will be gone any time soon, but once Asha has taken all the blame they’ll get back to the same old BS.
Idk, maybe stop??
“We’re going to crash in to that orphanage! AHHH!”
“Then brake…”
“OH THE HUMANITY!?!”
You can stop pulling the lever at any time. All that happens is modern society unravels as we enter the financial equivalent of a thermonuclear bomb going off. The same will happen but slightly worse if you keep holding the lever.
Better Nate than lever.
But how else should they waste billions of dollars to avoid paying any taxes?
Fuck Microsoft with an umbrella, but in this case it’s not just only Microsoft, there are a lot more and bigger players on this shit dish
Poor Microslop
If there was a decent governement behind they would have never left this reaching the point where the consumer market is left with nothing
I’m all for shitting on Microslop, but let’s not pretend they’re solely responsible for the memory pricing crisis.
let’s not pretend they’re solely responsible for the memory pricing crisis.
Nobody is claiming that. Did you even read the literal first sentence of the article?
the memory pricing crisis that its own AI ambitions are helping cause
The headline is claiming that. You can’t just lie and then walk it back once someone clicks. There is a limit to how much inaccuracy you can put into a headline to simplify it, and this is definitely past it. To save one word they make it this wrong.
Agreed, the headline is clearly pointing fingers at Microsoft even if the whole story involves other corpos. What’s the point of getting aggressive with people if the problem is the headline spewing misinformation?
The headline is claiming that.
Welcome to the internet and clickbait headlines.
Soley? No. Huge part of it? Absolutely.
Kinda direcly are, as they funded a lot of OpenAI during the early years. And later years.
They’re still planning on making a new Xbox? Sometimes I forget there’s an Xbox console anymore.
They could just cancel all yet to be manufactured orders for starters…
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I wonder if we’re going to see a console generation with expandable memory for the first time since the N64.
Would make some sense if the current climate persists for a few more years. Sell variants with multiple ram configs at different price points, and when ram prices come down you can wack a ram stick/module in there.
Obvious problems: consoles usually use unified memory, which probably won’t really work with expandable storage, so would need a different architecture. Also, if they use non-standard dimms, it’s unlikely the manufacturers would drop prices of those modules anywhere close to the actual amount of theoretical ram price drops. And this would require cooperation with game developers to make games that work with different ram configs, and give a tangible benefit for having more ram, without breaking compatibility for the base model units.
You think RAM prices are ever going to drop?
Sweet, summer child…
Yeah, I do. For two reasons.
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Buildout will start to slow down when the speculative investment slows down. Which is going to happen. None of the big ai companies are actually making money yet, and even if they were, eventually growth will start to level off. Investors are always looking for the next big thing, so once AI isn’t the shiny new thing, the magic investor money will start to dry up.
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Even if demand continues as it is, more memory will be manufactured. China is already producing memory, and I’m expecting them to scale fast. Also other countries and regions are realizing how important tech independence is, so I expect we’ll see more fabs pop up at least in the EU and US. One of the big reasons we’re in this mess is that the Korean fabs have been hesitant to expand production because even they don’t expect this to last.
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Just… lemme help folks out with the corpo speak here.
‘leading-end’
Ok now watch this ->
‘lead-ending’
mind explosion gif
