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Comment by mrweasel | Hacker News Reader

This feels like a classic business blunder. Focus hard on a single business segment, leaving an opening in the market for your competitors. Not because it wasn't profitable, but because it wasn't profitable enough for you, right now. Only downside is that now you've created an opening for a new player in the market.

This feels like a short coming of western business/stock market thinking. Focusing on profit within the next few quarters, and not caring about the longer term consequences. For all it's flaws and shady business practises at least China can think beyond a single fiscal year.

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Ok but this is how the market is supposed to work. If the incumbents aren't doing what their customers want, then competitors can rise and fill the gap and compete.

This isn't a shortcoming, it's a competitive market working as intended.

The market doing what it's supposed to do does not negate that the market segment has only been left open because of overly myopic businesses.

That's what modern capitalism is and it's bad for everyone

Why would we think businesses will always make the right move?

They'll blunder. They'll do it even harder in the absence of competition.

Who said I thought businesses would always make the right move?

Businesses blunder. "The market" is just a set of observations, including that competitors will tend to take advantage of those blunders. It is not a failure of the market that businesses have blundered, nor surprising that it will happen occasionally, and neither I nor mrweasel implied otherwise.

The market is actively trying to solve it right now. Micron is investing $200B in new fabs. Everyone is trying to ramp up production.

Yes, identifying a problem is easy. But solving shortages in all cases requires perfect knowledge of future demand. So, good luck.

Everyone gets mad when Chinese do capitalism...

"Why is nobody berating China?" is my favorite oft-repeated refrain on HN.

They’re too busy berating the US.

NO you see, we have to hate Chinese companies because they are unfair competitors since they get state funding from the Chinese government, unlike Intel, Micron, TSMC, ASML, Samsung who don't get state funding from the US, EU, Taiwan, ROK ... oh wait.

Scratch that, we have to hate Chinese companies because they do business with the Chinese military, unlike Intel, Nvidia, Samsung who don't do business with the US and ROK military ... oh wait.

I know you are being sarcastic but the reason why we have to hate Chinese is simply because the standard of living of Americans depends on China not succeeding, simple as that.

Well then hey can just say THAT, instead of coming up with hypocritical BS that doesn't pass the smell test. People internationally have enough IQ to see through the double standards BS, especially since youtube is a thing.

And the standard of living of working class Americans has been on a steady decline since Reagan by the hand of US administrations, not by the hand of CHina.

This isn't defending anyone's standard of living, it's defending profits of domestic monopolies like Micron, who indulge in state subsidies from US taxpayers and then fuck then over on prices.

Does it, though? If anything it seems like the opposite: China's success had directly enabled my standard of living as an American to be as high as it is.

I suppose it'd be true that the standard of living of some Americans depends on China not succeeding — specifically, those Americans who own corporations competing with Chinese firms — but I think they'll survive just fine with only 10 yachts instead of 15.

There's maybe a tiny bit more to international economics than who gets a yacht. We know how American lives are, given history. The question you have to ask yourself, is what if Apple had invested $275 billion over 5 years into the US instead of China.

You mean neo-mercantilism?

Lets not forget there is no competitors. There is one competitor- the chinese state, one huge company willing to subsidize any endeavor that will help it fmgain more marketshare with already captured markets.

Only if you don't want or need any geopolitical gradient at all.

CXMT sells the vast majority of their bits at the prevailing market rate, just like everyone else. They are adding capacity as quickly as they can, with a 5-10 year planning horizon, just like everyone else. It’s really not that deep!

  > They are adding capacity as quickly as they can [...], just like everyone else

Are you sure? In the past they explicitly said they are not going to increase production.

https://www.tomshardware.com/pc-components/dram/memory-maker...

Yes of course their messaging to customers and the investment community is that they will be rational and measured in their investments. In reality, they are adding capacity as quickly as possible as margins are too high. However, capacity addition leading edge semiconductor manufacturing has a multi-year lead time.

> In reality, they are adding capacity as quickly as possible [...]

Even if we ignore the fact that you can't build out factories in secret, this would be securities fraud by publicly listed companies.

> ...as margins are too high

This is not the first RAM boom-bust cycle, and memory makers are an actual cartel convicted of coordinating in the past - none if them are going to break rank when they can invest the minimum and reap outsized benefits. Also, no one wants to invest in additional capacity when the bottom can fall out at anytime, and shareholders demand your head- not even the AI companies want to bear that risk, which is saying something.

PRC asked them to curtail DDR4 production so they didn't bottom out the market a year or two ago, and to focus on latest gen development, like HBM. They were the world leader in cost efficient DDR4 production at the time.

It's not really a blunder though. Given that total capacity is tightly constrained, Samsung and SK Hynix are happy to focus on what they do at their best and with the highest margins. Why shouldn't they supply the HBM market?

It's putting all eggs in one basket. If/when the higher-margin category collapses, they'll have no fallback. Imagine Chevrolet had discontinued Impalas and other low-margin cars, and switched to Corvettes during the pandemic

Even if there's a collapse in the high-margin market (I don't think anyone is expecting this right now), it will be slow and telegraphed in advance, giving them plenty of time to refocus on lower-margin products.

Good description of what actually happened. Do they even sell any conventional 2-door passenger cars besides the Corvette these days?

Maybe not to starve whole segments of the society and economy of critical inputs ?

This is why we have strategy reserves - to avoid greedy companies to make a quick buck when they find out they can sell the equivalent of crack and dump all the other now low margin stuff like food or other essentials.

Sure, that company might make a killing for a short while, but people will die from hunger, missing medicine or freeze to death.

So let's buy a strategic reserve of DIMM sticks from CXMT. But that's not a great strategy either, because RAM tech evolves. DDR3 to DDR4 to DDR5 to DDR6. So you need to rotate your strategic reserves over time, and luckily enough for you, the used goods market is doing exactly that for free!

> Focusing on profit within the next few quarters, and not caring about the longer term consequences

Anything new? From my non-American view, American companies has done similar things for a very long time now. It happened in the consumer electronics, it might happen again in the IT industry.

It's not the fault of the companies, they simply just wanted more certainty and the consumer market is not (when compare to cooperate contracts).

But from the stand point of a nation, if no one creates low-end products, then no one will be providing low-end/entry-level jobs. That's when you got structural problems.

There is really nothing about the stock market that means only thinking about the mext few quarters. See all the losses on the profit and loss statements of AI tech giants, or, say, game console companies? Why are their stocks still valued so highly during these periods? The answer: investors are thinking long term.

It is really impossible to have quality long term thinking without capitalization accounting and similar instruments that come out of the "wester" system of business that chinese free enterprise gladly and speedily copied when it was made free.

I think the sentiment here is about management's tie of bonuses to near-term stock performance. Maybe not about the market itself, I agree with your view on investors want long term gains over short term fluctuations mostly.

It's ultimately the investors and owners of companies which control the company.

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