Over the long term demand will rationalise and supply will adjust. But in between there is a squeeze, and the right price is the maximum price buyers are willing to bid for the limited supply. Sucks for other buyers, on the other hand it ensures demand destruction, i.e. that the limited supply goes to the buyer who need it the most, other buyers will delay their purchase and do with what they have.
They have slow rolled rollouts and everything, if there wasn't CXMT they would probably still wouldn't have budged on building new fabs for a while longer.
You can absolutely price fix/manufacture a shortage. Ever heard of merchants setting fire to crops after hoarding to sell at a higher price?
The issue is the distributer and producer are the very same people this essentially means producers have no incentive to rationalize supply, they can make much more money of the long drawn out shortage.
If you want evidence that no one predicted this, look at WD. They disinvested from sandisk up to early this year. Now sandisk is worth more than WD. Doesn't seem consistent with a concerted strategy to gauge prices.
> You can absolutely price fix/manufacture a shortage. Ever heard of merchants setting fire to crops after hoarding to sell at a higher price?
Fine. Show me which manufacturer is cutting production to corner the market. I don't see that.
It's not like wheat, where you just can just plant more at marginal cost (I'm sure someone in farming will now explain why that isn't exactly true either).
https://www.blocksandfiles.com/ai-ml/2026/01/20/samsung-sk-h...
Big manufactures have absolutely cut production of lower margin products and it's not like they can re-purpose all of the equipment used for it for HBM yet. edit They can definitely focus more resource because of it on HBM though.
Things have improved a bit since govts are starting to get angry.
Tldr; no one is cutting the production of high margin stuff, but low margin stuff can go and die, because it's not a free market it's a stock market these companies want to show off better margins in every unit there is no reason to keep inefficient things running when not doing it pays more.
They just don't want 30-40% margins anymore. That is not free market that is quite literally serving their own interests because they know there is a monopoly.
All big memory manufacturers are heavily supported by the govt, that's what has made them the monopolies they are Micron supported by USA (they crushed Japan's memory industry for it), and Korean giants are more tangled up with the govt than well most people in US would realize.
Somehow people think free market means anything goes, which honestly is where we stand today so I don't blame anyone.
But using govts to crush competitions and build yourself up on subsidies and similar isn't really free markets. China hasn't been able to grow a significant memory chip industry yet because of lack of EUV machines and similar technologies blocked by the US, which is also not "free market".
As for WD, and Sandisk separating I feel like this was more mutual and they new HDDs or SSDs being together was a distraction for both. Which feels more strategic, think of it like this, the shareholders who had the shares how hold shares in both and together they might have likely been worth less so shareholders made money.
Aka good for free market. I don't see how that relates to the actual memory crunch issue more broadly.
...that's how the market works. This is called capital discipline and is standard across industries. If the increase in demand is temporary, they would be spending 5-10 years of profit on facilities which will only lose money. The same works in non-capitalist economies too, you don't want to waste resources on stranded assets and many still believe this RAM demand is temporary and the house of cards will collapse.
That's EXACTLY how a free market is supposed to work. The existing memory manufacturers are FREE to not build new factories, and anyone else is FREE to build those factories in their place.
And then we have bubble issues because the introduction of a new, cheaper player, causes the bottom to fall out and for the circumstances that allowed the new manufacturer to exist to completely go away.
The fix is regulation - we are going to have NOT-FREE-MARKET electricity, NOT-FREE-MARKET water supply, .... for vital services.
I'm not talking about you, it's funny to see anti-regulation HN complain about a FREE MARKET working as such. Suddenly it's not so fun where you are at the losing end of the free market when it turns out some are willing to pay way more for RAM than you are.
Will you die without it?
Will your life as you know it end if your next phone has 8GB instead of 12GB?
I call total bullshit on that. I need more.
And why in the world should the government force tax payers to subsidize your extraordinary computing needs?
I'm amazed you could write this in apparent seriousness.
A Mac with 8GB of RAM is blazingly fast for any task your average person would need for it to do. Which doesn't include gaming, mining crypto, or heavy AI models.
Maybe I've missed something? So please tell me exactly what task requires more than 8GB of RAM which is so necessary for the average citizen that the government should subsidize it?
We can go in circles about how developers need to optimize their applications, etc but truth of the matter is that 8GB is considered pretty low for a lot of "average" use cases. MacOS is an exception to the rule and even 8GB on MacOS is limited with multiple Electron apps.
MacOS is not limited in any way for the needs an average citizen has from computers. The average citizen is even fine with an iPad. 8GB is considered "low" by people here, just like a 170 horse power hatchback is considered "low" by muscle car enthusiasts and mining companies looking for dump trucks. But those uses have no bearing on reality for most people.
Ah, a motte and bailey argument! I always love those.
The most absurd argument is that any consumer would need more than 8GB, when it is proven beyond all doubt in physical reality that 8GB gives you extreme amounts of power in for example an Apple device - at consumer friendly prices.
Of course. Because "I need more than 8 GB of RAM" and "the government should subsidize Microsoft" are logically equivalent statements. If you're insane.
1. Nobody has argued either for or against for the government to subsidize Microsoft.
2. However people are arguing that the government should subsidize RAM makers. And their extended argument for it is that people choose to purchase Microsoft Windows. A well known low quality product.
That's a very weak argument. If you choose to make bad decisions and use sub-par solutions when good solutions are readily available, that isn't something that the government should take to account when deciding on subsidies.
What reasoning are you using to figure out what exact amount of RAM is acceptable at a given time period?
I don't know if I would personally fund such a venture though, for roughly the same reason existing manufacturers aren't expanding production.
The question is how quickly the supply adjusts. In a free market, the suppliers would respond to the price signal by quickly expanding their production to meet the elevated demand.
But a market captured by a cartel will be much slower to expand the supply.
So, the test isn't "how much is price going up" it's "how aggressively are the RAM producers expanding supply production"
Cartels aren't known for massively increasing production to satisfy all demand. Far from it I'd say, they're more likely to expand supply to such a level that they can still reap massive profits. Very few countries/companies have the knowhow and willingness to be able to build more.
OPEC is a perfect example of this behaviour. They set hearly production goals to keep prices high. Or the Quebec Maple Syrup Producers organization that limits the amount of syrup a farmer can produce and sell in a year to keep prices high.
Well guess what :) They've done it before, they will do it again.
"To date, five manufacturers have pleaded guilty to their involvement in an international price-fixing conspiracy between July 1, 1998, and June 15, 2002, including Hynix, Infineon, Micron Technology, Samsung, and Elpida.[1]"
And the reason the market is so small is because of players who did as you propose, the DRAM market crashed on them (not due to them but due to broader market dynamics), and they went out of business.
So there is, quite perversely, strong incentive to collude if possible and if not to abide by an unstated agreement to be extremely slow to expand DRAM capacity.
That said...
SK Hynix has two fabs under construction, one set to open later this year. One for 80k wpm, another 360k wpm. A third was recently approved to start construction.
Micro has an overhaul of Fab 6 in Virgina near done and slated to produce first wafers this year. It also has a large expansion in Boise nearly completion for 300k wpm. They're also building a "megafab" site in New York (my guess is >1m wpm) and expanding at their Japanese plants (40k wpm).
Samsung has two under construction, P4 for 100k wpm.
Nanya - historically a secondary player focused only on producing non-leading-edge DRAM is making a play for the leading-edge market with a new fab dedicated to DDR5 and HBM.
It appears they've all decided that the demand is sufficiently sustained that building new fabs is worth doing... but it takes time. If my guess is right Micron is making the largest play with their New York site at 1-1.5m wafers per month. That would give them a large chunk of the market.
(wpm = wafers per month)
Don't worry they will leave money on the table and lobby for protectionism when china comes and eats their lunch.
It really is. First thing I searched for in the thread.
I think we're in agreement here. I don't think memory manufacturers are interested in a market disruption even though profits are incredibly high for a few years. Make it too profitable for too long and others will arise but keep the supply at a steady pace with decent margins and they will remain the only ones on the block because of massive upfront cost.
China is, to my knowledge, the only country that has so far had the willingness to seriously invest. Not necessarily for profits but for independence reasons. I don't see many (or any really) other countries following suit.
Can you just not join the organization?
Maple trees are living things and have a right to reproduce, you can't fault a bird for shitting maple seeds all over my farm planting maple trees everywhere.
If only building a ram FAB was that easy :).
The best hope is that cxmt gets going quicker than expected and is able to satisfy a decent chunk of the Chinese demand for RAM which would - in theory - reduce the demand for ram from the few other producers.
> Backed by the Canadian civil courts, the federation has the monopoly for selling Quebecois maple syrup on the wholesale market, and for exporting it outside the province. Producers are only allowed to sell independently cans of less than five litres or 5kg to visitors to their farm. https://www.bbc.com/news/business-35028380
Lot of unsubstantiated claims with low fidelity meme evidence
https://stream-ai.s3.us-west-1.amazonaws.com/class-action-co...
I do see people arguing, "they had years to increase production - why didn't they?" They've been remarkably candid about this: because RAM production has been losing them money in the past. Because they don't have a cartel, prices were on the floor. Investing in more production would have been corporate suicide.
Even now, there is considerable risk that the bubble will burst, and all this investment in new production will be flushed down the toilet. RAM production is a brutal business.
I said:
> the test isn't "how much is price going up" it's "how aggressively are the RAM producers expanding supply production"
Even when it comes to manufacturing the tooling/testing infrastructure, it's just a question of money aiui.
I didn't say that there was a way to do it in the short run. I laid out what the test is to determine if there's cartel-like behavior or competitive-market-like behavior.
I will say, in a market with only 3 players and very high cap-ex cost, my prior is that you're likely to see more cartel-like behavior than competitive-market-like behavior, but that's still to be determined.
Oh yea, governments can fix by putting 100 billion in memory fabs right now, and when demand crater in decade or so, let tax payer eat the cost of those fabs. At least it will benefit poor computer users like me.
Why would they?
And you claim to have historic examples where they did?
Now what do you think happens when developing new supply is substantially constrained by lead times?
Coz a whole lot less of you have ever dealt with manufacturing logistics.
Some supply and demand curves move in days, some in months, some on years.
That said, even though we might have to wait years for new supply to hit there market, we probably don't have to wait years to see signals of that. We will likely know that manufacturers are starting to build new supply long before we see the chips hit the market.
Even if you started a new fab today, it's 5 years till it comes online. The great hope here is that China's DDR5 yields represent a high reject rate of an enormous amount of new capacity that they'll dump into the market to get a sovereign capability in that area.
This system is too complex, the few individual players too big, with too many artificial distortions for the adjustment to equalize out in a way that's anything but years-long (it may have shock-waves that extend past the decade), and highly destructive to everyone who isn't OPEC, or their largest customers, in this analogy.
The brunt of it will be paid by the people further down the food chain.
And given that these are independent actors in the free market, they’ve seen the history of boom/bust cycles in this market
Free market doesn’t mean “everything just magically happens”
That’s a good one!
20 years ago: https://en.wikipedia.org/wiki/DRAM_industry_price_fixing
> According to the one-count charge filed in San Francisco's federal court on Thursday, Park conspired with unnamed employees from other memory makers to fix the price of DRAM sold to computer makers from April 1, 2001, to June 15, 2002. The government says the move directly affected sales to U.S. computer makers Dell, Hewlett-Packard, Compaq, IBM, Apple Computer, and Gateway.
etc
It's pretty simple. In a correctly regulated market the sellers are in competition with each other so there is a limit to how much they can increase prices, since they'll just lose business to their competitor.
In a poorly regulated market that allows competitors to collude with each other to raise prices by the same amount, they'll inflate prices much further.
No? It goes to the buyer with the deepest pockets.
So RAM manufacturers will turn down company B's $2M offer for company A's $1M offer because company A "needed it more"?
I'm actually done discussing this...
In a bubble market where B has massive amounts of capital allocated to it in a way that will likely collapse in the future than it's very likely they will never recuperate the 2M they put in the RAM. Instead buyer A that would get at least 1M of usefulness if not more, gets far less, crippling their business. Then when B collapses a ton of RAM is dumped on the market for far less than 1M cratering the RAM providers business for years.
I'm sure it will only suck for the buyers. This has no effect on inflation and probably will be overlooked by the current admin.
The question is how much of this demand is actually based on AI, or just an excuse to fleece regular buyers (and AI is not really the actual demand driving such prices).
Memory manufacturers have driven up prices via collusion many times in the past (and paid fines for it), without AI or some similar high demand vertical market existing.
But I don't think it's the case now, see my answer elsewhere here for why.
In a market with healthy competition (no collusion), this generally can't happen. Every single vendor is incentivized to lower their prices slightly at all times, with a floor at cost plus margin.
We're talking about the memory market here.
The "healthy competition (no collusion). Every single vendor is incentivized to lower their prices slightly at all times, with a floor at cost plus margin" is the fairy-tale version they teach at 101s.
Everything else you said is accurate, but this is not. Supply will go to those most able to pay, not those who need it the most. It is not a moral allocation, which your language implies.
This was not created by the manufacturers.
Samsung said they were “moderating demand” which doesn’t sound like they want this problem to be solved either.
So a lack of builds coupled with AI boom at the same time created a perfect storm with no new capacity coming online for years after demand rapidly escalated.
...3 manufacturers with a long history of price fixing...
That's not a long history of pricing fixing, just accusations.
https://chipletsummit.com/proceeding_files/a0qVV0000032cp3/2...
https://www.msn.com/en-xl/money/general/apple-s-cxmt-memory-...
While they have spiked this year, the trend is towards more RAM for cheaper.
https://ourworldindata.org/grapher/historical-cost-of-comput...
"Manufacturers taking advantage of it" wouldn't take it to 500% without AI, because it's way beyond the price elasticity points where they make up lost sales at higher prices.
Those prices lose most consumer sales, and are only viable if there's constant high demand that's relatively insensitive to price (so, not regular folks, but e.g. AI companies).
I honestly don't think they need to fix their prices, and it's possible that selling to consumers is a secondary market for them compared to datacenters, like Nvidia selling GPUs to gamers. We know that's not where the money is.
Seeing some companies actually exit the consumer market is evidence for this.
https://en.wikipedia.org/wiki/DRAM_industry_price_fixing#202...
Is it worth the cost? Yup.
When parent commenter says "They have done this in the past after all" that's exactly what they're talking about. Micron, Samsung, Hyinx (prior to SK Group acquisition), and others all participated in RAM price fixing in the early 2000's.
In addition to that there are extra fabs build and (for example) China can use the high margin to catch up with their processes without breaking the bank.
An egg takes 21 days to hatch.
Then it's 18-24 weeks to start laying their own eggs. That's ~$5-15 in feed over the period, maybe 40-50 pounds. There's utilities, labor, land, etc., but your incremental cost to add a hen if you have the space is minimal. My numbers won't reflect a lot of operators, as scale matters.
Out of a typical 1.5-3 year lifespan that had a startup cost of a few dollars per, paying back its return by about month 6-7, that's not too bad. It's only worth doing financially in this economy at ludicrous, arguably inherently inhumane scales, but that's what it is on paper.
Not quite the same path to course-correction as a silicon shortage.
The actual deals were hours apart and secret for that reason.
It's hilarious watching the conspiracy theorists do their usual thing when there was an actual conspiracy, it was perpetuated by the inner circle of a US company and announced and publicized in full once it had achieved its goal.
Ironically enough it's because of its bet on RAM companies that all of Situational Awareness' publicly trading stocks got bought by the highest bidder (Citadel) when the (leveraged) shit hit the proverbial fan and Situational Awareness created a hole of tens of billions.
Situational Awareness was not forced to sell its share in Anthropic for, by contract, investors in Situational Awareness have no right to force the sale (before this month of September I think) of shares in companies not publicly trading yet.
Citadel bought those RAM stocks right at the end of July, during the dip. Amazing timing for for example MU bounced back from $746 back to above $1000 (now around $950).
Now Situational Awareness may still do exceptionally well: they've got $5 billion or so left in Anthropic AIUI.
Eventually someone will manufacture more to undercut
See the tariff thing where Bessent bought rights to refunds
It's all a really low tech con perpetuated by weak elders who need blue pills to simulate virility. Odd how they complain about the kids virtual reality.
Oh no it's not either; it's intentional petty bullying