Memory Companies Have Destroyed the Consumer Market | Hacker News Reader

Memory Companies Have Destroyed the Consumer Market

gamersnexus.net

120 pointsDeepLogin102 comments

Should we blame this on memory companies or the AI companies bidding for memory? How should the memory companies have acted differently?

For one, they could have could have not massively scaled back consumer memory manufacturing as a matter of duty to customers. But money and greed must prevail.

Isn't it the case that public companies owe a primary legal/fiduciary duty to shareholders over customers?

The question of choice between a profitable vs unprofitable venture is easy. But yeah, to what extent is choosing profitable instead of VERY profitable a breach of duty to shareholders?

fiduciary duty doesn't mean you always have to do what makes the maximum profit

avoiding the destruction of good faith with consumers is a legitimate business interest

Good faith with customers also has a monetary value, even if it is hard to calculate. This is still maximizing profits.

The overwhelming majority of incentives for executives is and always has been aligned with squeezing more value out of customers, in the form of increased margins, lowest possible costs with the highest prices the market will tolerate.

There are a few, I mean very few executives who stand firm on defending good faith toward customer happiness and quality. One of the only things stopping the spiral is competition. That’s why there’s an incentive to consolidate into a few massive conglomerates.

indeed, we don't even need the paperclip maximizer, turns out CEOs are enough

As far as I am aware, the answer to your question is ‘no’[0].

> Contrary to what many believe, U.S. corporate law does not impose any enforceable legal duty on corporate directors or executives of public corporations to maximize profits or share price. The economic case for shareholder-value maximization similarly rests on incorrect factual claims about the structure of corporations, including the mistaken claims that shareholders “own” corporations, that they have the only residual claim on the firm’s profits, and that they are principals who hire and control directors to act as their agents.

[0] https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-v...

This started long ago, and is one of the best examples of “if you repeat a lie often enough eventually it’ll be widely believed”. It’s a useful tool to manipulate public opinion over a few generations. But no one would ever do such a thing, right?

Mm not really. This has been argued so many times on HN. It’s imbued in de facto case law. You’re not going to find it in legislation.

Willingly getting sued by hostile shareholders is in itself not acting in the best interest of shareholders so while it’s not in code, it’s buried in many decades of case law and in reality it reflects the maligned incentives for companies.

So your contention is that a Cornell corporate & business law professor wrote and published a book and ignored all of the de facto case law that disproved their thesis? If so, do you have a rebuttal of the thesis by another subject matter expert that you can offer as a citation?

> Willingly getting sued by hostile shareholders is in itself not acting in the best interest of shareholders

Really? So if I am a hostile shareholder demanding massive workforce reductions so I can get a $1 dividend today, even though this action will make it impossible for anyone to get a $10 dividend tomorrow, it is in the best interest of shareholders for the company to capitulate to my demand? What if other shareholders are employees? Whose best interests are served then?

I’m not contending that the cornell professor is wrong. In fact, quite the opposite really. Perhaps my point wasn’t clear. What I’m saying is that reality is fuzzy enough that a majority of the country’s CEOs (often not lawyers) continue to operate on said myth. There have been enough lawsuits, even if many end up being frivolous, the myth persists. Honestly whether or not it’s written in stone doesn’t actually matter, it’s how executives behave.

Your own citation is basically an acknowledgement of that. In particular:

> “This dogma drives directors and executives to run public firms with a relentless focus on raising stock price. In the quest to “unlock shareholder value” they sell key assets, fire loyal employees, and ruthlessly squeeze the workforce that remains; cut back on product support, customer assistance, and research and development; delay replacing outworn, outmoded, and unsafe equipment; shower CEOs with stock options and expensive pay packages to “incentivize” them; drain cash reserves to pay large dividends and repurchase company shares, leveraging firms until they teeter on the brink of insolvency; and lobby regulators and Congress to change the law so they can chase short-term profits speculating in high-risk financial derivatives.”

Oh, I understand what you are saying now. Thank you for clarifying! I agree that executives these days do seem to persist in operating according to the shareholder value myth, despite it being a myth, and despite a bunch of them seemingly admitting to knowing better in 2019[0].

That false pledge certainly suggests that rather than being controlled by the dogma, they perpetuate it so workers and citizens accept turpitude as inevitable and necessary. The carrot is the stock option; the stick is the myth that everyone will get in big trouble if workers refuse to put shareholder wealth first.

[0] https://en.wikipedia.org/wiki/Business_Roundtable#2019_corpo...

>Isn't it the case that public companies owe a primary legal/fiduciary duty to shareholders

The shareholders own the company. It is their property. They paid for it, they own it, and likewise they can do whatever they want with it.

It would be crazy if I proposed you let me drive your car to work everyday. Why? Because you own your car, it's your property, and it works for your own interest. Basically every human agrees with this logic, but somehow "the company is just focused on pleasing shareholders" escapes this.

This is not at all how share ownership works. You don’t have partial title to a corporation by owning shares.

Shareholders functionally own the company. Yeah you can't stroll inside and take a ream of copy paper because you own a few shares, but the company also cannot be sold (ownership transfered) without you getting paid for your slice.

The shareholders, via the board, hold final say over the company, it's direction, and it's alignment...because they own it.

No, and I don't know who keeps teaching you that nonsense.

And what does that mean?

Raid your own assets, cut costs manically so you can have a few splendid quarters with stock buyback bonanza or focus on long term value creation, which a lot of times involves giving at least a passing tought to other stakeholders such as client and employees?

The getting was great for some time for HP shareholders under Fiorina, or GE shareholders under Welch. Lots of them left the sinking ships at the right moment, but I bet that lot of the others left holding the bag, would have preferred having bought AAPL.

This is like asking how many times can a politician can break his word before people vote for the other guy.

It's more like voting for public officials. Shareholders can vote to fire a CEO if they feel he's not acting in their best interests no mattter if that's the case or not.

I'd come at this from a different angle: we still want this to be market system, so we need to make this priced into the market. How can we price this in?

I would try to solve this by making the market structure reflect the underlying difficulty: we have to decide what capacity to produce years in advance, to construct the memory fabs. So this should be a futures market, and a capacity crunch would affect short-term-futures, but leave full term futures at the same price. Because the companies supplying the memory can just construct more capacity to fill those futures at the same cost regardless of the AI demand.

ah yes, adding a futures market to a sector heavily invested in AI certainly won't lead to catastrophic over-speculation that will collapse the industry entire

Well, the best way to solve this problem keeping it a market system is if consumers band together and create a fab that will supply them.

Since almost everybody is a consumer of those companies, I do suggest we reuse the governance system we have that solves other "everybody problems".

the market can't fix this. the problem here is that the consumer market is dwarfed by big buyers. the consumer market is simply less profitable. traditionally when a market is no longer profitable enough for big businesses, it opens the room for new small businesses to step in. but that won't work here unless someone finds a way to make small fabs profitable.

I buried the lede in my suggestion. I was saying that a future would give enough time to build or expand the fab in order to fill it. This means the company can fill an arbitrarily large number of orders - both consumers and big players - because it will just build the capacity to meet it.

I think the epic mistake was made by investors and executives who bought tales about imminent super-intelligence about to displace millions of knowledge workers from entire industries replacing them with AI datacentres.

These people are the main reason why AI companies have unlimited funding, and can afford to buy global RAM supply for years in the future despite their expenses exceed revenue by billions.

The main tool to fix this is to forbid companies to sell below cost price. It is part of antitrust law.

antitrust law can be a great tool if the government actually uses it for enforcement, which it hasn’t been because it causes parties to lose elections.

Which is weird because how is "making a pile of money of billions of dollars to put millions of people out of a job" not worth an antitrust case?

You can short them and make a lot of money (to buy RAM with?) if you feel this way and are correct.

Can I? Neither OpenAI nor Anthropic are publicly traded.

No?

Shorting doesn’t only require you to be right. It requires perfectly timing when the market will realize you’re right.

You can buy long term put options.

That still requires perfect timing. Getting the timing right on a long-term contract is even harder than with a short-term contract!

How does buying long term put options require perfect timing? The whole point of a long term put option is that you only have to be right at some point between when you buy it and when it expires.

No, put options suffer from time decay and IV crush. A $1,000 MU put for December 2027 was at about $200 today. So if Micron dropped tomorrow, you'd probably start making a bit of money, although the delta is only -0.32. But if you held all the way to December 2027, Micron would then have to drop all the way to $800 before your position is profitable.

When and how that transition happens is subject to a number of complex factors, and it's not even necessarily the case that incremental drops in the stock will produce incremental gains for your put option.

This is a really bizare argument for anyone who actually knows about options and trades them. If your thesis is that RAM is in a massive bubble and Micron is going to crash when it bursts, you don't express that thesis by buying a put struck around Micron's current bubble price. The fact that you chose a $1000 strike as your example is weird because that's basically the most expensive way to make the argument you're supposedly making.

"IV crush" is an especially strange objection in this context. IV crush matters when you buy options at elevated implied volatility and that volatility collapses. If Micron suddenly drops hundreds of dollars because the alleged bubble is bursting then the implied volatility would sharply rise, which makes your put more valuable, not less. Invoking "IV crush" here mostly makes it sound like you've heard the terminology without thinking through how it actually applies to the scenario you're describing.

If you genuinely think Micron is going to collapse sometime over the next two or three years because this entire RAM shortage is an overhyped bubble, then the obvious trade is to buy puts around where you think the stock should return to once that bubble disappears. Micron wasn't remotely a $1000 stock before this run. We can be generous and use a $300 strike since even though that's still 100% higher than Micron's price prior to this run-up, it gets the point across.

A long dated $300 put is currently around $7 per share, so one contract costs roughly $700. If Micron eventually falls to $200, that contract is worth $10000 at expiry. At $100, it's worth $20000. If the crash happens well before expiry, it can be worth even more than its intrinsic value because there's still time value left.

If you're claiming to be certain that a gigantic bubble is going to burst and wipe hundreds of dollars off the stock price, there are long dated far out of the money puts specifically capable of expressing that position. Pointing at an expensive $1000 strike put and saying "look, options are complicated" is just a weird or rather superficial misunderstanding of some financial concepts.

None of that helps you get memory now. You're not going to see your payoff for 2-3 years or whenever the bubble bursts. At which point the bubble has burst and you can simply buy ram at a normal price again. And the thesis of this discussion is that we can't buy memory at a reasonable price now, not 3 years from now.

This isn't an abstract discussion about the usefulness of options trading or other hedging strategies. You want to pay for ram today by betting on returns years in the future? Risky play! Hope you can stay solvent.

I personally use options for hedging, which I think is generally the responsible purpose of them.

It's true that you can get something like a directional bet by going far enough out of the money with strong enough conviction never to exit the position early. But this also exposes you to a lot of risk that it might not pay off even though the original idea was correct. Microsoft crashed in 2000, but it never returned to its pre-1998 price, because there was some real value in the dotcom bubble and they were able to capture a disproportionate fraction of it.

Thank you. Very tired of the financially illiterate option dogma I see constantly here.

The point of LEAPS is you don’t have to perfect the timing. You buy far enough out to avoid theta decay, and far enough out of the money to minimize risk.

Regardless of timing, for shorts to pay out requires the market to actually correct itself. You won't be able to get your magical shorts money until the price of ram goes back down anyway. The market will remain irrational longer than you can remain solvent.

The price of RAM does not need to come down in order for a way-out-of-the-money January 2027 put on NVDA to increase in value from its current purchase price.

You're suggesting gambling that Nvidia will start to fall within the next 3 months? That sounds like requiring perfect timing to me.

Ack, typo! I meant January 2029. That’s how far out the options chain goes.

Google (which is diversified more and whose performance is less likely to track AI outcomes closely) aside, the two other members of the AI Big 3 are non-public, so, no, you really can’t.

Not having the money to buy a new computer often means not having the money to put where ones mouth is.

Can't afford thing? Gamble on stock market instead.

Ridiculous argument that already rich people make.

With non-public companies?

You can make a lot of money with shorts if you are correct about when the market will move. If you think that the market is overestimating the real value you have not even half of the puzzle.

The same thing was said 4 years ago about NVIDIA on HN, that it's stock it's outrageously overpriced, given it's $20 bln revenue, that it should have at least 10 times more revenue to justify that stock price, which is fantasy, that there is no plausible way for such demand no matter what you think about GPT-2.

nVidia earning is way above zero by a healthy margin. This was also true 4 years ago. How much their shares should cost is debatable but still, nVidia is obviously a profitable business.

Anthropic net loss in 2025 was $42 bln, OpenAI $38.5 bln. Both are spending enormous amounts with no obvious path to profitability.

The market can remain irrational far longer than you can stay solvent.

both of them

memory companies could have attempted to protect consumers, at least a little, but the AI money machine goes brrrr

> How should the memory companies have acted differently?

Well if your thesis is that they should have acted differently, then we should blame the laissez-faire capitalists.

> How should the memory companies have acted differently?

Same way nVidia did through the crypto insanity - make sure they're supplying enough to the consumer market so it doesn't get completely destroyed and pulls down the other parts of the consumer market they're reliant for long term success.

> Should we blame this on memory companies or the AI companies bidding for memory?

Blame doesn't change the outcomes, neither does it improve the negative consequences. Think in terms of "what does destruction of our consumer market mean for my prosperity?" not "oh, how do defend poor companies again?"

Both are to blame.

An aside, this is a poorly-structured article. It's mostly screenshots of citations from other articles with no alt or any other way to actually search through what they're citing.

I gave up on the article and watched the video

Do we really need to obsess so hard on citations here? I mean what further proof does one need from the retail price of electronics lately

People have the option of just not buying stuff. I sold my Tesla in 2021 for a stupid price, drove a beater for two years, and bought another new car a couple years later. Now, certainly not everyone has that luxury, but this is computers, not real estate. Prices will crash.

Way to miss the whole point of the article and fail to understand the point. Do you think if significant part of US industry goes bankrupt because they can't source parts for their products, work machines and consumers disappear... you'll still have luxury of running around in a Tesla?

I hope so. I feel so, so, so terribly guilty for not building my wife a computer for her in 2023. She is rocking a 1080ti, and I really wish I had at least upgraded her system, but now I just straight cannot afford to even consider it, given the price of rent, food, gas, energy, all on top of the actual hardware prices.

And I am a SWE.I am not making bad money. I can't imagine what others are going through.

I was so lucky to buy a high-end miniPC to replace my home PC for about $1,500 USD in 2025. The same model now sells for more than $8,000 USD, without disk or RAM. Triple that if you match my original disk and RAM buy. Everything got incredibly expensive, not only storage and RAM.

>People have the option of just not buying stuff.

Unless you know, your main and only PC/notebook just died and need a replacement ASAP, they you don't really have an option to not buy. And no, the used market (where I live) is just as fucked, proportionally reflecting the retail gouging, with people wanting quite a lot of cash for tower PCs and notebooks from the Pentium 4 - Core 2 Duo era.

> Prices will crash.

Does your crystal ball also say when exactly? If my laptop broke, then I need a replacement now in the overpriced market, not in X years when prices will crash.

If there were such a crystal ball, the same market doing the gouging would be pricing it in already ;) does suck that "wait and see" is the optimal answer to the average consumer but I guess that's the capitalist hellscape we have wrought

> Does your crystal ball also say when exactly?

last news I heard was end of 2027, when several new production lines from existing producers start operations

If this goes on long enough the prices crashing won't matter because the manufacturers of all the other PC hardware will be gone.

I think we're seeing the end of the PC as we know it, personally.

I think this is the goal. They too powerful for the plebs, enable too many things. Like thinking and learning. Can’t have that.

/s if you need it

I think it's more likely the industry would rather rent us our compute and storage than let us own it ourselves.

We can have our Raspberry Pis and our ESP32s, but meaningful amounts of compute and especially storage will be rental-only.

Requiring proof-of-humanity using device-bound cryptographic attestations (which the "age verification" camp will rally behind) will insure the toy computers we are allowed to own won't be able to conduct meaningful online discourse. Only phones and other locked-down platforms will be trusted to make the attestations necessary to interact with banks, merchants, and governments.

Edit (now that I'm not on mobile):

I think storage ownership, more than RAM or compute, is the cornerstone of digital sovereignty. Big tech will be happy to let us store our data on their servers for a fraction of the cost of self-hosting, so long as we let them train their models on our data. Any storage, be it self-hosted or rented, where the data is inaccessible for model training, mass surveillance, or censorship will command top dollar.

It'll be just like "dumb TVs" going extinct. "Dumb storage" will be impossible to get for any reasonable cost for consumers.

They're coming for business computing too, BTW, but consumers are the low-hanging fruit.

The AI companies must be regulated. They are already destroying the world and the economy before they can even make an attempt at destroying humanity.

Either AI will get cheap enough and blow up and destroy the economy by eating everyone's lunch and killing off sectors left and right. Or it will become an uncontrolable weapon destroying the internet and killing off people on the battlefield. Or it will tank the economy because there may not be a way to monopolize it making the billions of investments moot leading them to their only leverage of hoarding up all the resources pricing out the competition but also destroying the industry. And maybe all of those at once.

Yes, but zoom out more. Wealth inequality and the k-shaped economy are the real culprit.

When a few people have so much wealth that they are no longer price-sensitive, they bid up the price of everything and anything of value be it stocks, real estate, computer hardware, fine arts, sports teams, etc.

The result is that a business which tries to make quality products at reasonable prices will fail. They aren’t luxurious enough for the people with money. They aren’t cheap enough for the people without. Customers in the middle hardly exist. Any valuable good that is genuinely scarce will inevitably become a luxury.

exactly this. and this is why, in the long run, we not only need to eliminate poverty, but also extreme wealth.

Building a gaming PC in the spring of 2025 was probably one of the luckiest things I've ever had happen. 32G DDR5 for 90 bucks, 4TB drive for about 200 bucks. Funny thing is I held off upgrading my GPU to wait for the price to come down from the crypto rush :)

AI needs to die so we can buy electronics again. This is one of the top reasons why nobody likes it (among many other reasons)

Could this be the opening China needs to get their foot in the door? This feels short sighted.

yeah CMXT is likely to come online in the not too distant future

All(?) ASUS mainboards got a week ago a new BIOS:

> Enhanced memory performance, system stability, and compatibility with CXMT memory chips for improved low-latency operation.

A year ago I'd hardly know what CXMT is.

This is how prices crash.

A year ago CXMT was sanctioned by US

This comes at a perfect time. The public doesn't need computers, they can just use their phones.

If the consumer had access to this RAM, they might all just run local or semi-local AI. It's important to outbid them so you can rent AI to them, and extract money from them in a million other ways while they use it.

Make RAM half the price it was before and you'd still have very few people trying to do local AI on it because it's just so damn slow for the task. Having 12 channels of DDR5 in an Epyc system with NVMe storage is still one of the slowest ways I can run LLMs locally.

Funny, I'm running local LLMs in a modest iMac M4, they are slow indeed but not utterly slow. A dedicated system should be way faster I'd guess.

The M4 (soldered wide LPDDR5X + unified architecture + GPU with neural cores) is also closer in design to a dedicated GPU than an Epyc server with DDR5 or the components in the article.

But yes, a dedicated consumer GPU can still typically outpace the M4 quite well (if things fit in VRAM) and both will have their socks blown clean off by a hyperscaler GPU cluster. For some hard numbers I can run a ~24 GB model on my 5090 (about as fast as you can get on a single consumer class device) about 3x-4x faster than on my M4 mini and I'd still consider that pretty slow to running models 10x the size in the cloud.

I do think that MoEs change the dynamics a bit.

No one is running cpu-only inference anymore. Deepseek flash / Qwen flash next et al only need ~12-24 gb of VRAM for the active experts, so anyone with a decent gpu + lots of RAM + server cpu can run them at okay speeds.

Or one can also run Strix Halo / DGX spark / Apple. They handle MoEs well and use normal (not HBM) ram.

some benchmarks from locallama:

Deepseek V4: "~25t/s decode at full quant, no speculative decoding, 2x3090 (only one being used for this model) + 9684x w/ 12 channel ddr5 4800, latest llama.cpp"

"Getting about 300 tk/sec pp and 23 tk/sec decode on Mac M3 Ultra 256 GB. Using original full precision model weights."

Qwen-Flash-Next: https://www.reddit.com/r/LocalLLaMA/comments/1wom3fe/qwen_38...

https://www.reddit.com/r/LocalLLaMA/comments/1vcaztx/what_sp...

Did you dodge the phone price increase somehow? Phones also need RAM (and ambitions of running local models)

Same for small business or any small buyer.

nvidia investing in every aspect of the hype cycle is terrifying. as an ai skeptic i almost don’t want the bubble to burst anymore, i don’t know if the economy can recover at all. perhaps a new economic paradigm will emerge, but if so, the transition is going to be rough.

The economy always recovers because the value in society is create by people existing and wanting things. The people won't stop existing or wanting things and eventually they just will believe something new is valuable and the economy will recover and grow. Because nothing material was lost just numbers in the spreadsheet. The recovery will be rough though your right about that.

> The DRAM and NAND flash manufacturers at fault for the ongoing RAM, SSD, and GPU price increases

Yes, it's the manufacturers fault, not the unbelievable market demand.

We are all Capitalists, until the Market comes after the stuff we love.

> We are all Capitalists, until the Market comes after the stuff we love.

Anyone with half a brain isn't a "Capitalist" (with a big C, like in your example) which is why every single prosperous nation (including USA) regulates markets to avoid destruction of their prosperity and society.

Colloquial "capitalism" today is just cronyism that in no way resembles the capitalism that Adam Smith wrote about. We really should move towards Rhine Capitalism, the only system that has stood the test of time and truly benefits everyone.

Adam Smith wrote about the invisible hand and let the free market run. What ended up happening?

He also wrote about the problem with monopolies, but that was later on in his book so we forgot to do that part so the market isn't properly free.

He only used that metaphor a few times, and he did not attribute the sort of mystical power to the metaphor that modern neoliberal economists do. He never proposed the modern extreme interpretation of the concept, nor did he suggest that government should release all control over the economy.

Marx treated Smith rather favorably, and credits him for first understanding that labor in general is what creates value. Smith is best understood as an early pioneer in understanding political economy and trade. He likely wouldn’t recognize or understand the capitalism of today (nor would Marx).

It turns out the hand is invisible because most of the time, it's not really there.

Adam Smith was writing in the 1770s. At the time, only ~5% of the economy was capitalist. The rest was feudal, where lords owned the land and extracted rents.

Going from a feudal system to a capitalist system was great. All of a sudden people got payed wages, the creation of capital (productive goods) was incentivized. It created a much more dynamic economy.

What we are seeing now is a transition from capitalism to technofeudalism. You no longer buy things, you rent them from corporations that have much more power than you.

Additionally, the giant platforms (youtube, facebook, et al), are like a feudal lord's lands: people post / create content mostly for free, the lord extracts rents from the society (ads, etc). The many have no power, the lords get to organize their platforms however they want, prices rise because of the advertising spend, so even if you don't use facebook you bear the burden.

The entire point of anti-trust is to ensure a capitalist system doesn't transition back into a feudal one.

>We are all Capitalists

1/ speak for yourself

2/ where is your capital and your means of production? Your machines? Your factories? Your raw materials, your tools? How long do you survive tomorrow when you quit your job and you have no other income?

You're not a capitalist. You're just a consumer for them to suck dry. The faster you learn it, the better off you will be.

You are right. People are misusing "capitalist" to mean someone who favours a capitalist system, where as it actually means someone who posses capital; someone whose relies on possession of assets rather than earned income.

In the past people just starved to death when someone needed all the resources for their thing. Sounds like improvement.

> Memory companies

Someone misspelled "Altman", https://www.mooreslawisdead.com/post/sam-altman-s-dirty-dram...

Someone misspelled let's tax ai companies until we get back to balance.

just stop buying. you people buy way too much crap anyway

Yeah, great. Let me tell the hospital whose MRI needs maintenance to just not buy whatever it needs. Wome will die but that's a sacrifice I'm willing to make, right?

Consumer market is not you and your console only.

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