alt Hacker NewsThe big news story this cycle is that OpenAI secured two large contracts with two separate DRAM companies at the same time, carefully timing the deals so that neither DRAM company knew about the deal with other. Had either company known about the true demand from OpenAI they would have charged a lot more, but each only saw about half.
In other words, there was no collusion between the DRAM manufacturers. They were both caught off guard and left a lot of money on the table.
The current price increase is the result of the huge demand spike. Production takes years to ramp up, but demand has spiked rapidly. Supply and demand.
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One difference that strikes me with the .com bubble is that I don't remember the .com companies having sustained multi-billions losses / cash burn. They were not profitable but this is quite different. If (or when) the music stops, won't OpenAI go bust immediately? That's quite a counterparty risk those companies are taking.
And when demand eventually crashes, all the new production capacity is left without buyers to sell to, so maybe it does not even make sense to create it.
You have to wonder whether they realy intend to use the ram, or they just spotted an opportunity to corner an essential market and choke/extort in resale.
They are not going to repeat the Windows 8 debacle again are they? (Over producing in response to perceived demand only to not get the demand when they are ready to sell) Didn't that bankrupt some memory manufacturers?
To those who haven't heard how colossal the size of OpenAIs contracts are.
900,000 wafers monthly. Tom's hardware estimates that is equal to 40% of global dram production capacity.
https://www.tomshardware.com/pc-components/dram/openais-star...