alt Hacker NewsHere’s the thing, what if memory manufacturers take this opportunity to collude and basically never reduce the price of memory below the current levels since it’s too hard for a new competitor to just rise up and undercut them? Everything I hear about is how hard and risky it is to spin up a new fab.
And by doing this, they ensure local LLMs never become feasible for the vast majority of people and AI companies solidify subscriptions forever.
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If the collude to say make the price $1000 for a component that costs them $100(including opportunity costs), then either a new company or a greedy company in the collusion can make their price secretly $900 and get massively more profit.
Right now their opportunity cost is too high.
> risky it is to spin up a new fab
You don't need a new fab. You can build memory in 20 years old fab.
Then China will come and eat their lunch. I for one will only buy Chinese RAM from now on, no matter the prices.
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Keeping prices at this level is precisely how one or more competitor will rise up. Making memory isn’t super hard. That’s why it is a commodity. The problem with the memory market is that up and down cycles have bankrupted the vast majority of players in the past. Now we only have 3 players left except for a few smaller ones in China.
The reason memory prices can stay high for years in this mega cycle is because the 3 players will be very cautious on overbuilding. They’d rather under build, make great profit (not maximum) and reduce the risk of going bust if this suddenly ends.
Same for TSMC in chips.
Great opportunity for Chinese companies though. This shortage is exactly what Chinese companies need to scale.