alt Hacker NewsExcept that's nonsense, any company that could make more ram absolutely would because the damand is insane. There is no universe or economy where it would be profitable to artificially lower your production to keep prices high when you can just make more ram.
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brainwad • today at 11:50 AM
Until making more means huge capex building extra factories. Semiconductors is famously a boom and bust industry, building too much in the boom will kill your company.
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It depends on how much inelastic demand there is. For example:
Let's say there are 10 companies that need 1 GB of RAM each in a life-or-death scenario. They would be willing to pay $100,000,000 per GB to get 1 GB of RAM.
At the same time, there are 90 more companies that need 1 GB of RAM each to make certain quarterly targets. They are willing to pay $10,000 per GB to get 1 GB of RAM.
If you make 9 GB of RAM, you can sell it for $900,000,000. If you make 99 GB of RAM, you can only sell it for $990,000, because the 10 life-or-death companies only need to bid high enough to push out a quarterly-target company.
It's a bit of a contrived example, but it shows you how restricting supply can boost total revenue if there is a segment of the market that has inelastic demand. (this is why medicine pricing has to be regulated - in the medical industry, there are lots of inelastic demand scenarios that can lead to predatory pricing)