alt Hacker NewsI don't understand the distinction you are making. If you have a massive excess of demand ready to pay any price, and a limited supply, of course the sellers will take advantage, that's how any market works. They can do that because of the lack of supply.
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.
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> I don't understand the distinction you are making.
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
"that the limited supply goes to the buyer who need it the most" - I would say that the limited supply goes to the buyer who can afford to pay higher than others. Someone may need the memory more, but may not have the deeper pockets to pay for it like NVidia and Apple might.
>that the limited supply goes to the buyer who need it the most
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.
"limited supply goes to the buyer who need it the most"
No? It goes to the buyer with the deepest pockets.
> I don't understand the distinction you are making.
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.
>I don't understand the distinction you are making. If you have a massive excess of demand ready to pay any price, and a limited supply, of course the sellers will take advantage, that's how any market works. They can do that because of the lack of supply.
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.
They fixed prices in the past and now they have an easy cover, like egg producers had with eggs after the cull a few years ago
I'm sure there will be no large scale leverage campaign against a country who is enabling profiteering at this level. No defense agreements removed, troops removed from the country, or large tariff increases around failed investments.
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.
Byron the bulb checking in.
The distinction is that on the latter case you have a cartel that decided to fix prices and fuck everyone in the ass.
Google: Cartel
In an absolutely free market? sure. But we don't live in an absolutely free market, the memory manufacturers have refused to budge on creating new fabs until recently out of caution and to be able to create a demand excess.
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 have a massive excess of demand ready to pay any price, and a limited supply, of course the sellers will take advantage, that's how any market work
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"