alt Hacker NewsI wonder if supply chain constraints currently represent an inherent scepticism of manufacturers that demand will last. It feels to me like a side effect of the self-dealing / incestuous financing that is going on is that manufacturers are not willing to bet on it all materialising and therefore are not scaling up capacity nearly as much as they would if they thought it was certain.
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It's exactly this - the memory market has gone through exactly this boom/bust since I can remember - there was a great RAM price stabilization around Windows 95 (price stayed the same or went up per megabyte over years) and then a glut of oversupply.
Counterpoint: I drove past TSMC in Surprise AZ and I counted at least 18 large construction cranes on that single site.
Building new fabs is a very different bet from selling into a temporary shortage: you're committing billions based on what demand will look like several years from now
It's funny you mention that because this exact same issue has come up in war in Iran and the closure of the Strait of Hormuz.
What a producer will do now is hedge their risk. They do this by forward-selling their product, in this case oil from an oil well. The peak for spot prices, depending on the particular flavor of oil, peaked at >$170/barrel while future prices (which are the prices we see) didn't really get above $100 while long-dated futures were significantly lower, rarely exceeding $70/barrel by much.
Now this is a problem because there's no incentive to invest in extra production when you can only sell it at $70/barrel, despite the spot price being up to $100/barrel higher. So new wells and new production in general is down despite the supply disruptions and high prices.
I imagine RAM is in a similar position. It takes a long time to bring on more supply and suppliers don't expect those prices to last. Likely a large amount of new supply will probably cause the next crash in the boom-bust cycle.
But there's another problem with all this. A lot of existing manufacturers are switching from DDR5 (and soon DDR6) to HBM because it's way more profitable and there's seemingly insatiable demand for high end GPUs. I expect that in the short-to-medium term we're both going to see no increase in supply and the DDR prices are going to keep rising to the point where in a year we'll probably look back on current prices fondly
All I can say is I'm happy I upgraded my laptop to 64GB (for $200) and my PC to 64GB (also for $200) last year. .
Manufacturers know demand will last to the extent that big companies are willing to commit to purchases over a given period of time, but supply today is still constrained by capacity built for the pre LLM era. The 500 billion put in by Samsung/SKHynix will increase modern DRAM by roughly 50% but it wont be fully online until 2030.
9-Aug-2026: SK Hynix to invest $38 billion building new memory chip plants as demand soars [1]
"In the AI era, technological competitiveness alone is not enough and the ability to supply the required volume at the exact moment customers need it is the ultimate competitive advantage," SK Hynix said in a press release. "We reached this investment decision after a thorough review of market demand."
[1] https://www.msn.com/en-us/money/general/sk-hynix-to-invest-3...