If I understand this comment correctly, it's saying that Micron and the others would be better off selling RAM at below the price they could get, in order to keep competitors from deciding to enter the market.

Such collusion might well be a violation of anti-trust law, but in any case, it wouldn't work. If they decide to sell at below-market price, they must (by definition) be preventing some customers from buying by some non-price mechanism (eg, only selling to companies run by other members of the CEO's family). Potential competitors would then see an opportunity to sell to these excluded customers.

The argument I've seen about why someone else doesn't start selling RAM is it takes a year or two to ramp production. But here's a CEO saying he's going to make sure prices stay high enough, long enough that you can spin up a competitor

The Big 3 (Samsung, Hynix, Micron) have been playing this game for 30+ years. There used to be many more DRAM companies but most of them went bankrupt when DRAM was cheap because the big 3 will intentionally drive the price down to bankrupt the competition. Now that they have a tri-opoly, they're milking the profits. New competition will emerge but they don't have the capital of the big 3 so they likely won't survive the next DRAM winter.

They are not prioritizing extremely high prices. TSMC has a similar waiting list, so does ever other tool manufacturer. Memory capacity is being increased approximately as fast as it can be.

> I would be very worried if I created any opening (even on the very long term) for competition to justify itself being built up to meet demand

The interesting question is, why aren't other companies looking at this from the other direction?

For example, AMD now has a trillion dollar market cap. They make consumer and enterprise GPUs with integrated GDDR/HBM and have got to be looking at APUs that do the same going forward. They don't benefit from the price of their complement being high. They sold off their logic fabs at a point when they were half dead and had fallen behind, but you don't have to be TSMC to make DRAM. A large DRAM fab costs around $25 billion, i.e. 2.5% of their market cap. Why aren't they building two of them? Best case supply is still tight when it opens and they have a huge win, worst case the market has crashed by then but they still have a productive asset worth several billion dollars and paid for with cash from the time when it was highly available to them. And since they have internal demand, the amount the price would have to crash before the investment is a net loss is significantly more than it is for other companies.

Likewise Apple, Google, Amazon, etc. who have even more capital. What are these companies doing? They have the option to spend an amount of money they can easily afford to write off if it goes south, to get a huge win if supply continues to be tight.

This is a bit like complaining that toilet paper manufacturers did not dramatically scale up production in the first months of COVID-19. Had they invested in additional factories and production lines, they would be now holding the bag.

The memory market isn't all that different, except it's even more capital-intensive. Roughly half of HN is convinced that the current AI boom is unsustainable even though the technology itself is amazing. So why should memory makers take the bullet here?

Ultimately, as much as this sucks, having an inexpensive gaming rig is not a human right. People with money decided that all that money should go to AI, and we have to suffer through the downstream consequences of that.

I think neither CEOs nor boards of the public companies care. They want to maximize their paychecks and bonuses in the short term before they leave to other companies.

Micron has several fabs and fab upgrades coming online or under construction right now. An expansion in Boise and Virginia. Plus a huge megafab project in New York that's going to be the biggest in the world AFAIK.

All the DRAM makers have new fabs or plant expansions underway right now - indicating they believe the demand increase to be sustainable.

How much of this issue is self-inflicted? Micron is building a massive fab in Syracuse. They've spent like 4 years seeking approval, lobbying politicians, doing BS "environmental impact studies" (which are mostly just rent seeking and political handouts). They finally started building, but if they had just been able to put shovel in the ground we would already have this fab be producing memory.

Oil is sky high, a recession might be near. Also, optimizations (like the current KV one) can yield a drastic reduction in RAM needs. It's a risk.

If I was trying so stabilize (just stabilize) funding for humongously expensive fabs: I'd be giving markets reassurances that my business will continue to be high margins for the mid-future.

This reminds me of an economist joke.

3 businessmen are in jail, they ask each other what they are there for.

Businessman 1: "I made my prices higher than my competitors and was jailed for price gouging!"

Businessman 2: "I made my prices lower than my competitors and was jailed for price dumping!"

Businessman 3: "I made my prices the same as my competitors and was jailed for price collusion!"

What would the alternative be? If you just kept prices lower, you'd have shortages. There would still be the same motivation—if not more!—to spin up competing production.

And to build up a large amount of new capacity yourself, you need to invest a massive amount of capital into something relatively risky.

There is 3 companies that make memory - they ALL want to keep memory prices high for as long as possible.

Well it would depend how much higher prices and for how long until competition could arrive. Any business that could sell stuff at 10x prices for 10 years would make enough extra money that it would be worth it even if they knew bankruptcy would happen in year 11.

This is a very difficult supply chain in which to compete, even nation states mostly can’t. The machines that build the chips are really hard to come by and even China is just hoping they can start to make them in 2030 and they likely cannot. Meanwhile demand is accelerating.

History does not drop financial gifts like this in one industry’s lap often. From a sheer numbers standpoint, what they’re doing absolutely is the only logical choice.

> prioritized extremely high prices

Wouldn’t shortages produce basically the same incentive structure regarding competition or national security requirements? Like the demand for RAM is actually way up, so if they don’t raise prices enough the inventory will just quickly become depleted.

Whether they did this or not, I think the exponential demand for memory would still be there. So there would still be conditions that encourage new competing manufacturers.

Building capacity with looming bust around the corner has its own drawbacks. Damned if you do damned if you dont situation for them.

He's not prioritizing high prices. Demand is exploding and supply can't keep up. Everybody in the world that can is already trying to ramp up production.

I honestly expected that there would be more competition entering the memory market by now. I know it takes a lot of time and capital, but Europe has plenty of semiconductor know-how with ASML and ARM, and a strong desire to be less dependent on other parts of the world, so investment in a European semiconductor industry would make a lot of sense to me. And these high memory prices sound like the perfect opportunity.

First line of your post was enough.

Or it just be that demand really does seriously exceed supply. It's not fast to bring supply online, it's costly and risky to do so if the demand will not be sustained for a long time. IMO, there's no conspiracy. I have been telling folks for the last 3 years that the price of AI compute is not coming down for a good 5+ years. Possibly 10 years too. Every human in the world will need AI, the same way we all got on the internet and then mobile. However, outside of humans, for every human there's going to be ten or hundreds of agents also all demanding compute.

If someone enters as competitor because of high prices/profit, they'll want for them to stay that way. It won't make it better for the consumer if the supply is constricted in such a way.

I think this is a point where governments should intervene and perhaps start fabs that would produce RAM at cost for working class and SMEs to use.

> because I prioritized extremely high prices for a few years that might have the effect of changing the arithmetic for potential competitors that wouldn't have done it before.

Or maybe they believe the demand is not sustainable, and they don't want to fund $10B ghost fabs.

> extremely high prices for a few years that might have the effect of changing the arithmetic for potential competitors that wouldn't have done it before.

The big problem is, competitors need money. Say a fab costs 10 billion $ a piece, that is a big chunk of investment needed that absolutely needs to be paid back because even a big bank consortium will have a hard time shouldering this kind of single risk.

Now, the fab needs around three years to build... which means if there suddenly comes a huge amount of new supply or alternatively, the AI bubble pops, prices will crash, the companies won't be able to service the loans, and the banks will be sitting on a very expensive piece of real estate and machinery.

Particularly in semiconductors, this "bust and boom" cycle, "pork cycle" or however you want to call it, is very very well known. Banks and other investors have been through that one more often than you can count, that's the reason why there are so few producers left after all.

The only place I think can reasonably pull it off to start a competitor is China because their economic policy is focusing on decades in the future and the CCP is willing (and able) to shoulder the risk - however China can't acquire EUV machinery due to sanctions and will likely take a few years until they can pull it off on their own, by the time TSMC et al will already be at the next generation.

Not enough people are prepared if this isn't a bubble. I think he's betting on this being a bubble which would imply building more supply would be a mistake, because they'll end up with a factory and no more customers.

It's starting to look more and more like we will always need more memory.