That one was caused by manipulation by politicians, not market forces. Micron started a price war with Japanese memory manufacturers, the Japanese cut prices to compete, Micron sued them for "dumping". The saga ended with the 1986 U.S.–Japan Semiconductor Agreement, which, among other things, created production controls that limited the total dram supply. The level was set based on then current demand, and due to the rapid growth of demand at the time it almost instantly caused a massive global supply deficit.
The agreement also caused the rise of the South Korean memory industry, because the Japanese companies offloaded their now surplus equipment for cheap.
Funny how you then go on to explain it was market _actors_ that drove the politicians to act, but that this is nevertheless totally not an example of market _forces_.
Here it's useful to point out that free markets can't exist without an external force keeping them in check.
But there's another key bottleneck. Even with all the money in the world, getting those machines that etch the RAM could be a multi year ration shop queue. And they're not making those companies every day!
Yes, except no DRAM maker is taking this as a signal to go deep into debt to double or triple capacity. It takes a minimum of 3+ years to dramatically increase capacity and no one expects this inflated demand bubble to last that long. Because they've seen this cycle before, they'll bump next gen capacity up a bit more than planned, maybe 15-25% because the current windfall profits are enough to build a buffer to absorb the hit if that excess capacity comes online in the next DRAM demand crash.
In the meantime, they'll just apologize to everyone for the "market conditions beyond our control" while banking as much of these crazy profits as they possibly can while it lasts. But deep down they remember they were starving just yesterday and know they'll be starving again tomorrow.
I understand why everyone's pissed at the "evil DRAM makers" but I also remember boasting about how I scored some crazy cheap RAM sticks not so long ago. None of us were shedding tears when they were selling at a loss just to survive.
Incorrect. CXMT is taking this as a signal to open new fabs, create new products, develop new silicon manufacturing techniques, and enter the consumer market worldwide (except USA).
Okay, you got me. I was reflecting the prudent way long-term players generally interpret the market. But from time to time external macro-economic and/or geopolitical factors may shift. Those changes may persist over time or eventually swing back like tides. Other times someone thinks they've got a new angle or a new technology (the RDRAM format was a notable attempt). Occasionally, the people who always say "But this time it's different" are lucky enough to actually say it one of the rare times it IS different.
Time will tell if CXMT's gambit will pay off. Even if it doesn't maybe their state sponsors will absorb the losses for other strategic reasons.
This also describes the U.S.A. steel industry. "Heavy state backing" and "not allowed to go bankrupt" often result in particularly terribly-performing industries. If anything, it's notable that China seems to buck that particular trend.
Lately consumers are told capitalism is cheap TVs, phones, and computers while housing, healthcare, education, energy, and food climbed further out of reach. The "bread" part of bread and circuses has shrunk dramatically, "but at least you're getting cheaper circuses" is what they've been saying.
Now you're saying only a heavily state-directed Chinese model is still willing to aggressively finance new fabs and meet demand to provide that? "Capitalism demands we don't expand capacity and don't meet demand' is kinda a tough sell after capitalism has been sold as expanding access. "Consolidation, maximal extraction, shareholder preservation, and AI" isn't going to be a winner. I get it makes business sense and wouldn't be a big deal in the past, but the rapidly changing dynamics hitting nearly every part of daily life across the entire economy feels destabilizing.
We're down to wearing dystopian sci-fi level cheap clothes, can't afford chips/sodas, candy/sweet treats have been enshitified to no longer be fulfilling, we can't afford to call an ambulance. Media is polarizing instead of mass media calming. Heck thrift stores are becoming unaffordable to the low end as the middle now resorts to them.
"You don't have the foods you are used to, decent clothing, shelter, health, or social cohesion but you have a sweet 6 year old phone and flock cameras keeping you safe". Jesus it feels... not good. Even cyberpunk dystopia understood you needed to at least jack people into something.
Everyone knows the commodity market (outside HBM) is going to be margin crushed within a few years… by CXMT, demand swings, and so on.
So nobody cares to fully meet the demand today. They are perfectly happy telling customers (those not willing to sign a 10 year contract paying up front at least) to go pound sand.
They don’t even need an OPEC like arrangement. They are effectively perfectly coordinated already in dismissing customers.
China is trying to be vertically integrated, completely independent of outside influences and own the future supply/means of production. Memory and chips are piece of their larger plan. In any event, whatever China brings online will be absorbed - imagine a future where people's home computer has 100 to 1000GB of RAM in one variety or another. Folks are going to want better chips and more memory for years to come, supply will be absorbed.
Most analysts think LLMs will elevate the long-term base RAM demand level. I mentioned 15-25% above prior projections without AI, which I think everyone agrees is highly likely. That's actually a lot because it's an overall market number and RAM goes lots of places other than PCs, servers and high-end mobile (depending on how you segment, 25% overall could be in the neighborhood of doubling PC, server, high-end mobile demand).
Above that range analyst estimates diverge. Some are more bullish, and a few are much more bullish. But everyone's error bars get much wider when the numbers go over 30% overall. It's hard to tease out exactly how much of the current demand bubble will persist in the long-run. Clearly, the current market is distorted by short-term dynamics but which part is base demand and which distortion?
How much consumer AI compute will be on-device vs aggregated in load-balanced clouds? How much RAM will that kind of compute require? Will the market find it's more efficient to consolidate around two or three mega-datacenters or will each frontier lab (and geopolitical block) continue drag racing each other to tie-up future RAM (as much to keep it away from competitors as for their own needs). I don't know. I've been watching this game as an interested bystander for several decades and I wouldn't bet too much of my own money on the most bullish estimates.
Even taking bank loans at a 10% rate to pay (maybe even 15%) upfront would still make sense.
Is it fair to conclude that DRAM is basically a commodity that can be specified well enough by a set of parameters?
If so it won’t allow you to get any competitive advantage in your products and thus wouldn’t be a business you want to be in as Apple.
Hell, an 8GB hard drive was unfathomable when I was a kid in the 90s. I remember getting a 30 megabyte drive for our Mac LC.
My childhood best friend and neighbour had the same kind of computer except they only had something like 384K of memory and I tried to convince them their computer was broken when it didn't count up all the way.
Mine had 4K of RAM and an 800 KHz CPU - and I was living in the future, man. No way I could use that much memory. After all I had to type in whatever program I wanted to run every time I turned it on. Then I got a manual audio cassette recorder and thought "Woah, I don't think it gets better than this!"
The same world where a classic Mac came with 128KB of RAM.
We might someday live in a world where entry-level is 256TB of RAM.
If Apple could go back in time 3.5 years and decide to build their own factory, that would put them in a great position today. But deciding to do it now won't increase their supply 3.5 years from now more than just increasing their long-term orders with existing suppliers. Those suppliers will start building new factories based on Apple's increased orders and they'll do it faster and cheaper than Apple can because they don't have to build some factories in the U.S. for political reasons or worry as much about environmental regulation, permitting and ensuring Apple employees in Penang get benefits similar to employees in Cupertino.
You're talking about the "best" things Apple could do with their money, in terms of investment returns, but I think that misses the point that Apple literally can't buy enough memory at any price.
One of the reasons Intel fell behind is that they couldn't give access to their competitors for business reasons, and therefore could never scale as high as TSMC could.
There are many other reasons, but accounting is a huge one. Unless there is a huge ROI or something else we don't otherwise know, I don't see Apple adding such expensive deprecating assets onto their books as chip fabs.
Apple’s not exactly famous for their low pricing on spec upgrades nor competing based on being the price leader…
Personally, I think there's no way memory heavy inference moves on-device (vs cloud) due to the economics, but it's not impossible technology + platforms go that way for currently unforeseeable reasons.
My non-tech friends and family would probably be served perfectly fine by local models today, if they had a working web search tool. Their queries are often “soft” and don’t have an exact answer. My mom and aunt used it to pick a hairstyle, my mom used it to get an image of what a room would look like with particular drapes in it, etc. Stuff I think mid-sized local models like Gemma or smaller Qwens could do without issue. They just don’t have a device that will run them.
Businesses won’t move. They need a huge context so they can stuff a bunch of Confluence pages in it and 300 tools and it needs to read an entire codebase and yada yada. The hardware depreciation and electricity will probably make it a net zero or even cost more than paying for API access.
But maybe that hardware becomes so commoditized that it's not difficult to obtain / stuff in a box.
In that world, a) we are already at or close to having enough memory in local devices to do inference locally, and b) that memory isn't inference-specific and can be utilized for other things. Most devices come with enough memory to do some level of inference, and some come with plenty (eg a gaming desktop probably has 32GB+ of RAM in it).
You aren't going to run Kimi on it, but I think the reality for a lot of consumer inference is that it doesn't need to be. It's going to be a lot of things that are soft, and easily answered by a search API, so the LLM really just needs to be able to skim and summarize. Going a step further, we may even see some kind of hybrid approach where a local OpenRouter kind of thing decides whether the task is soft enough to do locally with models that fit in RAM or if it needs to be farmed out to a PaaS provider.