This has played out time and time again during every other supply-side shock. Once prices go up, they don't come back down.
For the current DRAM situation, I can almost promise we'll never see $60-$90 RAM again. Maybe, 32GB won't cost you $500 eventually, but it'll cost you $250-$350 instead of $500. If the market can bear it, why would anyone get into a price war that's just a race to the bottom where no one wins?
What do you mean?
2011: 2 TB HDD for $79.99 ($0.0000400 / MB).
2012: 2 TB HDD for $157.27 ($0.0000786 / MB).
2014: 4 TB HDD for $109 ($0.0000367 / MB)
2024: 8 TB HDD for $111.98 ($0.0000140 / MB)
https://web.archive.org/web/20250318110739/http://jcmit.net/...
https://www.thecpuguide.com/pc/disk-price-history-hdd-ssd-pr...
That doesn't disprove my point though. Prices are still higher as a baseline than before the supply side shock. Prices raise to a "new normal" and consumers adapt, removing pressure to lower back down to pre-shock levels.
wholesale egg prices have actually plummeted, yet retail prices have only drifted slowly downward incrementally, and have not reached the previous baseline. Its asymmetric price transmission, and its a documented economic phenomenon. "Prices go up like rockets, and fall like feathers"
Looking at the chart, it seems to be the case that every sharp increase in price has been followed by a sharp decrease in price.
Just for fun, here's the same chart adjusted for inflation: https://fred.stlouisfed.org/graph/?g=1WXWZ
Prices will continue to go up.
Though that’s kind of cheating considering it’s basically a monopoly at this point
If that bubble pops like it seems to be threatening to do memory prices could drop back to their old levels give or take some sticky inflation.
Can you explain this chart?
https://ourworldindata.org/grapher/historical-cost-of-comput...
You need to provide a compelling argument why it is different this time.
The counter-argument is pretty basic:
RAM companies are currently selling as much as they can at high prices. This leads to investment in building new factories.
At some point the supply of new RAM will match the demand for it. When that occurs companies can increase profit by cutting prices to gain market share.
What's more, all the RAM companies have slightly different estimates of what the demand is. This leads to different levels of investment in new factories. Some will over-invest in new factories and the only way they can make their investment back is by increasing market share.
The final factor is new entries in the market. Chinese RAM manufactures can already produce DDR4 RAM (but only small amounts of DDR5). They can both increase supply of DDR4 RAM and are aggressively chasing DDR5 capabilities.
TL;DR: The profit motive is too strong for companies to artificially keep prices high once demand drops.
Then it's just the same capacity, but without huge buyers. Still the prices won't come down...
If they built new factories now, they would just lose money to an investment that would not pay off.
(Of course under the premise that AI collapses or is saturated at some point. If that doesn't hold true then ex falso quodlibet!)
Because they have orderbooks 2 years (at least) into the future so know what demand is there - and they are demanding deposits for future orders.
It's easy to see if this is true. Look for news on new factories opening:
Micron: https://finance.yahoo.com/technology/ai/articles/micron-mu-p...
Samsung: https://www.kedglobal.com/korean-chipmakers/newsView/ked2026... (note this is doubling Samsung's memory production)
SK Hynix: https://finance.yahoo.com/sectors/technology/articles/sk-hyn...
How long does building a factory take?
If the demand grows with their production they can sell more units at the same price.
If demand goes down by a certain percentage, they sell more for less + they lost the investment into new factories.
It all is based on IFs and about personality, about "optimism" vs "pessimism"
I for one think that the AI bubble will "burst" at some point and I think that then there will be a lot of hardware to go by.
Time will be the judge of my abilities to replace the Oracle of Delphi.
Suppose you have a warehouse full of widgets. You bought them them for $450 each, and sell them for $500. You're really happy with this profit, and you can just keep selling them at $500...forever, right?
But then, I get my own warehouse and fill it with widgets that I bought at $400 each because I entered under better market conditions. And I really want to sell these widgets -- they aren't making me any money when they just sit there taking up space and burning rent.
So I price these widgets at $475, to attract customers. It works; the widgets are flying off the shelves. And they're being purchased by people who used to be your customers, and I'm making even more money per-unit than you are.
What's your next move? Do you want to keep losing customers to me, or do you want to adjust your price to be more competitive?
A new entrant isn't guaranteed to now price at $475. They'll see the incumbent being successful at $500. Now they price at $499 rather than trigger a destructive price war. Companies collude on this quite frequently. When everyone keeps their prices high, all get to enjoy the big margins.
Outside of that, ok so you have a warehouse full of widgets you need to move fast. So you undercut, and sell out. If demand is still bigger than your supply, you're now out of capacity, customers are going back to buying for $500 from your competitor. That means you've mispriced your limited inventory, so now you raise your prices up to closer to $500 because it helps you control your capacity, and also you know the market can clearly bear it.
Anyway, those are obviously overly simplified scenarios prices rarely fall down dramatically because of tacit collusion. Its asymmetric price transmission ("Prices go up like rockets, but fall like feathers")
Retailers are mostly free to offer things at whatever prices they want. But the market has more power than you may think to correct it.
> They make about $20 per user annually and, assuming an active TV service life of five years, yield about $100 over the lifecycle of a main viewing room TV.
https://omdia.tech.informa.com/om030986/in-the-smart-tv-indu...
Look at monitor price drops (comparing the same tech). Same price drop curve.
You can also look at computer monitors (which don’t have advertising and spyware) and see an enormous price drop.
Edit: I found this which estimates you can make about $100 in ads and data collection over the lifetime of a TV https://omdia.tech.informa.com/om030986/in-the-smart-tv-indu...