upvote
Not exactly, I think it's saying that Micron would be better off increasing supply themselves (and thus lowering prices) than waiting for a competitor to come and provide more supply to meet the higher demand.

If there was enough existing competition, that might be the right move, because if they don't increase capacity, a competitor probably would in order to gain more market share. But I think the barrier of entry for making RAM is high enough that Micron can probably get away with keeping supply low (and thus prices high) for at least a few years before a new competitor appears. Assuming demand stays high that long.

reply
They aren't keeping supply low.

They have two massive DRAM fabs (56000 m^2 cleanroom size each) that they started construction on in 2022 and 2023 in Idaho, with production starting in 2027 and 2028.

reply
The point they were stating was that if they kept up the high prices, that leaves room for a low priced competitor, likely from China, to occupy the lower end (and larger) share of the market. Like what BYD did to the EV market everywhere except the US. Or what Chinese mobiles did to the smartphone market. Eventually they become so powerful that they start going upmarket, trying to catch everyone in the higher end segments too. And by the time the Western companies think they can retaliate, too bad, China's got them by the bollocks on raw material.
reply
But the reason that semiconductors are so vulnerable to boom/bust cycles (going back decades) is that takes a very long time to build the fab- you have nothing for years, and then the fab completes and enormous numbers of chips get made. So if you get demand wrong either direction you have problems. Either you flood the market or prices go way up.

I don't think it is possible to beat the fab construction delays. This isn't about things being slow in the US: TSMC took four years to go from site selection to some production at their Fab 22 plant in Taiwan (it is currently only 60% built out, is my understanding). And TSMC is best in the world at getting frontier (logic) semiconductor fabs built, it took them slightly longer (five years) for Fab 21 in Arizona. Logic fabs are not the same as memory fabs, but they are close enough to be a good comparison for timeline.

Basically, unless you started fab construction (specifically to make memory chips) in 2023 you cannot change production for 2027 and 2028. The only thing that will affect prices between now and 2028 is demand, production can't go up because the fabs to make those chips don't exist. If you started now you might get memory chips in 2031, and can you bet 40 billion dollars that the demand will still be there? (A current generation logic fab costs about 20 billion. By 2031 a logic fab will cost about 40 billion. I don't have prices for a current memory fab, but as I understand it they are comparable.)

reply
Which are exactly the two years they are threatening tighter supply.
reply
He's "threatening" tighter supply the same way a weather forecaster "threatens" heavy rain.
reply
Production starts != maxing out capacity of the fab
reply
He's not threatening. Demand is exploding and supply just can't keep up.
reply
Yeah there is no such thing as selling a commodity below its market price on the open market. Someone else will come and arbitrage that away, or it’s not an open market.
reply
Supply is severely limited and there is not really any competition making RAM chips, so it is kind of not a commodity and not a market.

But you are right someone will arbitrage the price, like scalpers selling concert tickets.

reply
Well, that's blatantly false...

A well-known anticompetitive tactic is for a big player with a vast bank account to move into an area and eat losses while waiting for their competitors to starve. Well observed in the 90's movie rental market, so certainly real.

reply
The statement further up should have qualified it as "scarce commodity". Then it is correct.

To successfully perform dumping, you have to have access to excess supply capable of disrupting that market.

reply
You don’t lower your prices on the off chance a competitor might enter the market in the future. You wait until they have invested capital but before they start making profits and are at their most vulnerable.
reply
I don't think that would work. They wouldn't demolish the competitor's factory when it goes bankrupt. Instead the factory, being an asset, gets sold for cheap, and another company gets a shot at competing while having much lower debts. This process could repeat a few times until the debt is low enough to profitability compete.

So if that's the expected outcome, it might be better to prevent competitors from building factories in the first place.

reply
Also why anti-dumping laws exist
reply
Do those solve the problem just outlined?

(Legitimately asking: I don't know the answer ... but based on most US business law my strong suspicion is ... no, they don't.)

reply
No, because they're hardly enforced. China has been blatantly dumping a buttload of products for decades and the U.S. has been asleep at the wheel as it continues to hollow out our domestic manufacturing industries even further.
reply
Silicon Valley and other venture backed enterprises also regularly dump into various markets without consequences.
reply
Are you seriously not aware of the existing history of the memory cartel? https://en.wikipedia.org/wiki/DRAM_industry_price_fixing
reply
There are nicer ways to phrase that.
reply
I think misleading people using confident language about an issue you don't understand is more unkind.

Also I was truly asking if they weren't aware in disbelief, since I assumed it was common knowledge.

reply
Micron started as the outsider busting in during a past RAM crunch. They more than any manufacturer should understand this.
reply
> Such collusion might well be a violation of anti-trust law

The Memory cartel do not care about silly things like laws

reply
Does 87% gross margins sound like that them lowering prices is tantamount to dumping?
reply
It also ignores the giant CAPEX and OPEX required for any competition. This isn't banana stands or book publishing, or whatever.

These are billion dollar+ funded operations that take multi-years just to see if you can compete at the levels required.

All these comments show up every time, like there's a memory faerie land where you just put on your memory faerie hat and walla! Memory!

So bizarre.

reply
Everything is a conspiracy. The elites refuse to wave their increase-manufacturing-capacity-instantly wands.
reply
I mean, we can assume the people who make the memory love getting huge prices for it. But beyond that, I just dont see why someone who invest several multi billion dollars to squeeze into a potential window that may or may not last 3 years. Especially with how volatile the whole AI bubble is.
reply
Yes, one of those markets with infinite demand where supply has no impact on price. Those ones.
reply
> Yes, one of those markets with infinite demand where supply has no impact on price. Those ones.

In economics, "demand" doesn't mean "I want this", it means paid, funded demand. 100s of millions of "free" LLM users aren't funded demand, they're subsidized. This leads to front-running and scalping the silicon market at an unreal scale, it also monopolizes access to silicon and compute. Nothing happens by chance here.

reply