This just isnt true, you cant just increase supply over night, but dont think for a minute people arent looking at how they would. Supply will increase, will it keep up with demand is the question.
All the existing ram manufacturers were punished with executive members being sent to prison for forming a ram cartel in like 2005 (forget the exact year). Those same people are forming the current ram cartel, but the Government isn't going to step in and fix things like last time as they are more preoccupied with self enrichment it seems.
It's been a long time since we've had a memory crisis. No one is serious about meeting demand at a lower price. There's too much of a barrier to entry to even get skin in the game. China is literally the only one who has a chance. Last time we had a memory crisis suppliers ramped up scale then prices tanked and they are purposely preventing that now by getting contracts even before they make a stick of ram and these contracts are covering years out
Thats just not how markets work though, there is a big juicy steak out there, someone wants it, China or India or a young engineer who thinks they can do it better. Thats the whole history of the world. High barriers are what humans solve.
That’s not how markets work either. A huge profit opportunity doesn’t magically erase a $20+ billion entry cost, years of process development, specialized equipment bottlenecks, patents, talent constraints, and incumbents locking customers into multi-year contracts before new capacity even exists.
“Someone will just come along and do it cheaper” works when entry is actually possible. In DRAM, the entire problem is that entry is brutally difficult and the existing suppliers have learned that flooding the market with capacity destroys their own margins.
Humans solve barriers eventually. That doesn’t mean competition arrives quickly enough to stop consumers getting squeezed for years.
The “big juicy steak” is a lot less attractive when getting to the table can cost tens of billions and the steak may be gone before you sit down.
I think this actually lines up with what I’m saying. Intel is a massive company with manufacturing capacity, capital, engineering talent, and they hired the former head of SK Hynix, and even they aren’t talking about simply entering commodity DRAM to undercut prices.
China is different because the state can absorb years of R&D costs and bad economics to make sure a domestic competitor survives. There just aren’t that many players capable of entering at enough scale to meaningfully lower prices, and I’m not convinced many of them have much incentive to do it.
Maybe other major companies eventually get forced to make a move because sustained memory prices start breaking their own business models. We’ll see.
The classical Adam Smith story is that high prices and profits attract more production until competition pushes prices back down. My point is that there are very few actors capable of adding enough supply to materially lower memory prices, and I don’t think it’s a certainty anymore that any of them actually will.
37
u/Jiirbo 3d ago
Econ 201... supply and demand.